March 9th, 2023: Market Updates

Reading Time: 8 minutes

#1: Liftoff‘s 2023 Mobile Ad Report

Mobile growth accelerator Liftoff released a new report on the state of mobile advertising, using data from 240 million installs in 2022. Let’s look at the main takeaways from the report, give some more context on the info presented, and compare the results from the previous year’s report.

For almost all types of creative, iOS CPIs were up, while Android remained a mixed bag.

As 2022 was the first full year under Apple’s new ATT privacy rules, this result for iOS was expected. Still, CPI growth for interstitial and banner ads was surprisingly high, and we believe that lower installs in the hypercasual market, particularly on iOS, may have contributed to this. The hypercasual market is the largest provider of interstitial and banner ad impressions, and the impact on active users in the subgenre may have an impact on prices.

The Android market, on the other hand, was more unpredictable. CPI for playable and video ads decreased considerably. In contrast, CPI for interstitial ads increased by 205%.

We will dig into Interstitial ads later, but the results seen in playable and video ads, which are two of the most popular ad types apart from interstitial, could result in a shift to cheaper CPI-optimized campaigns on mobile in light of the ongoing macroeconomic environment and continued ATT aftereffects.

Overall, the price-per-install for iOS market makes it extremely difficult for developers to acquire users across all creatives, and some companies are already shifting part of their UA budget to Android as a result. So far, as developers are operating at a lower budget than normal, this shift has not impacted CPIs on the Android platform. But if demand for Android users increases, then prices will follow. With GAID being depreciated in 2024, Android’s CPIs are likely to suffer even further.

Playable ads have the lowest CPIs. However, they also present the worst Day 7 return on ad spend (D7 ROAS). Similar to 2021, in 2022, playable ads still hold the lowest CPI among game creatives, at $1.31.

Playable ads usually have a higher click conversion than other creatives. According to an Unity’s 2022 monetization report, this type of ad has a three-times-higher CTR compared to other creatives. Considering the interactive nature of those ads and that developers rely on presenting extremely engaging mechanics in those creatives, those numbers are expected. Nevertheless, they still present the lowest D7 ROAS, as you can see in the chart below.

One possible culprit for this is that playable ads are still primarily present in casual and hypercasual games, which have a lower average CPI than midcore titles. Additionally, these games, especially hypercasual, usually optimize for CPI campaigns instead of player-value ones, which would lead to a lower ROAS.

Another explanation is that developers still rely on fake or misleading ads, featuring engaging gameplay designed to go viral and boost clickthrough, but that doesn’t end up being a true representation of the final product. This can affect retention, among other factors. While some games like Royal Match and Blackout Bingo have managed to stay true to their actual gameplay and still maintain strong ad performance, it remains a more significant challenge for more complex genres in the strategy genre that may, out of necessity or ease, use unrepresentative playable ads as part of their UA approach. Nonetheless, more games are trending towards featuring actual gameplay in ads, and it will be interesting to see whether those retain the same CTR while optimizing for higher-value users.

Interstitial Ads CPIs tripled between 2021 and 2022, and this creative type is now the most expensive. Interstitial ad CPIs jumped considerably in 2022, and they are now the most expensive creative. The increase in cost-per-installs can be seen in both platforms, with iOS prices going up 153% and Android prices going up 205%.

This rise on Android, which wasn’t reflected in other creative types, is due to the new Google Play rules on interstitial ads announced in early August, which we covered in one of our Market Updates. The new policies, which restrict unexpected interstitial ads and require interstitial video ads to be skippable after 15 seconds, limit the number of placements available for developers, affecting CTR and CPI prices as a result.

Although Apple has yet to announce new restrictions on interstitial ads in the platform, we should expect the company to address this at some point in the future as it takes a more active role in policing advertising on its platform.

Overall, the latest Liftoff report indicates that the situation for gaming mobile user acquisition is far from ideal. The market's higher CPIs make it more difficult for smaller developers to compete. It also establishes a higher threshold for larger studios to invest in and scale new games, as seen in the case of Playtika.

Nevertheless, as the market adapts to the new conditions, developers are already pushing for new acquisition channels, better strategies to acquire organic users, new tools to target users for acquisition, and new best practices for playable ad creatives. These in the long run should help lower the demand for impressions, raise the CTR for creatives, and ultimately lower CPI.

