Recently, I listened to an episode of Freakanomics Radio called The Upside of Quitting which discusses why it is so hard to quit and how it can be extremely valuable to do so. It made me reflect upon a relatively new issue facing modern game developers: how do you know it is time to quit working on your live game?

In a landscape including free-to-play, mobile, Steam, Ouya, Kickstarter, Desura, alpha funding, etc, there are more ways than ever to release a game and continually improve it. And there are cases, such as the story of Wild Ones’ ascension to become Playdom’s top performing game, which show it is possible to grow your audience through strong game design. But by and large game development is a career of passion, and when it is not just A game but YOUR game out there in the world, it can be impossible to ignore your sunk costs and objectively decide whether or not to continue working on your game.

Since my team Quarter Spiral has been self-funded for the past year, I have worked as a monetization design consultant to fund my end of the company while we develop Enhanced Wars. Between my work and public lectures, I have talked to a number of game developers about free-to-play games at various stages of life. One of the hardest things to tell someone when evaluating a live game is “I think you should quit” but I have done it several times. There are no hard and fast rules to determine when your free-to-play game has become a lost cause, but here are some thoughts on how to identify if it is time to move on.

Engagement before monetization

Many times people ask me to look at their game because they have a monetization problem. For an initial evaluation I both play the game and probe the dev with some questions about the game’s metrics. The dev may think he just needs more users, or that he needs to get more money from the users he has. But as we discuss the metrics it is clear that any work to improve monetization is a premature optimization because player engagement is the real issue.

In free-to-play, a long term relationship with the player is key to monetization. For most games, the majority of players will not return for a second session of play. That is a natural byproduct of a game being free. Wherever your engagement figures are after launch, in general the first few updates for your game are spent fixing unexpected bugs, difficulty spikes in the early game, or other factors to improve the number of returning players.

If you have low engagement numbers despite a number of updates to improve them, it is unlikely to turn around. This is a sign that your game is not fun enough for the audience of organic players you are attracting and it is time to move on.

Burn rate vs revenue

Each developer’s economics are different. Metrics that represent a windfall profit for a solo developer working with contractors will get a team of 14 devs sunset at a large studio. If your burn rate (average monthly expenses) is greater than your monthly revenue, you need to evaluate what it will take to start making money with your game and if that level of improvement is realistic.

If you feel that you’ve more or less optimized your engagement rate then you can work to improve existing features or introduce new features that boost revenue. But in many cases these optimizations will be just that – optimizations. Silver bullets that dramatically change your game’s finances happen, but they are rare.

If you’ve never done the exercise, look at your expenses and figure out your burn rate. Then look at your game’s monthly revenue and what it will take from a metrics perspective to get in the black. For example, if your conversion to paying users is currently below 0.5% and you need to improve it to 3% in order to start making a profit that is an unlikely optimization. If you are new to forecasting revenue, you can use my interactive forecast calculator to do the rough math.

Evaluating your burn rate vs revenue sounds like a no brainer, but I have been surprised at the number of devs I’ve talked to about monetization only to discover they do not have a firm grasp on their finances. Being realistic about your finances and evaluating them on a weekly or monthly basis will help you decide when it is time to move on.

Paid advertising can’t save you

More than once I’ve talked to a game developer with revenue losing metrics considering a paid advertising campaign to attract new users and turn their game around. When this happens, I try and run them through the numbers, figure out approximate lifetime revenue per player, ballpark the acquisition cost per player and show them how much money they are likely to lose on advertising.

If you are an average game dev and not a player acquisition targeting expert, your metrics are unlikely to improve when you are paying for users in comparison to your organic new players. In fact, acquired players will generally perform worse than your organic players. If you are considering an advertising push in the hopes of turning your game around and the numbers do not add up, it is best for you to spend that money on the next game.

Quitting is hard

If you are driven enough to see a game through to ship, then you probably have trouble admitting it is time to give up. As the Freakanomics episode explains, though difficult, quitting your free-to-play game may be the best decision for you. It is hard to be objective, ignore your emotional attachment to a game and admit that it is just not working, but quitting something broken is the only way you will find yourself working on the right game.