Eric Kress of Deconstrctor of Fun offered a sobering insight into the immediate future of the mobile games industry in the keynote opener of the Google Istanbul Games Summit today.
The principal of Gossamer Consulter and chief outrage officer of Deconstructor of Fun offered what he described as a pragmatic vision of the industry, or the western industry at least. Focusing on the US market data (which represents 60 to 70% of western downloads and removes international 'noise' from downloads'), he outlined several key topics: "Platform Privacy - the biggest thing that's happening in gaming", "Gaming Legislation (particularly the 'lunatics in the EU)" and "Macro Economic forces and the Appstore vs Google Play debate (and whether we can negotiate this 30% down)."
His main focus was platform privacy and what he described as 'the Apple Mobile Global Games Recession". After offering a quick history of the IDFA and UA targeting mechanics that the industy has been building around for the last decade, Kress went on to present some data-backed graphs that show the real and ongoing impact of IDFA deprecation - a reduction in both quality and quanity of downloads, "Downloads continue to deteriorate and this is what scares me, as revenue is obviously following".
He went on to dispell explanations that this was a pure post-Covid correction, "If this was just a Covid bum, we'd have seen a reversion back to mean. We were growing at 25% a clip and were down 10% last year, that's a 35% delta to the year before. It's bad, it's really bad."
He stressed that no genre was really immune from trend, with strategy, RPG, Match-3 and casino (that represent about 70% of the market overall) were all "down double digits", and that "shooters got creamed, down 33%", and then went on to show arguably his most chilling chart illustrating ultiamte yields (effectively LTV revenues):
"Overall if downloads go down, the growth in the yields should go up as you have a lower denominator. But what we're seeing in the market place is that the growth of yields continues to decline and that means not only are we getting lower downloads, we're getting lower quality of downloads… This is scary as this impacts everything going forwards."
Kress went on to explain that this means we're effectively replacing existing cohorts (users) with new cohorts who are less valuable than the ones before and therefore this will impact revenue going forward. "Until this changes, we're going to see continued declines in the market."
When asked how long he thought this would last Kress said that he diidn't want to scare everyone, but that "This year and two more years, we're going to see declines in the western market of five to 10%".
Kress then proceeded to take aim at the route causes… Taking a bite out of Apple!