In-app purchases decline but ad revenues is up 26.7% despite falling player retention

Unity’s 2024 Gaming Report finds retention rates and IAPs are down, but there's still plenty of room to make money

In-app purchases decline but ad revenues is up 26.7% despite falling player retention

Unity’s 2024 Gaming Report is out now, shedding light on the state of play for Unity's customers and users and the broader world of games as a whole.

They've surveyed 300 game development studios and found that 52% of them are "consistently delivering new content to attract and retain players" in response to economic uncertainties with in-app purchases on the decline.

With the games industry’s revenue having fallen since a 2021 peak, gamers understandably have less disposable income to spend on in-app purchases in times of economic hardship, and Unity has found that studios are increasingly implementing in-app ads to counterbalance this reduction in spending.

Ads all around

Players "churn out quickly" according to Unity’s report, with mobile gamers’ day one retention having fallen by 1% and day seven retention by 0.1% in 2023. While this is a small drop, importantly the number of paying players has fallen too, down by 0.15% since 2021.

These marginal impacts ultimately contributed towards a 13% fall in in-app purchase ARPDAU in 2023.

Despite a decline in spending and difficulty retaining new players, daily average users on mobile increased by 4.1% in 2023 and this average continues to grow, meaning a greater number of eyes to present with ads. ARPDAU from in-app advertising is therefore up too, "seeing major growth" at a 26.7% year-on-year incline.

Unity found that the success of ads varies by the game genre they appear in, with simulation games seeing the biggest increase in in-app ad revenue. Up 41% year-on-year, simulation takes the lead over casual’s 33% and the puzzle genre’s 31%.

These three genres are also among the most affected by an in-app purchase decline, simulation games having taken the biggest hit in 2023 with a year-on-year fall of over 40%.

RPGs and shooters were the only genres in the study to have generated less from ads last year compared to 2022, down by roughly 2% each. Notably, they were also the only genres to see an increase in in-app purchase revenue, up by approximately the same amount.

Unity’s full report explores which ad types show the highest engagement, as well as the types of games most developers are prioritising.

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