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Information Technology Medium difficulty

Software Interviewer-led case

This case focuses on a new product launch for a mobile game developer. It begins by focusing on more
commercial aspects of the product before shifting to explore the practicalities of technical product
development. It covers all elements of the case interview scorecard other than creativity, with stretch
areas in Judgement & Insight.

This case is only suitable for candidates applying to digital or technology-focused roles as it includes

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several Information Technology expertise questions that cannot be skipped.

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Problem definition
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Your client, ViaMachine, is a mobile game developer that creates games for smartphones and tablets.
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ViaMachine launched a number of games over the past decade, but has not launched a new game in the
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past two years, choosing instead to iterate and improve upon its current portfolio. The existing games are
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now maturing, however, and ViaMachine’s management team are concerned about revenue and active
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user numbers levelling off. In order to refresh their offering and boost sales, ViaMachine’s leadership
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team have therefore decided to invest in developing a new game.

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The client team have yet to decide what type of game they should develop. In particular, the client is
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trying to decide which of its three existing genres to launch a game in: matching puzzles, action games,
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or augmented reality. They’ve asked your team to review the options and provide a recommendation,
taking into account both commercial and technical implementation concerns.

What kind of game should ViaMachine focus on developing, in order to boost its sales and user
numbers?

Additional information
If asked at this point or later, please share the following:
• ViaMachine’s core objective is to boost sales and user numbers. However, the client has not offered
a specific target on either of these
• ViaMachine’s product portfolio comprises 8 games across three genres. Given the firm’s capabilities,
they are also looking to launch the new game in any one of these existing genres:
− Matching puzzles (comparable to e.g. candy crush)

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 − Action games
− Augmented reality games
• Augmented reality games involve displaying the real world via a mobile device’s camera and
projecting some computer graphics onto it with which a user can interact. These games therefore
blend the real world and the virtual world together to create a gaming experience. A well-known
example of such a game is ‘Pokémon Go’, which encourages users to visit particular physical
locations at which they can ‘see’ virtual creatures in a real environment through a mobile device
• For the purposes of this case, ViaMachine explicitly only need to land on what genre of game they
should select. The specific details of the game’s proposition will be handled separately
• The client believes that the three genres have sufficient diversity that they can gain fully incremental
revenue in any of them. In other words, the fact that the client may have more existing products in
some genres than others should not affect our commercial decision

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Question 1 (Structuring)

How would you go about structuring this problem?

Guidance for interviewer

The client is looking for a recommendation that takes technical implementation as well as commercial
concerns into account. A good structure should highlight both of these elements and reference topics
specific and relevant to software product development of this kind

Possible answer
We should review each of the three genres and perform a structured review of the commercial attractiveness

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and technical feasibility of each. We should then select the genre that has the best balance of economic

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potential and technical feasibility.

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Topics to review would include the following:
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1. What is the revenue potential of each genre?

a. Number of potential active users per game:
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• Size of the total user base per genre

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• Competitive intensity within the genre (i.e. how much of the user base can one game capture?)
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b. Conversion rate to paying users (e.g., do more users for a particular genre just play a free offering?)
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c. Average revenue per paying user:

• Purchase price
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In-game revenue
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2. What is the technical feasibility to develop a successful product in each genre, relative to the client’s
capabilities?
a. UX & Design
b. Creative & art
c. Technical implementation:
• Middleware selection & use
• Programming
• QA & testing

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Question 2 (Judgement & Insight)

The client team want to begin by reviewing the performance of their current portfolio, to build intuition on
which genre might offer the greatest opportunity for further product development. The team have pulled
together data on user numbers and revenue to assist with this (share Exhibits 1 and 2).

What does this data suggest about the commercial attractiveness of each genre?

