The Evolution of Hybridcasual

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By Niek Tuerlings, Naavik Contributor & Lead Game Designer at Moonlit Games

In January 2019, a notorious article predicted that the then-booming hypercasual genre would eventually become unsustainable. More than a year later, Apple announced IDFA deprecation. The fallout has kept a few of us here at Naavik busy all the way through 2020 and 2021. The clearest way out, especially for the most established hypercasual companies, became hybridcasual. Now that the dust has settled — although Unity’s new pricing scheme could form a new challenge — there is more clarity around the strategies of the companies that chose this path; a perfect time to look at their best practices.

Firstly: What is hybridcasual? Homa Games defines hybridcasual games as “maintaining the simplicity of hypercasual games while including more sophisticated progression mechanics. This genre requires audiences to make time to play to improve long term user engagement.” While this definition covers part of it, we like to specify that the progression mechanics need to be added onto an arcade core. But even then the question remains: Can every arcade core serve as a base for a hybridcasual game? Does this definition of hybridcasual encompass everything we now know?

Arcade games – or games with instantly understandable core mechanics – obviously existed since long before hybridcasual or hypercasual. Games like Temple Run (2011), Hill Climb Racing (2012) and Subway Surfers (2012) are great examples as they started out differently and only later in their life cycles modernized their way to monetize, by pivoting toward an ad-driven model. Each of these three classics was downloaded 100M times or more in the last 12 months.

*Downloads comparison (last 12 months) between the three classics and hybridcasual hit Survivor.io. | Source: data.ai*

While these games likely earn a pretty penny through ads, they lack significant IAP revenue to be labeled hybrid. The IAP revenue comparison with arguably the biggest hybridcasual game of today — Survivor.io — looks very different. For example, Subway Surfers has seen 250M downloads and $9.8M in net IAP revenue over the last 12 months. In comparison, Survivor.io has seen 62M downloads and $276M in net IAP revenue over the same time period. These are not the same kinds of games, even though they speak to very similar audiences.

*Revenue comparison (last 12 months) between the three classics and Survivor.io. | Source: data.ai*

The three games mentioned above don’t have a meta that is deep enough to leverage best-practice IAP monetization as seen in casual (specifically Live Ops). Games must be built with truly free-to-play economies and metagames to be able to achieve this. On top of that, practically all hybridcasual hits have a power progression that is used as the main thread to build the meta progression onto. A hypercasual-esque marketing angle also needs to be found to reach the desired marketability, driven by hyper-accessibility.

Next, let’s dive deeper by dissecting some notable hybridcasual titles, including SayGames’ Dreamdale, Voodoo’s Mob Control and Collect ‘em All, Madbox’s Pocket Champs, Habby’s Survivor.ioand Homa’s Fight For America 3D and the upcoming Merge Army.

By doing so, we’ll answer the question: what are best practices in hybridcasual, which strategies are being used to develop them, and what prerequisites ought to be in place to build these games successfully?

to convert players into paying to be able to skip them, rather than watch them.

To learn more about SayGames’ approach to game design, Voodoo’s pivot to hybrid, Habby’s string of successes in it, and much more, read the full article.

Read the whole deep dive here

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Gaming Market Update: September 23rd – 29th

By Mario Stefanidis, CFA, Naavik Contributor

For the week ending September 29th, 2023: The average return for gaming companies tracked by Naavik with a market capitalization exceeding $500M was flat. The S&P 500 returned -0.7% and the Nasdaq-100 returned 0.1%. Full access to the Naavik Gaming Company universe is available here.

Year-to-date through the third quarter, the top performers globally were AppLovin (NASDAQ: APP, 279.5%), International Games System (TWO: 3293, 58.9%), and Rovio (HEL: Rovio, 53.8%). The bottom performers were Embracer Group (STO: EMBRAC-B, -53.7%), NCSoft (KRX: 036570, -50.3%), and Keywords Studios (LON: KWS, -43.2%). For more details on the performance of these companies, you can check out our podcast here.

Sea Limited (NYSE: SE) surged 22.2% after Indonesia, one of the company’s key markets, banned TikTok’s e-commerce operation effective immediately. The move is aimed at protecting smaller merchants and marketplaces from TikTok Shop’s growing influence, with the service already having 6M local sellers in the country. According to Reuters, the new regulation also requires ecommerce platforms in the country to set a minimum price of $100 for items purchased abroad, a prohibitively high price for many Indonesians. Sea’s online shopping unit Shopee stands to benefit substantially from these regulations, given Indonesia also prevents other social media platforms like Facebook and Instagram from operating marketplaces as well.

