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If you’re part of the mobile gaming industry you’d have noticed that the air is currently thick with caution. Many game studios have announced declining revenue results, as well as plans not to spend on new game titles for the time being.
Probably one of the biggest names to jump on this train, which has metaphorically stopped venturing into new territories, is Playtika. The mobile developer and publisher, which boasted a 35 million monthly user base in 2021, announced it will not be investing in new titles and will instead be optimising existing titles with proven monetisation strategies.
As mentioned in a previous blog post Confidence is Key: How to Make Your Mobile Game Stand Out, launching a mobile game is hard for many reasons. But in 2023, it seems to be even harder.
We’ve been keeping abreast of the predictions that CPIs will rise this year. The cause? Principal of Gossamer Consulter and chief outrage officer of Deconstructor of Fun, Eric Kress (the keynote opener at the Google Instanbul Games Summit) says it’s not the post-Covid correction that everybody is claiming it is. It’s an amalgamation of things which includes the changes in privacy restrictions (thanks to SKAN), record-breaking inflation, and the looming global recession which is crippling most industries.
As a result of all of this, not only will studios be paying more for installs, they’re likely to also attract lower quality installs. In other words, they’ll be replacing existing cohorts with new cohorts who are less valuable than the ones before. And this means lower future revenue.
The predictions align with trend reports such as the ones from Sensor tower and data.ai, which similarly anticipate a 10-15% decrease in market revenue for this year, when compared to the 2021 period.
We’re seeing more and more of those Playtika-esque decisions (or at least deep consideration) being taken by our clients. We’re calling it the “In with the old and out with the new” approach.
It’s definitely a cautious approach but since we’re in the business of data, it totally makes sense to us.
By doing this, studios can:
Existing titles have more data to work with - and this means studios can look at things at a more granular level, which ultimately leads to more accurate decisions about the future of their titles.
In fact, one of the most common questions we get asked during our prospect meetings is “How much data do you need to be competent in your forecasting?” While we have a prescribed minimum of six months data, we always include the caveat of “the more data we get, the more granular we can go - and the more granular we can go, the more accurate the forecast”. So, it would be going against our own practice if we didn’t point this out.
Studios may be sitting on a title that didn’t produce the intended volumes, but somehow there was still promise. Or maybe it did produce the intended volumes, and there’s still room to optimise it even more. Studios should relook those sorts of titles - the monetisation and UA strategies may have been on track - and now just need to find how to scale it.
Just recently, we spotted an opportunity for a client to scale an existing title more efficiently after realising they were wasting money at a Country segmentation level. They immediately shifted the otherwise wasted spend to a more profitable channel, and were able to scale their UA efforts significantly.
Similarly, we’ve picked up opportunities to scale active titles for other clients (which were trudging along with organic installs) by boosting them with UA spend because the data shows their potential.
As mentioned in the paragraphs above, the recession is affecting most industries and cost-saving is at the core of most business strategies for this year. So, besides scaling UA and monetisation strategies, shifting focus to existing titles is also a way for studios to save money that otherwise would have gone into the development of new titles. New titles, which are predicted to not yield as great an ROI as previous ones.
Adding to the pipeline is always a great idea, just not right now.
We could be shooting ourselves in the foot here, but we’re not saying that your new title won’t be an anomaly based on the current lay of the land. However, we are saying it will be hard.
And, with many industry experts saying that studios are likely to get lower quality installs this year (maybe for the next two years even - yikes!) - it’s worthwhile trying to re-engage inactive users who have already downloaded your game or attempt to scale existing strategies rather than spend money on getting new users for a completely new game.
Until things improve, what’s that saying - ”A bird in the hand is worth two in the bush?”
P.S. If you're still going ahead with new titles this year, at least read our post on How not to f**k up your soft launch
