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In Q4 of 2013, Google Play games revenue grew 4X and iOS games revenue grew 2X year over year. The mobile games industry appears to be booming, but only a small percentage of app developers dominate a large piece of the pie. As part of an investigation into what separates smaller, less lucrative developers from the big players in the app world, our friends over at VentureBeat recently conducted a study of 176 global game developers. Among them, they have launched nearly 1,100 games that have been downloaded over 300 million times, accruing more than $600 million each year.
Here are just a few of the key factors to success that VB Intel identified in its Mobile Games Monetization Report (get the full download here):
There’s obviously a large direct correlation between downloads and revenue, which supports our assertion that app install ads are an important part of an app developer’s arsenal. However, downloads alone won’t guarantee you success. A small percentage of report respondents claimed they had 2-4.9 million downloads, but an average monthly revenue of less than $10,000. This is a great argument for adding app engagement ads to the marketing mix.
The report also reflected a direct, positive correlation between the number of monetization models a developer was willing to try in combination, and the amount of revenue they saw as a result. Much in the same way that eCommerce marketers run campaign iterations, test out creative, and go with the strongest combination, a successful developer will try out different kinds of in-app advertisements to determine the best fit.
Far and away, the majority of top earning developers in the survey use freemium as a monetization model. With in-app purchases dominating the mobile ecosystem, the importance of high-value customer acquisition — targeting audiences who not only install, but purchase — becomes all the more important. Savvy developers will measure for desirable in-app behavior and optimize acquisition campaigns to attract similar gamer personas.
The iOS app store features nearly 1.2 million apps, sourced from 300,000+ publishers. Competition for users is fierce, and app abandonment is extremely high (once you get over the download hurdle, there’s a 25% likelihood that your app will be used once and then never again). Taking cues from the types of in-app advertising your user base responds to is a great way to inform your app install and re-engagement ad campaigns on Facebook. If you find a trend of increased purchases, analyze why it’s successful: What kind of creative did you use in the game? What was the messaging? You’ve only got one shot at a first impression, so you’d better understand what motivates your audience.
Mobile game monetization is a tough nut to crack, but the rewards — literally millions of downloads and billions of dollars — make the struggle well worth the effort. With such a small group of truly successful developers, there’s plenty of room at the top. And with estimates from eMarketer placing the number of US mobile phone gamers at 191.3 million in 2017, the industry is certainly big enough to make way for future “whales.” The key is identifying the right mix of advertising and sticking with what works.