April 6th, 2023: Market Updates

#1: Street Fighter: Duel's Stunning U.S. Debut Masks A Potential Retention Issue

Street Fighter: Duel, published by Tencent and developed by Tencent subsidiary Topjoy, has enjoyed a promising start since launching for Western audiences last month. The title has quickly become the third best performer in the team-battler RPG segment, with $7.5 million in revenue in the U.S. in its first month due to a record 10.9 million downloads. This early success raises two questions: why is Street Fighter: Duel such a hit, and can it maintain its performance in the long run?

A Primer On Street Fighter: Duel

As we covered in one of our March updates, Street Fighter: Duel was initially released in China in 2020, later in Hong Kong and Taiwan in 2021, and then reworked and launched in partnership with the gaming arm of Sony-owned anime streaming Crunchyroll for the Western market in late February 2023.

The game departs from the original action-based real-time combat of the original fighting franchise and instead features an auto-battler mechanic. The game introduces a unique combo feature as well in which fighter combos change depending on their sequence in the lineup. Additionally, limited-time events keep the gameplay fresh and engaging. Despite the shift to an auto-battler format, Street Fighter: Duel manages to retain part of the franchise's essence through polished UI, authentic fight animations, and excellent sound design.

Factors Contributing to Street Fighter: Duel's Early Success

Street Fighter: Duel has garnered an explosive number of downloads despite operating in a highly competitive market. The table below shows a comparison between the game and subgenre leaders for the month of March 2023 in the U.S. Duel’s downloads for this month rival those of some of the top revenue-generating apps over the course of their entire lifetime.

Around half of those downloads came from organic sources, as you can see below:

While it is reasonable to expect a popular IP like Street Fighter to generate a high number of organic downloads, the game's launch timing may have also played a role in its success. Street Fighter 6 was announced last year and creator Capcom has been continuously advertising the new entry through regular teaser videos featuring in-game characters.

Half of Street Fighter: Duel's downloads, however, come from paid advertisement, indicating a significant investment in user acquisition (UA). The team battle subgenre is notorious for having sky-high costs per install (CPIs). To reduce the expenses of acquiring users, Tencent likely took advantage of the Street Fighter IP and its overlap with the fighting subgenre, which generally has lower CPIs. However, even with these measures in place, the game still required a colossal investment from Tencent's coffers to reach its impressive first-month numbers.

Despite these efforts, Tencent's UA strategy for Street Fighter: Duel has hit a rough patch. The company has completely paused its growth efforts and as such the game's hype has dwindled, resulting in a decline in downloads. The situation looks grim for Street Fighter: Duel, which can no longer rely on a high number of downloads to increase revenue. As we'll discuss in the next below, the game's long-term retention prospects following this initial launch boom may also be at risk.

Challenges & Uncertainties for Long-term Success

Let’s walk through the current challenges facing Street Fighter: Duel going forward and the uncertainties casting doubt on its long-term success.

Compatibility of Street Fighter IP with team battle games

Street Fighter: Duel's main strength comes from the popularity of its legendary IP. The core of the franchise has always been its action-based fighting gameplay. But players typically don't establish an emotional connection with some of the characters in the way they might with more narrative-focused games, and the franchise’s often peripheral storylines have not been a significant factor in the success of the franchise. Those factors make it hard to carry the Street Fighter IP to other genres outside of the fighting game genre.

Street Fighter: Duel features a wide variety of elements that capture part of the essence of Street Fighter’s core fighting titles. However, hardcore fans may find themselves disappointed that the game's core mechanic breaks from that tradition by relying on auto-battler mechanics.

Additionally, the game's unique combos bring a slight differentiation from others in the market, but it may not be enough to capture RPG Team-Battle fans. The RPG Team-Battle market is extremely competitive and there are plenty of other games out there with more engaging storylines or more relevant IPs that are a better fit for the genre.

Is low performance in the Chinese market a bad sign for the West?

While it's not necessarily working against the game, Street Fighter: Duel's performance in the Chinese market could be seen as a potential indicator of what could happen to the title in the West. Although the game saw some solid success following its initial launch, that success was short-lived, and Duel now generates almost no revenue in the China market and its RPD at $17 is lower than all other domestic competitors there.

Unfortunately, there is no available data on the game's retention rate during its 2020 launch, but signs from Taiwan and Hong Kong suggest the game has struggled to keep users engaged over the short, mid, and long-term.