Guidance for interviewer

This section requires candidates to come to a judgement on the performance of each genre. Good
candidates will ask about how many games of each type the client has, in order to gauge performance at

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a per game level. Very strong candidates will combine data points within and between exhibits, and will
notice that conversion to paying users has been increasing steadily in augmented reality games, but is

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flat or declining for the other two product types. If a candidate does not discuss conversion to paying

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users proactively, ask them to explore it using the exhibits.
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If asked, please share that:

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• The client has 8 games overall, with the following split by genre:
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− Matching puzzles: 4 games

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Action: 3 games
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Augmented reality: 1 game

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• While the client only has 1 augmented reality (AR) game, it has been iterating and improving it since
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an early release five years ago. The client released a new version of the game last year with
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significant new features and improvements

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• All products have a freemium offering. Most monetization strategies involve a shift to a premium
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paid-for version of a game, in-game purchases, or both

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• ARPPU = “Average revenue per paying user”. It captures total revenue / number of paying
customers (either paying for a premium version of a game or making in-game purchases)
• Consumers still enjoy matching games, but free or low-cost options are increasingly driving out paid
options
• Action games have well-established paths to monetization such as character upgrades, but are an
increasingly crowded category with some low-cost options entering
• Augmented reality games are newer, and monetization strategies are still being explored and
developed. However, the current wave of customers appears content to pay for these games (both
in terms of up-front purchase cost and in-game sales)

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Possible answer
Augmented reality games appear to be the most promising opportunity. The genre is appealing today,
but its future prospects appear by far the most attractive of the options.

To begin with, both revenue and user numbers in augmented reality seem very promising. The client has
grown its first AR game to 4m users and $540,000 in annual revenue – nearly 40% of its overall sales.
On a per game basis, the revenue numbers for augmented reality are more promising than other genres
already.

In terms of future prospects, while other genres appear to be maturing augmented reality looks to be a
growth market. Our sales here have doubled in the last year alone, in response to a new update to
ViaMachine’s existing game with many new features.

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The ARPPU numbers also provide considerable insight. While user growth remains quite positive in the

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Matching Puzzle and Action categories, conversion to paying users appears relatively poor. For

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matching puzzles, revenue growth has declined more or less in line with ARPPU, but net user numbers
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have increased. This suggests that there is a decline in conversion to paying customers, indicating that
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users increasingly adopt free tiers only. In action games a similar but less pronounced change can be
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seen, and conversion here appears generally flat.

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In contrast, conversion to paying customers in AR appears to be increasing over time. In Y1 we saw

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~0.33% conversion levels. Around ~1,000 customers were premium ($30,000 / 31 ARPPU), out of
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300,000 overall users. Last year conversion to paying customers is well over 1%: there are ~55,000
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paying customers ($550,000 / ~10 ARPPU), out of a user population of 4m. This is a very promising
trajectory, and suggests a positive future for monetization of the category.
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Exhibit 1: Users per genre in ViaMachine’s portfolio (last five years)

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Exhibit 2: Revenue and ARPPU for ViaMachine’s portfolio by genre (last five years)

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Puzzled by some case interview charts?

Practice on your own with the Exhibit Drills in the

Interview Prep Course

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Question 3 (Numeracy)

The client team are keen to explore the prospects for augmented reality games in more depth, and the
Head of Product is particularly keen on the category given its rapid growth and user adoption.

Based on the data we saw previously, what total number of users would ViaMachine need in the
augmented reality genre in order to reach $1m annual revenue in the category?

Guidance for interviewer

Candidates should ask how conversion and ARPPU are likely to change. Share that conversion to
paying users is expected to reach 1.5% and AARPU to stabilize at $9.

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Possible answer

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To attain $1m annual revenue from AR, we must reach a point where: [Total user base] X [Conversion to

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paying users] X [ARPPU] = $1m in m la
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We assume a conversion rate of 1.5% and ARPPU of $9.

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Therefore $1m = [Total user base] X 1.5% X $9

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$1m = [Total user base] X $0.135

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$1m / $0.135 = [Total user base]

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= ~7.4m users
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The current player base is 4m, so this growth rate does seem feasible if the client were to invest more
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heavily in the category – especially given its current positive trajectory.

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Question 4 (Information Technology expertise question)

ViaMachine sees a lot of potential in creating a new augmented reality (AR) game, but it has only
launched one such game so far. In addition, ViaMachine built the previous game making use of third-
party contractor resource, and its internal capabilities in the space are still relatively immature.

The client is therefore looking for guidance on the implementation of an augmented reality application,
and what it should consider to ensure the technical implementation is successful.

Thinking creatively, what do you expect are some potential technical challenges involved with
developing an AR game?

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Guidance for interviewer

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Candidates should not yet be encouraged to resolve these challenges. This section aims only to ensure

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candidates think creatively and put ideas “on the table”.

