By adaptive - November 6th, 2017

Even though the mobile games market is showing massive growth, carving out a piece of the pie is not so easy. In an oversaturated market for free-to-play games, it’s hard to become the next big Clash of Clans. But as Hans Klis reports, creating a good monetization strategy and marketing plan is the key to success.

Last year mobile games revenue reached $40 billion, surpassing PC and console games. We’ve come a long way from playing Snake on a clunky cell phone. Huge international hits such as Pokémon Go, Monster Strike, Clash Royale and Honor of Kings are currently capable of driving millions of dollars in revenue from in-app purchases, ads and partnerships. Analytics firm App Annie predicts that consumers worldwide will spend $105 billion on mobile games in 2021.

Most games in the app stores utilize a freemium, or free-to-play (F2P), monetization strategy. Users play the game for free to get familiar with its story, interface and, developers hope, get hooked.

By imposing limits in game play, players are enticed to do in-app purchases to attain levels or weapons a little bit faster. It’s an effective model for monetizing a game notes Nir Eyal, author of

“Hooked: How to Build Habit-Forming Products.” He says, “You put a lot of time and effort into a free game. You become psychologically invested in it.”

Once you start purchasing in-game items or virtual currency, that investment increases tenfold. “Every purchase becomes an additional investment atop of the already major investment of time and effort.” By spending money inside the game, the experience gets deeper.

The problem is the F2Pmonetization strategy has created an oversaturated market offreemobile games in app stores. Every week thousands of new games pop up vying for the attention of weary users. Most F2P games are shameless attempts in trying to have gamers part with their money.

Just before game developer DeNa Games announced its shuttering of their Marvel: War of Heroes card game in the spring of 2016 it promoted their in-app purchases with more vigor than before. 

That did not go over well with players including Timothy Heinrich from Mount Airy, Maryland. He spent about a thousand dollars over the lifetime of the game. “I will not spend another dime on another game app,” he emailed at the time.

Acquired skills, alliance relations and investments in the digital trading cards with superheroes on them became worthless overnight. That all disappeared on May 31, 2016 without a trace from phones and tablets.

The F2P-model wasn’t meant to be a strategy for get rich quick schemes, Nexon CEO Owen Mahoney has told media including VentureBeat.

The company is responsible for popular games including DomiNations, Titanfall: Frontline and Dynasty Warriors: Unleashed, and Nexon raked in more than a billion dollars in revenue in the first half of 2017, according to financial reports.

It’s easy to see why game developers try to push paying customers to pay more. Only 5 percent of freemium players actually make an in-app purchase in the lifetime of a game.

But dedicated users aren’t thinking about payments or venture capital investors in the publisher. “They just want a fun game”, former senior director of Marketing at Canadian game publisher Magmic and mobile strategist Jonathan L. Simon explained in an interview with Open Mobile Media. “For exampleorganizing tournaments in-game you can try to get your users to come back and ask more money. You might improve the percentage of gamers who’re willing to do an in-app purchase. But you’ll probably do worse than five percent paying users.”

Simon suggests mobile game developers trying out and using different kinds of monetization strategies; not just in-app purchases but also rewarded video ads, paid subscriptions thatoffer an ad-free experience, banners or native ads.

Ads add a separate stream of revenue besides the F2P-model.  “But you need to test out what kind of ad-strategy fits your users,” Simon stresses.

Analytics help to identify people who will make in-app purchases. You should not bother them with advertising, like large, screen-filling videos or banners that totally disrupts the gaming experience.

Instead, introducing an option to view video ads that reward players with more in-game currency is useful when there’s an identifiable large audience that likes to play for long periods of time without in-app purchases.

Simon stresses that the most important thing developers need to invest in--aside from a great game, of course--is viral marketing. That’s because acquiring new users for mobile games, or any app, costs a lot of cash using traditional marketing.

The cost of attracting a new player to an iOS game in the United States or the United Kingdom averages around $2.40 and $1.83, respectively, according to mobile game discovery and monetization platform Chartboost.

Predictably, it’s much less for Android ($1.67 in US and $1.47 in the UK). That’s because iOS-users represent a premium segment in the mobile market, mobile advertising platform Clickky writes in a report: "The average selling price for an iPhone has not been changing over the past several years, whereas the price for Android phones has halved. It means that iPhone remains a premium segment phone, whose users tend to spend twice as much on applications as Android users. Moreover, iPhone users tend to convert better into paying customers, making in-app purchases and upgrading applications to premium."

Simon says, “Most companies put all this effort in developing a game but not in marketing." He adds, “They should really look at how the music industry has adopted virality to get artists sold. The answer is making a game so sticky that users think it’s worth sharing with their friends.”

He currently sees developers investing too much money and effort in technology to become the next Clash of Clans, when he asserts, “You’re not going to be the next Clash of Clans.”

Nic Beraudo, App Annie managing director for Europe, the Middle East and Africa, voices a similar view: “App stores are more crowded than ever and publishers are faced by increasing competition. The app economy is still a relatively new frontier, and lots of companies are still finding their feet. If you can successfully execute a good app marketing strategy, you can quickly overtake others that fail to strategize.”

Beraudo also sees virality as an important component of success, “Break-out games will continue to disrupt the gaming industry. In fact, as gaming continues to move further into the mainstream, the market may become even more responsive to social and viral trends”.

As a large-game company that has been around since 2002, Magmic, leverages its experience to form brand partnerships--a way to gain access to an audience that will most likely want to interact with a mobile game based on that brand, like card game Phase 10 or the Rubik’s Cube.

For an independent game developer and publisher like Los Angeles-based Superbitmachine, this is not yet an option. They’re currently beta-testing their original real-time multiplayer action shooter Armajet.

Founder Alexander Krivicich explains the game will have a F2P monetization model, “Launching a premium game brings with it some challenges. You limit your revenue to a one-time buy. Because we’re self-publishing we need to attract as many players as possible. Even when you ask just one dollar for your product, that’s a lot to ask players right out of the gate.” 

Armajet offers four minute battles in diverse arenas between two to eight players, integrating iOS and Android-players simultaneously.

The developers at Superbitmachine are old-school gamers who used to lug their monitors around going from one LAN-party to the next, Krivicich says nostalgically. 

Armajet promises to be a game that’s true to gamers. Even though it’s also aimed to bring in revenue. “A large part of our mission here is to restore consumer confidence in mobile F2P games,” he says. That’s why the development team is working hard to balance out the gameplay experience between users who will pay for new weapons or specialty items and the casual gamer who won’t spend a dime. “eSports players and new players must be able to compete fairly,”Krivicich says. Even though there’s no official launch date for Armajet yet, it’s already amassed a huge online following.

Combining monetization strategies based on user analytics and focusing on creating viral stickiness can make mobile games stand out in the app stores. But how will that be in the future? According to App Annie managing director Nic Beraudo that’s simple. You only need to look at last year’s biggest hit of the summer: Pokémon Go. 

“Pokémon Go is probably the biggest innovator we've seen recently," Beraudo notes, adding, "Niantic still utilizes successful micro transactions but they are also generating a lot of revenue through sponsored locations.”  Companies such as Starbucks and McDonald’s pay to attract both valuable Pokémon and players to their stores. 

“As AR and location-based gaming becomes more prevalent, we may see this monetization method continue to grow," Beraudo says. "For example, retail has already embraced geo-targeted advertising on mobile and we may see the same model replicated in gaming. As retailers build more detailed profiles of different games’ players, they’ll be able to more intelligently target consumers during game play on the go”.


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