It's worth noting, however, that the specifics of the Chinese launch may have contributed to these struggles and may not be as relevant to the Western market. For instance, the Street Fighter IP is not as popular in China as it is in the West, while The King of Fighters is the most popular franchise among fighting game enthusiasts in China. Around the same time as Street Fighter: Duel, Alibaba also released a team battle game with a more culturally relevant and popular IP, Three Kingdoms Fantasy Land, which has attracted a much larger audience.

Key Takeaways

All in all, Street Fighter: Duel made a strong initial impact in the Western market, securing a place as the third-best performer in the RPG Team-Battler segment. Its success was due to its highly recognizable IP, a well-timed launch, and Tencent’s significant UA investment. However, the game's long-term prospects remain uncertain. Downloads have fallen sharply, and Tencent appears to have abandoned its growth strategy.

There are also doubts about the compatibility of the Street Fighter IP with auto battler mechanics, which may limit the game's appeal to longtime fans of the franchise. Street Fighter: Duel's poor performance in the Chinese market adds another layer of uncertainty to the game’s future prospects in the West. The highly competitive RPG Team-Battle market presents a daunting challenge, and Tencent and Crunchyroll have their work cut out for them to overcome these obstacles and establish a sustainable player base.

Game Launch Radar

#1: Chrome Valley Customs

Publisher: Space Ape Games
State: Open Beta
Territories: Canada, Philippines
Classification: Puzzle | Match-3
Quick thoughts:
- Chrome Valley Customs is a new puzzle and decoration title developed by Space Ape Games:
  - The core gameplay consists of traditional match-3 mechanics with reskinned pieces and traps to resemble the theme of the game. The game includes the standard power-ups and boosters of the Match-3 genre.
  - The meta is heavily inspired by AppLovin's Project Makeover. Coins earned in the match-3 core game are used to complete renovation tasks in the meta, all of which are related to a specific makeover project. What differentiates Chrome Valley Customs, though, is that the projects are car renovations, similar to MTV's TV show "Pimp my Ride."
  - The game is still in its early stages when it comes to features and live-ops and currently only features leaderboards, which is understandable given that it has only been in soft launch for a few weeks.
  - You can watch a video of the gameplay here.
- Puzzle is not a segment Space Ape Games is familiar or comfortable with, and Match-3 is an extremely competitive subgenre, both of which are working against Space Ape in this respect. Nevertheless, the Match-3 and Decorate formula is already proven, and it won't be hard to recruit experts to help with scaling and operating the game.
- Furthermore, although Chroma Valley Customs doesn't bring much innovation to the market here, the game’s "Pimp my Ride" theme caters to the more male demographic that Space Ape is more familiar with.

#2: Avatar Saga

Publisher: THHMobi
State: Open Beta
Territories: Korea, China, Hong Kong, Macau, Taiwan, U.S., Canada, Germany, France, U.K.
Classification: RPG | MMORPG
Quick thoughts:
- Avatar Saga, developed by TTHMobi, is a relaunched version of the popular MMORPG game Yong Heroes with a slight Avatar: The Last Airbender reskin:
  - Players can choose from five distinct character classes as they explore an open-world map, completing quests, engaging in battles, leveling up, and acquiring new equipment.
  - Although the game offers action-packed gameplay, it also provides an Idle mode for players to progress through quests and battles.
  - Avatar Saga also incorporates a range of social features, allowing players to interact on the map, join guilds, and establish various relationships that unlock unique benefits, such as marriage and mentoring.
  - You can watch a video of the gameplay here.
- TTHMobi's decision to revive Yong Heroes, one of its most successful titles, with a powerful IP is understandable.
  - However, there are only minor visual differences between Avatar Saga and Yong Heroes, as seen in the gameplay video here.
  - Comparing both videos reveals that the games share similar themes, animations, and art styles, making it unclear how the Avatar IP has enhanced the original game.
  - Additionally, while Yong Heroes' graphics, animations, and themes were considered high-quality upon its release in 2019, they may appear somewhat outdated now.

