Seven ways mobile games can make the most of direct–to-consumer strategies

Xsolla's Chris Hewish explains how mobile studios can make the most of the direct-to-consumer strategies used by major publishers

Seven ways mobile games can make the most of direct–to-consumer strategies

By Chris Hewish, President, Xsolla

Taken as a standalone figure, it’s mighty impressive that the mobile games market is estimated to have generated $92.2 billion in 2022. Those of us in gaming know, however, that this masks the true cost of business in the industry, where up to around 70% of that value can be eaten up by user acquisition spend and other costs such as platform fees. In reality, $92.2 billion of ‘revenue’ becomes more like $27.7 billion of revenue. And, as we have heard ad nauseam last year, the games industry experienced its first year-on-year decline in history.

Given the razor-sharp margins most game developers are operating within, leaving money on the table by not looking at alternative revenue streams isn’t an option. Some of these streams are well-discussed, such as alternative Android app stores. But with more games looking to IAPs to counterbalance rising challenges in ad monetisation, the possibility of direct-to-consumer revenue streams are coming into sharper focus.

How web stores work

We’ve seen the direct-to-consumer model used to great effect by large publishers such as EA and Ubisoft, popular games such as Warhammer and Eve Online, and smaller PC publishers including Aspyr, Badfox, and Mundfish. They use websites, proprietary game launchers, news portals and email marketing to increase touchpoints with and insights into their players.

Mobile studios and publishers of all sizes can also expand their business model by going direct-to-consumer, using the relatively new phenomenon of browser stores / ecommerce sites / web shops / web stores. As the various names imply, they’re online storefronts where game makers can sell digital goods from avatars and cosmetic items to in-game currency. The headline benefit is the opportunity to keep more revenue from these IAPs than would be possible in the app stores, but focusing solely on revenue share does online storefronts a disservice. The other pluses may be less obvious, but they’re also vitally important.

Mobile studios and publishers of all sizes can expand their business by going direct-to-consumer
Chris Hewish

Like alternative Android stores, web shops can help developers monetise new markets where app stores aren’t available or credit/debit cards aren’t widely used, such as parts of MENA, Southeast Asia and Latin America. We estimate that around 40% of global gamers can’t transact in-game using their preferred payment method. Players who are able to use familiar payments typically spend more too, so being able to accept QRIS, QIWI, BLIK, Kakao Pay and Skrill as well as more mainstream payments providers like PayPal will enable you not only to reach a wider audience, but also increase the lifetime value of players in those regions.

The real kicker is first party data (isn’t it always?). Using email address logins, browser stores create the opportunity for greatly improved analytics and therefore insights into player spending habits, and pain points and opportunities in their gameplay. What players purchase - and when - informs functionality such as special offers and bundles. These can be tailored for subsections of your user base, such as players in a certain territory or your game’s most committed players, and web stores can even be whitelabelled to mirror the look and feel of your game’s branding.

Who can use web stores?

The two main app stores are our bread and butter distribution and monetisation platforms and rightly so - they’re familiar and fantastic for reach. Direct-to-consumer doesn’t change this. However, familiar names like NetEase Games and Hi-rez Studios - of Smite fame - have turned to browser stores in addition to app stores in order to maximise player base, player engagement mechanics, and ultimately their revenue. A couple of small caveats: Games must be cross-platform, so mobile games also need a browser or PC version to use web stores. Items sold in your web shop must also be available to purchase in-app - and for the same price. That said, your browser store can offer unique bundles that aren't visible in the in-game store and represent better value for money. Games can be AAA or indie, brand new or have an established user base.

With that in mind, here are my top seven tips for making the most of browser storefronts:

1) Test everything!

Make the most of improved analytics by offering various purchase options ranging from item arrangement, price points and loyalty programs to content bundles. This is your trial and error playroom to find out what approach works best for your game - and your players.

2) Market directly

Invite registered players to check your web shop via in-game prompts, email or social media. Forums or chat rooms are also good places to raise awareness.

3) Give stuff away

Who doesn't like free stuff? Your players will appreciate the chance to get bonus codes or unique content - and be willing to sign up to get them!

4) Start at the top

Begin with incentives for your whales to make them feel special, then widen the reach as you find out what works best.

5) Point users from web to… web

If you have a website for your game, make sure it points players to your web shop.

6) Run time-limited offers

Make your offers feel special - nothing encourages participation like FOMO. These could be seasonal or linked to holidays, as well as daily, weekly, monthly - or weekend flash sales.

7) Geo-locate

Really want to engage your 'local' players? Show them that you understand them with special offers tailored to their regional special occasions and bank holidays. The best thing is that nobody else in the world will even know!

Browser stores have truly come into their own since the end of 2021, amid a growing awareness among developers of what can be achieved in tandem with the traditional distribution and monetisation landscape. Since then, they've been adopted by hundreds of forward-looking indie developers and international publishers alike.

Web shops directly connect game makers with their audiences like never before. I love seeing how the community has embraced this opportunity - as well as being impressed by its innovation on a daily basis. This is a major opportunity for the industry and I'm fascinated to see how it develops in the years to come.

About Xsolla
Xsolla is a global video game commerce company with a robust and powerful set of tools and services designed specifically for the video game industry. Since its founding in 2005, Xsolla has helped thousands of game developers and publishers of all sizes fund, market, launch and monetize their games globally and across multiple platforms. As an innovative leader in in-game commerce, Xsolla’s mission is to solve the inherent complexities of global distribution, marketing, and monetization to help our partners reach more geographies, generate more revenue and create relationships with gamers worldwide. Xsolla is headquartered and incorporated in Los Angeles, California, with offices in Berlin, Seoul, and cities worldwide. Xsolla supports major gaming entitles like Valve, Twitch, Roblox, Ubisoft, Epic Games, KRAFTON, Nexters, NetEase, Playstudios, Playrix, miHoYo, and more. For additional information and to learn more, please visit xsolla.com.

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