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For candidates not yet familiar with the genre, a description of augmented reality games is provided in
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the guidance notes at the beginning of the case.

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Possible answer
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I see a number of potential technical challenges with developing an AR game successfully.

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To begin with there are potential issues with ensuring the software is functional and meets user
requirements. Potential challenges I foresee here include:
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Hardware integration. An AR application must interface with a user’s camera and potentially the phone’s
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location tracking. We must ensure any application does this successfully across a range of device types
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• Computer vision & image recognition. An AR app will be expected to “project” images onto a real
environment. This will involve detecting surfaces and objects in the real world, which may prove a
technical challenge
• Graphics. To ensure a good experience, the graphical implementation must work effectively but also
seamlessly match the real world

I also foresee potential challenges in terms of efficiency and run cost. An AR application may be
computationally expensive if designed poorly – even if it meets user requirements on the surface. This could
lead to a number of potential issues, which will be particularly problematic on older or less powerful devices:
• CPU overload, which may lead to slow run-time and a poor user experience
• Consumption of memory
• High battery consumption, which will be particularly problematic if the app is to be used outdoors for long
periods

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Lastly, I see some privacy and ethical risks:
• Data retention. If the app captures user’s location data and transmits this to our servers, we must be very
careful to adhere to proper standards on data processing and retention
• Safety. Unlike conventional games, AR may expose players to physical harm (e.g. if they encourage
movement to certain locations and interaction with the physical environment)

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Question 5 (Information Technology expertise question)

The client is concerned about CPU overload if any potential augmented reality game is too
computationally expensive. If the game does consume too much compute resource, many devices will
throttle the application, leading to poor performance and a greatly diminished user experience.

What could the client consider to minimize the likelihood of this problem?

Guidance for interviewer

Detailed knowledge of AR or app implementation is not expected here. What is important is a
candidate’s general familiarity with concepts to improve runtime for a digital application, and good
judgement and thoughtfulness to adapt their points to the circumstances at hand.

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If the candidate asks for details of the specific game at this stage, share that the current proposal is to

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create a driving game where a virtual vehicle is “projected” onto a surface (e.g. floor, table) while a user

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steers the vehicle by moving the mobile device. A range of obstacles and potential bonuses are also
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projected into real space for a user to encounter.
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Before moving on from this section, share that at the end of this review the client is satisfied with the
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technical feasibility of developing an augmented reality product.

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Possible answer
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There are a number of things we could consider to reduce resource consumption in the application. To begin
with, we should try and minimise the complexity of the application where possible, while being careful not to
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adversely affect the user experience. We could reduce texture resolution on the graphics, reduce polygon
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counts on any 3D models, and consider reducing visual features and graphic options in the application. We
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may opt to adjust some aspects of this dynamically according to a user’s device type.

Where possible we should also make the storage and loading of graphics as efficient as possible. In
particular, we should compress assets to the greatest extent possible. We should also consider pre-loading
or pre-fetching data before it is used, in such a way as to even-out the resource consumption of the
application. Loading large amounts of data (e.g. images, graphics) in one go will slow down the application.

The client should be thoughtful to make best use of the device’s hardware capabilities. For the graphics and
any image recognition used in the application, a device’s integrated GPU compute will be more efficient than
using the CPU.

Lastly, the client should look to adhere to good software development practices and to ensure the codebase
is as efficient as possible to avoid adversely affecting performance.

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Question 6 (Synthesis)

What is your overall recommendation at this stage?

Possible answer
We were asked to investigate the mobile gaming market and to recommend the best genre in which to
launch a new game. Based on our assessment, launching an augmented reality game appears the best
choice to achieve ViaMachine’s objectives.

This is for at least two reasons. First, from a commercial standpoint AR appears to be the most attractive
game type. The market appears young and ripe for future growth: user number and revenue growth for
the category both appear very promising. In addition, while ARPPU is dropping, conversion to premium is

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going up: ever more users are adopting paid options in the category.

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Second, the development appears feasible from a technical standpoint. We have explored a number of
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concerns, and our initial analysis suggests that potential technical challenges can be overcome.
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As a next step, ViaMachine should develop a more detailed proposal for a new AR game in order to test
the concept and validate the technical challenges in more depth.
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