Other Game Announcements

Roblox will hide ads for users 13 and under (Link)
Clash Royale faces backlash following latest update (Link)
Dragonheir: Silent Gods announces collaboration with Wizards of the Coast Dungeons & Dragons (Link)
My.Games’ Left to Survive hits 60 million players worldwide (Link)
Civilization: Reign of Power to shut down its services on 8th June 2023 (Link)
Harry Potter Magic Awakened enters early access on Android in selected regions (Link)
NetEase’s Hyper Front to shut down its services on April 10, 2023 (Link)
Dead by Daylight Mobile has been removed from the Google Play Store and App Store in India (Link)
Merge Mansion hosts special event at the Paramour Estate to celebrate its milestone update (Link)
Surprising Fans, WB's Smash Bros.-Like Shutters Until 2024 With No Refunds. (Link)

Company Announcements

East Side Games hits back at Truly Social with counterclaims and cloning accusations (Link)
Huuuge saw a 57.3% year-on-year increase in net profit in 2022 (Link)
NetDragon announces 2022 full-year financial results (Link)
NetEase Games enters the world of animation with Anici Anime (Link)
Ten Square reports $116 million in revenue in 2022 (Link)
Mag Interactive's Q2 strategy pays off, delivering highest ever revenue (Link)
EA restructuring, laying off 6% of workforce (Link)
East Side Games financials sees record revenue for 2022 (Link)
Zynga India spearheads tech meetup for women in games (Link)
Ubisoft clarify the use of AI-script writing Ghostwriter (Link)

Ecosystem Announcements

Australia proposes labeling games with loot boxes M for 15 and over (Link)
Mobile game spend up almost 30% compared to pre-pandemic levels (Link)
Mobile Global Esports collaborates on AI-driven data analysis (Link)
Turkish game investment fund WePlay Ventures expands to Europe and Asia (Link)
81% of adults in Turkey play mobile games (Link)
Saudi Arabia looking to invest $38bn in games (Link)
Activision Blizzard sued by US government over esports salaries (Link)
Wings Elevate Game Accelerator returns in 2023 (Link)
Mobile game market stabilizes above pre-pandemic levels (Link)

Content Worth Consuming

Increase Player Engagement and Generate More Revenue with Hybridcasual (Sensor Tower): “In partnership with Homa, the world’s leading platform for creating and publishing mobile games, we leveraged Homa Lab data to look into the influence of the Hybridcasual genre in today's mobile gaming market. Gain an understanding of the Hybridcasual landscape, the success of Hybridcasual titles, and the best practices for developing Hybridcasual games that can help create new gameplay experiences for your audience.” (Link)
Ep. 110: Running LiveOps Without Interfering with the Core Game (Mastering Retention): “In this episode of the Mastering Retention podcast, Dafna shares how LiveOps teams focus on events and promotions to engage players, drive retention, and monetize games. Successful LiveOps events are those that balance the core gameplay loop of a game while introducing new features, challenges, and rewards to keep players interested. She also highlights the importance of understanding player behavior, segmentation, and time zones in planning LiveOps events, and the need to balance creativity with return on investment.” (Link)
The hyper-casual landscape in 2023: trends and insights for developers (Azur Games): “In March, Azur Games and Google Ads held a joint meetup focused on the development and monetization of hyper-casual games. Although it was a closed event, we decided to share the content and insights from the event. To start things off, we’ll first take a look at the situation with competition in general, and then move on to individual genres that are popular with players and what the developers are releasing in response to that.” (Link)
User motivations: Where game design and monetization meet (ironSource): “In this LevelUp episode, Melissa sits down with Anna Popereko, Game Design Consultant at ironSource from Unity. They talk about the importance of user motivations, what even are they, why they should be a part of your monetization strategy, and more.” (Link)
The design secrets powering Habby’s hit machine (Mobilegamer.biz): “Habby is one of the hottest labels in mobile games right now. And after scoring huge success with Archero and Survivor.io, its latest game looks like it could be just as impactful. Sssnaker has that same top-down viewpoint and all-action gameplay. Having already remixed the shooter and crowd survival genres in its own Habby house style, it’s Snake’s turn for a mobile makeover.” (Link)
Case study: Boosting revenue in Solitaire Grand Harvest (Pocket Gamer): “Last year was a rough year for mobile, nowhere near fatal, but it still saw some serious changes for the industry. So how did some companies overcome these challenges to boost revenue in some of their biggest games? In the first of a series we're going to take a closer look at games that have done just that? Beating trends and innovating with new audiences in order to succeed in the ever changing mobile landscape.” (Link)
Episode 44: Locked and Loaded: An Expert Review of the Mobile Shooter Market (Mobile Gamedev Playbook): “Is there room for others to succeed in a market dominated by so few companies? Join us as we explore the current state of the mobile shooter market, the top games dominating the market, their market shares, and the different types of shooters available” (Link)