Today’s Landscape: Publishing-Perfect 1

• “2023 is shaping up to be a year where big companies and publishers lead the charge, and this trend will likely continue in 2024.”

Last year, the mobile games market had its first-ever decline as player behaviors changed due to life returning to a resemblance of normality after the pandemic. Other factors within the industry, such as rising costs, a more demanding user acquisition process, and various other industry changes, have made finding success and profits a far higher order.

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I mentioned in my UA series that launching a game has become significantly more challenging this year, especially on iOS after the IDFA deprecation. If you take a look at the top 100 games in the US, you’ll notice a few key trends:

“I’ve had discussions with approximately 70-80 C-level executives from studios of varying sizes and locations, and there is genuine concern about the survival of their businesses.”

1. The familiar classics still maintain their positions; these are the evergreen games you’ve likely encountered and enjoyed over the years.
2. Many of the studio names remain consistent, signifying a reduction in the number of successful companies (including multiple appearances by the same publishers throughout the charts).
3. Hypercasual games are still present but no longer as dominant as they were two years ago. Games are returning to being more intricate, with deeper meta, longer LTV, and extended shelf lives.
4. Fewer new games are breaking into the top 20, and even fewer new studios are succeeding. Unlike two years ago, it’s mainly the larger players dominating the market.

There are exceptions to these observations, but these are the overarching trends I’ve been witnessing. Over the past six weeks, I’ve had discussions with approximately 70-80 C-level executives from studios of varying sizes and locations, and there is genuine concern about the survival of their businesses.

The reasons for this concern are evident:

• Game launches have become more challenging, providing fewer opportunities for success and profit.
• Operating costs have significantly risen due to various macroeconomic factors affecting the world.
• User Acquisition (UA) has become a more refined art, with companies that excel in this field having large teams of experts and the resources to test more aggressively across various channels.
• Marketability is no longer the sole determinant of success. Two years ago, a game with a 40-50 IPM would ensure a top chart position and profitability, but that’s no longer the case.
• VCs are not investing in gaming as aggressively as they once did.

“Small studios that self-publish will continue to face challenges, except for the fortunate few who achieve exceptional success.”

From a publishing perspective, I can share some insights:

• We are testing fewer games now, focusing more on those we believe can become tier 1 launches generating $5-10 million or more in lifetime revenue.
• We are dedicating 3-4 times more effort to working closely with studios we believe have a chance at success.
• On average, we are investing 25 times more in user acquisition per title, prioritising an understanding of monetisation results over marketability (with retention being a starting point for all tests).

In summary, 2023 is shaping up to be a year where big companies and publishers lead the charge, and this trend will likely continue in 2024. Small studios that self-publish will continue to face challenges, except for the fortunate few who achieve exceptional success. Many companies that previously found success on their own are likely to form closer partnerships with publishers, leading to a market dominated by fewer and more established names.

The increased difficulty in finding successful games

Below are the three main reasons I see for these increased difficulties:

1. Evolution of the Market: Over the years, the gaming market has evolved. It has shifted from uber-simplistic core mechanics and a continuous stream of quick, bite-sized, content-based games to a place where users demand more from their gaming experiences.
2. Extended Development Timelines: Developing games now takes considerably more time. Gone are the days of creating a new prototype weekly or even a few each month. Teams are now investing more time in research, ideation, and game development, resulting in fewer opportunities.
3. Challenges in UA: As reiterated numerous times in recent weeks, UA has become significantly more challenging. The primary challenge lies in conducting effective UA at scale while ensuring profitability. Improving LTV and refining monetisation strategies are crucial for marketing teams to achieve success.

One of the most frustrating aspects of this changing landscape is the shift in what defines success.

Let me share an example from Kwalee:

“Make sure that you keep your head high and find a publisher who sees the long-term vision with you.”

We recently worked with a studio for about six weeks. While testing one of their older titles, which was less engaging, we obtained unfavourable results. However, they had a new game that was initially underdeveloped but now had a proper MVP with 60 minutes of gameplay, which we wanted to test. We spent hours advising them on monetisation strategies, the placement of RVs, interstitial frequency, shop construction, and the use of soft and hard currency, etc.

The initial test results seemed promising to me, with an impressive 40+ IPM and a pLTV of 0.55 cents. I was excited about these results, and during the hyper-casual gaming boom, this game might have ranked in the top five charts globally.

However, the current gaming landscape is markedly different, and what signifies success has changed. Upon reviewing the data from our testing campaign with our marketing team, I realised that our average CPI exceeded 0.80 cents, even with an IPM of 40. This meant that to achieve profitability, we needed to reach target eCPM rates of $32 or even more, likely closer to $40 in the US/iOS market.

This revelation indicated that the game, which I initially believed would be a hit, was far from ready for a profitable launch. This was just the first round of tests. At Kwalee, we are committed to thorough efforts and will continue to collaborate with this developer in the coming weeks to enhance all metrics. It won’t be a quick, easy, or inexpensive process.

My best advice at this moment is not to lose hope. As a developer, it’s easy to feel disheartened when the path to success seems elusive. It’s even more challenging when you achieve what you believe are great metrics, only to discover that they fall short of ensuring success; make sure that you keep your head high and find a publisher who sees the long-term vision with you.