Just two weeks ago, market intelligence firm Sensor Tower acquired data.ai, bringing together the two leaders in the mobile app data space.
The news was the talk of the mobile games industry during GDC week - arguably more than announcements such as the Epic Games Store heading to mobile, thanks to the Digital Markets Act opening up the iOS ecosystem.
For many, the purchase was a surprise, not because they are competitors, but that many considered data.ai to be the larger company.
Speaking exclusively to PocketGamer.biz, Sensor Tower chief operating officer Tom Cui says discussions over a deal had been going on for “quite some time”, with the companies sharing similar goals on how to provide insights to the mobile market.
Cui says Sensor Tower’s own investor Riverwood Capital, which pumped $45 million into the company in May 2020, was already familiar with data.ai. TechCrunch previously reported that Bain Capital is providing credit-based financing, while Riverwood Capital and Paramark Ventures have invested money into the company.
“We spoke to their team, and when both sides evaluated this, it became pretty apparent that we're trying to achieve similar goals - which is how do we provide really valuable insights for the industry? How do we go beyond mobile? Everything is going cross-platform nowadays, especially in gaming,” says Cui.
“It became pretty obvious that if we combined our resources - you know the panel assets, the data science team - that we could accelerate this product roadmap.”
He adds: “Both companies were at a stage where they were ready to engage in conversations. I think in the past we probably weren't ready for that yet, and we were able to make it happen.”
The acquisition price has not been disclosed. data.ai had previously raised $157 million through investments, and employed around 400 staff prior to the purchase.
Sensor Tower has confirmed the deal has resulted in layoffs at the company, but did not specify a figure. MobileGamer.biz has reported rumours that as many as half of data.ai staff lost their jobs.
Meanwhile, an email sent to some data.ai staff stated that the price paid for common stock in the company was less than the exercise price of their options. It’s not known how many staff this impacted. Sensor Tower declined to comment on the matter.
Consolidation plans
Cui says Sensor Tower plans to quickly consolidate the data.ai team and brand. The company has previous experience of integrating an acquisition, having purchased digital marketing intelligence platform Pathmatics in May 2021, which continued to run independently at first.
“In hindsight, we should have integrated the companies much sooner,” admits Cui. “We should have integrated the cultures, the engineering, the backend assets, etc.
“So this time around, day one, we've integrated and we want to build that unified culture, unified company, one brand. And hopefully we are now wearing the same colours and can march toward that.”
Both companies were at a stage where they were ready to engage in conversations. I think in the past we probably weren't ready for that yet.Tom Cui, Sensor Tower
As to what happens to the data.ai platform right now, Cui says “currently nothing”.
“We have to do what is in the best interest of our customers. And that is, don't do anything crazy, don't do a disruption of service, don't say that anything is disappearing. We're going to support both products in parallel.”
Cui admits it can’t do that forever, however. In future, there will be a unified platform, and Cui says Sensor Tower plans to discuss this with customers of each platform before that happens.
The platforms and data they provide play a key role in the mobile games industry and wider apps sector for understanding market size, performance, and competitive analysis, as well as insights into ad creatives and app usage.
Asked whether there are any concerns that this deal could create a monopoly in the mobile market intelligence space, given there is no other company of its size, Cui is not so sure.
While he admits the combined business is much larger, he argues there are still plenty of other mobile app intelligence providers, as well as other companies such as SimilarWeb, Nielsen, Kantar and MediaRadar that also provide data and insights.
Keeping market visibility
Mobile market intelligence providers have faced challenges over the the past few years to provide accurate and complete estimates. Google and Apple have made it more difficult for these companies to gather chart ranking data, the mobile games industry has had a tough few years in large part due to Apple’s privacy changes, and a shift to web stores and a cross-platform approach by some publishers means less visibility on overall performance.
We want to be that one-stop-shop, that full suite digital end-to-end consumer journey for our customers.Tom Cui, Sensor Tower
Cui says Sensor Tower is looking into how it could provide data for other platforms, with the acquisition of data.ai allowing the companies to combine resources - such as its panel assets and data science teams - to accelerate its product roadmap.
“We want to be that one-stop-shop, that full suite digital end-to-end consumer journey for our customers, and so when they think about mobile, web, PC, console, desktop, it's like Sensor Tower is that go-to,” Cui explains.
“The long-term vision is really that Sensor Tower has a multitude of products. You have your mobile app product, you have your digital advertising product, you have your audience product, you have your PC, console, Steam product.
“It’s going to take us years to get there. But with the combined resources and further brain power, we're able to get there.”
When asked if that means further acquisitions for Sensor Tower, he says if the deal with data.ai goes well, other acquisitions could come.
“If this integration goes well, which early signs point to yes, then yes, definitely, we're going to be one of those companies that are going to be able to grow organically and inorganically," says Cui.
Beyond the App Store and Google Play
The challenge for full data coverage, in the face of the rise of web shops, third-party app stores and companies going cross-platform, is something Sensor Tower has its eye on. Cui says as soon as the start of next year, over half of the top 100 games could be monetising their players outside of the App Store and Google Play.
“We're going to have to follow them, to be honest,” he says. “That was one of the thesis for this acquisition, which is that both companies have traditionally been heavyweights in iOS and Android, but how do we go beyond that? It's having more resources to do so.”
So now that Sensor Tower has acquired data.ai and become the defacto market leader in the mobile market intelligence space, what’s next? With all that investment, does an IPO beckon? Cui says it’s not on their radar this year, but it could happen in future.
“We're doing this because we aren't satisfied with the smaller pie... the smaller circles that both companies had traditionally been in,” says Cui.
“We're going after the very big circle, and if we want to IPO and that makes sense for us in future we'll do it. If we want to stay private and keep growing down this path of organic and inorganic, we could do that as well.”
Full disclosure: I have previously worked at Sensor Tower and data.ai.
