Pollen VC: "User acquisition costs remain stubbornly high"

Meet the mobile games and Web3 experts at Pocket Gamer Connects Toronto on July 6-7 2022

Pollen VC: "User acquisition costs remain stubbornly high"

Pocket Gamer Connects – Europe's leading mobile games industry conference – returns to North America as we bring the conference series to Toronto, Canada! We're bringing an array of incredible speakers, industry experts, and unparalled networking opportunities to the Sheraton Centre on July 6-7 2022.

You can check out our speaker lineup, but to give you a teaser for what you can look forward to, we spoke with our speakers to share a little of what they'll be speaking on, and their thoughts of the mobile games industry.

Martin Macmillan, CEO of Pollen VC, is a PGC stalwart and will be discussing a framework for valuing mobile gaming studios. Specifically, how to create a defensible valuation for a gaming studio based on solid principles as the markets tighten. What’s the most common mistake you see being made in the games sector?

Martin Macmillan: Studios not being able to effectively model user acquisition scenarios. Very often studios have some early success with a golden cohort in soft launch and expect to be able to extrapolate, but all too often that's not the case. It's very easy to lose money in mobile gaming by being too optimistic in UA modelling.

What is the single biggest challenge facing the mobile games industry today?

User acquisitions costs remain stubbornly high, preventing many good games from being able to monetize and scale up. The algorithms of the leading ad networks seem to be very good at understanding user LTVs and raising prices in the 'auctions' so they take most of the money off the table, making it hard for all but the best monetising games to succeed.

What key trend should we be paying attention to in the next 12 months?

Publishers are becoming acquirers. Founders have figured out that self-publishing is essential if they are ever to achieve and exit, so publishers are having to evolve their models and looking to acquire the studio and all it's associated cashflows as opposed to shorter term revenue share agreements. This is good for studios as it creates more acquisition appetite for great studios.

What’s the best piece of advice you’ve ever received that you can pass on to others?

Something is worth what someone is prepared to pay for it. Founders should always remember this in good times and in bad. In a frothy market, valuations can get bid up, and in a down market the reverse happens. There is no point trying to argue the toss on where transactions were priced in the past. What matters is the present and who is prepared to pay what in order to get a financing or an exit done.

If you could give other mobile games companies one piece of advice, what would it be?

Understand capital efficiency and how you can use it to your advantage in scaling your studios. Studio founders should fund UA using debt as much as possible, rather than deploy their equity capital and needlessly diluting themselves. Otherwise you're giving VCs an equity return for taking debt risk. D'oh!


There is still time to secure your place at Pocket Gamer Connects Toronto to connect with the leading figureheads at the mobile games industry's leading international conference through this link.