Embracer Group (STO: EMBRAC-B) fell -16.1% following the poorly received launch of Payday 3 and the apparent cancellation of the Star Wars: Knights of the Old Republic remake for PS5. Payday 3 is published and financially backed by Embracer’s Plaion subsidiary, and it had been anticipated for years. When the game launched on September 21st, it received mixed to negative reviews from gamers and critics alike due to server issues stemming from always-online matchmaking, the XP system, and perceived lack of innovation from the previous installment.

On September 28th, Star Wars fans noticed that the KOTOR remake trailer, released during the September 2021 PlayStation Showcase, was hidden from its official YouTube channel. Sony had also deleted almost every tweet related to the game as well. While nothing concrete has been announced, the move is troubling given it was one of Embracer-owned Saber Interactive’s most anticipated upcoming releases.

Notable Venture Financing Deals

Kyber Knight Capital, a newly founded venture capital firm, announced a $120M fund to invest in pre-seed and seed stage gaming and tech companies. Co-founders Sunny Dhillon and Linus Liang created Kyber Knight in January, leveraging their investor networks across digital media and entertainment. That includes figures like Alphabet Chairman John Hennessy and former eBay and HP CEO Meg Whitman. Other supporters are affiliated with companies like Dreamworks, MGM, Warner Bros, and Disney. The firm also has financial backing from Airbnb, PayPal, and Zynga founders. Kyber has made investments in 16 companies thus far, covering sectors from AI technology to manufacturing. The initial fund aims to invest in 40 to 50 companies.

Omada has raised $7.5M in seed funding to further its sports social prediction game. Users place non-real money bets on various sports events, similar to social casino games. This model, according to Omada's CEO Adrien Miniatti, differentiates it from conventional sports betting platforms. Omada boasts over a million monthly users worldwide, with 300K from France, where the company is headquartered. London-based Felix Capital took the lead in the funding round, with other notable participants including 20VC, Play Ventures, F4, and Motier Ventures. The recent funding was obtained to bolster Omada's global growth, especially in the U.S. To do this, Omada intends to tap into the NFL season's momentum with an ambassador program based around college sports.

Aug X Labs secured $3.1M in an oversubscribed seed funding round, aiming to revolutionize video creation with AI. This follows a $1M pre-seed round earlier this year. The funds will be channeled into expanding the team, enhancing its core technology, and furthering customer acquisition for its primary product Augie, which is slated to exit its beta phase later this year. The AI-powered platform transforms inputs, like scripts or recordings, into videos. It also includes high-quality licensed stock video footage to enhance user-created content. Augie can be accessed through any browser, and there’s a mobile version incoming.

Zakazane, a newly-formed game studio in Poland, raised $1M in a pre-seed investment round. Established in 2022, Warsaw-based Zakazane was co-founded by Jan Bartkowicz, known for his contributions to The Witcher 2 and Netflix show “Cyberpunk 2077: Edgerunners”. He is joined by experienced game animator Piotr Chomiak, and former 11 bit studios designer Radosław Gwarek. The team has expanded to 16 members, bringing on senior art and business development resources. Zakazane is focused on producing deep, mature-themed games with an emphasis on moral choices.

Creative UK has introduced Creative Growth Finance II, a new £35M investment fund. It aims to bolster the UK's creative industries (including gaming) with a goal of adding £50B in growth and creating an additional 1M creative jobs by 2030. The fund backed independent game developer Fallen Planet Studios in February with an investment of £500K. Fallen Planet specializes in VR games and experiences for Meta Quest, PSVR, PicoVR, and SteamVR.

Notable Strategic Investments

Supercell acquired a majority stake in Australian game developer Ultimate Studio. The studio was founded in 2018 by ex-EA veterans Tony Lay and Mark Zaloumis, following an initial investment from Supercell. Ultimate Studio has one game release, Trackmania-esque racing experience Hot Lap League, which it self-published in 2022 on mobile and Steam. The studio is dedicated to PC and console releases, and the majority stake acquisition by Supercell will mark a shift in the Finnish company’s strategy from mobile-only to mobile-first. According to their website, Ultimate’s team is comprised of 16 individuals.

Timur Haussila, special projects head at Supercell, stated a desire to “explore opportunities beyond mobile,” with Ultimate marking “one of the first steps in that chapter.” It may also move Supercell away from their exclusively liveops strategy, where the majority of mobile games they develop shutter a year or two later due to revenue not meeting expectations. Of the 17 games created by Supercell, only six remain active, with three of these (Hay Day, Clash of Clans, Boom Beach) having come out before 2015.