Mobile game developers are facing an ever-evolving market, and currently, many of those changes are making finding success harder than ever. Studios are navigating the current post-IDFA environment, regulation changes and a market that, despite its growth, also grows increasingly competitive and over saturated.
So what can you do to help your studio to break through?
In this guest post, Village Studios founder, Will Luton shares his 15 years of games experience at the likes of Sega and Rovio to highlight today's changes in the mobile gaming industry and how, in these difficult times, studios should be adapting to take advantage of new power shifts.
We’re in trouble. The golden era of mobile gaming, characterised by meteoric growth and abundant cheap players, is over: Users are harder to target, more expensive to acquire and are overwhelmed by choice. Meanwhile, platforms that were once arbiters of free organic traffic have become more controlling and less influential over users. For many mobile game studios, the struggle means they’re on the brink. A good chunk won’t make it through the next few years.
In this article I will talk about the combination of challenges, the upcoming shifts coming in the next months, as well as how we can innovate our way out.
The Mobile Games Dark Ages
There is a perfect storm of pressures and problem:
The mobile gaming industry has seen little significant innovation over the past decade, especially in UA and monetisation strategies.Will Luton
- Market Growth is Slowing: The days of exponential growth in the mobile gaming market ended around five years back. While there are still more people playing and spending in games year-on-year, driven by emerging markets, the growth rate is slowing. The latest projections, both total revenue and player numbers are expected to plateau by 2027. It's a clear signal that the easy growth wins, carried by market expansion, are coming to a close. In other words, Everyone who could play mobile games soon will be.
- K Factor is Approaching Zero: In the late noughties word-of-mouth growth (known as K-factor) was naturally built into marketing models. Today the K value is now commonly set to zero. Players aren't excitedly telling their friends about their latest mobile game obsession, and they're not glued to the app store charts or featured sections.
- User Acquisition is Getting Vague: The post-IDFA (Identifier for Advertisers) landscape is filled with uncertainty and soaring UA costs. It’s much harder to find the right people for your game and put it in front of them. Smaller to mid-size devs are feeling the pinch acutely as the player quality drops, impacting retention and revenue, while user acquisition costs increase.
- Platform Discontent: Developers are increasingly disenchanted with the platforms that once nurtured their growth. Restrictive content policies, exorbitant fees, and the new requirement to pay for app store search placement are souring the once positive relationship between devs and platform holders.
- Lack of Innovation: The mobile gaming industry has seen little significant innovation over the past decade, especially in UA and monetisation strategies. Performance marketing was the single item in the growth playbook for too long, and as its power wanes, marketing teams are lost.
- Monetisation Regulation Looms: Regulations intended to protect consumers are making monetisation a headache. Gacha and similar are banned or restricted in multiple countries, meaning many games are forced to adapt to less effective mechanics or pull out of regions entirely.
- Investment is Waning: Many investors we talk to see the systemic problems that new mobile studios face and simply pass on pitches instantaneously. There can be no growth for a fledgling company, while older publishers are likely to stagnate, they believe.
Light at the End of the Tunnel
These problems paint a bleak picture for the mobile industry, but it's not all despair. What has always been true in games is still true today: Developers who adapt can still thrive. A new playbook is needed to capture some upcoming disruptions.
This disruption is foreshadowed by charging cables. The recent iPhone 15 announcement saw Apple drop proprietary connections in favour of USB-C for the first time. This is thanks to EU law, which dictates a universal charger across all phones as of 2024, but also indicates the start of an upcoming trend: Regulators are lining up to strip away the powers from platforms. These regulations over the next decade will fundamentally change the business of mobile games. Many things we’ve known to be true will cease to be so. Already we know of two seismic changes:
- Sideloaded iOS Apps: The EU's Digital Marketing Act dictates that platform holders cannot be the only source of applications. As such, sideloaded apps will be enabled from iOS 17 and will be the first time in iPhone history that users can install what they like without the need for jailbreaking.
- Off-Portal Billing:While Epic Games vs Apple was mostly a bust for Epic, one of the ten counts was upheld: Apple must not prevent developers from steering their customers to alternative payment systems. Meaning developers can break free of the 30% revenue tax they pay to platforms.
Likely these regulations are the start rather than the end for Apple and Google. These rulings, and whatever comes next, open up platforms massively for developers and begin to crumble the walled gardens we’ve all known.
Take Back Control
The power to distribute your own games is within reach on mobile for the first time.Will Luton
I see there being a few areas in which developers can innovate and restart growth in the new post-platform era:
- Keep Players in Portfolio: Think wide, not just deep. Traditionally, game developers have thought about retention as a product problem. But there’s another way to think about user retention, and that is portfolio-wide. Cross-promoted users are gold, being ten times more likely to monetise, yet the extent to which we find them is by sticking a few ads in the waterfall. There is space instead to run multigame live ops where players hunt rewards across all games in your portfolio or to run a portfolio-wide VIP and loyalty system.
- Monetise Better: Embrace the opportunity that off-portal billing provides. For instance, Supercell has its own store offering discounts to players while sidestepping platform fees. Smart monetisation strategies like these can result in a significant upward shift in revenue.
- Self Distribute and Innovate: The power to distribute your own games is within reach on mobile for the first time. Platforms will have less say in what they offer to players, opening the door to innovation in content, monetisation, and marketing. Consider how counterculture and adult content have long been denied a mobile audience.
A sea change on the horizon will shift the power relationship between platforms and developers.Will Luton
What Village Studios is doing
Village Studios was founded by a team of mobile game vets (me, Cyril Barrow and Tak Fung) We’ve all done stints at the likes of Rovio, EA and Zynga and know the pain of growing games. Over the last year, we’ve been talking with publishers and have seen their struggles and upcoming opportunities, so we decided to pivot our product to build tools that will set them up for success in the next decade.
Playken is a suite of portfolio management tools for game publishers that revolves around a portfolio currency (think Zynga Bucks or Scopely Coins), where we offer incentivised cross promotion, off-portal billing and even custom app stores.
Yesterday’s prices are not today’s prices. This makes tomorrow a scary place to be a mobile publisher. And some won’t make it there. But those who do, as always, will be the ones who see that there is a shift, innovate, experiment and grow.
A sea change on the horizon will shift the power relationship between platforms and developers. The extent of this is ultimately unknown. But it will undoubtedly become a crucial part of the mobile game story in the next decade.
Edited by Paige Cook