Game Launch Radar

#1: Angry Birds Kingdom

Publisher: Rovio
State: Open Beta
Territories: Philippines, U.S.
Classification: RPG - Action RPG
Quick thoughts:
- Rovio’s newest RPG title, Angry Birds Kingdom, combines the core gameplay from Archero paired with the meta game from Cookie Run Kingdom and the well-known Angry Birds IP:
  - Similar to Archero and the new Tomb Raider Reloaded, Angry Birds Kingdom features roguelike action-RPG gameplay. The main difference between Rovio’s new game and the above mentioned titles is the Angry Birds Kingdom requires players battle with a team of characters, helping advertise Rovio’s IP and leaving more room for gacha monetization.
  - Most of the gameplay is autobattle with players being allowed some few interactions like dragging characters on the board. A cameo from the original series, the giant slingshot, is also available to fling characters in standard Angry Birds fashion.
  - The meta takes inspiration from Cookie Run Kingdom, but with a lighter touch. In the castle feature, players build infrastructure and produce resources, feeding the game’s quest system.
  - Angry Bird Kingdom is overall a very casual RPG, and because it presents rewarded video placements, including the first session, we can assume advertising is the frontline of the app’s monetization model.
  - You can watch a gameplay video here.
- Angry Birds Kingdom brings arcade elements that might resonate with the Angry Birds core audience and become a hit. Nevertheless, considering the RPD benchmark, the arcade elements of the game, and the ads-monetization strategy, it is likely the game’s LTV will not reach the same metrics as those of Rovio’s biggest title, Angry Birds Dream Blast.

#2: N-Innocence

Publisher: Asobimo
State: Open Beta
Territories: Canada, Japan, U.S.
Classification: Action RPG
Quick thoughts:
- N-Innocence is a gacha action RPG featuring a 2D anime art style. It was newly launched in the West from developer Asobino.
  - The game follows traditional action RPG gameplay you’d find in games like Honkai Impact, in which players equip a team of three characters to battle waves of enemies. As expected from this subgenre, players can collect several characters of different rarities through the gacha feature.
  - One of the main differentiators of N-Innocence is its narrative, which mixes elements from different mythologies with a fresh story in a rare combination for action RPGs of this variety.
  - Despite the art style, the game features high-quality and polished animations and graphics.
  - You can watch a video of the gameplay here.
- N-Innocence has been live in Japan for some time, and although it did enjoy success in the country, its iOS RPD a year after launch in the region is still far below benchmarks like Honkai Impact 3. ($3 versus $12). Considering the saturation of the action RPG market and the lack of differentiators, this is understandable. Nevertheless, N-Innocence may still find some success with users interested in its unique narrative.

Other Game Announcements

Pokemon Sleep gets release window (Link)
World of Tanks Blitz brings 3D skins to mobile (Link)
Street Fighter: Duel announces Monster Hunter crossover with Gore Magala challenge (Link)
Supercell to bring Clash Royale to web store (Link)
Roblox users rose 20% from 2021 to 2022 (Link)
Tencent’s Arena Breakout to enter global beta (Link)
Avatars Saga opens pre-registration in Western countries after a successful run in Asia (Link)

Company Announcements

*Source: Private Division / Take-Two Interactive*

Take-Two makes round of layoffs, claims impact on dev teams is ‘minimal’ (Link)
Square Enix's Yosuke Matsuda stepping down after ten years as president (Link)
Kwalee is the latest hypercasual publisher going ‘hybridcasual’ (Link)
Marvel Snap publisher Nuverse follow up with Dragonheir: Silent Gods (Link)
Rovio announces IMG as their exclusive agent for books and more (Link)
Room 8 Group unveils trailer and cinematic production studio Heroic (Link)
The Financial Times places Tripledot as fastest growing company in Europe (Link)
EA lays off hundreds of QA workers from Baton Rouge office (Link)

Ecosystem Announcements

Austrian court rules that FIFA loot boxes violate gambling laws (Link)
ESL FaceIt acquires esports analytics provider Vindex (Link)
Driven by mobile, MENA games revenue predicted to reach $2.8 billion by 2026 (Link)
Mobile games included in inaugural Olympic Esports Series (Link)
Venture funding fell 83% in Q4 2022 (Link)
EU to approve Activision Blizzard merger after Microsoft licensing blitz (Link)
The Sandbox expands to Germany with acquisition of developer Sviper (Link)

Content Worth Consuming

Why Mobile Game Studios Are Increasing the Prices of IAPs (Game Refinery): “There’s no hiding from the fact that the mobile game market is facing challenging economic conditions. This is for a multitude of reasons, from post-pandemic changes in player behavior and a drop in consumer spending to the impact of Apple’s ATT causing the mobile market to decline for the first time in over a decade.” (Link)
Is it game over for Live Ops games? (Pocket Gamer): “We've seen some huge live games get the plug pulled, but are reports of their demise exaggerated? And what makes a LiveOps game fail? Oscar Clark of Fundamentally Games explains.” (Link)
Ep. 109: The Core Principles of LiveOps (Mastering the Retention): “On today’s episode we're gonna talk about the great world of LiveOps. Join Oscar Clark as we dive into the three must-haves for games as services: capturing data, configurations, and selling.” (Link)
2023 will be the year of Hybrid Monetization (Game Analytics): “Hybrid monetization might not be new, but it’s becoming an essential tactic for game studios. So what’s caused this trend? And how will it affect the industry?” (Link)
Key licensing tips from working with big brands (GameIndustry.biz): “Having worked on IP such as Portal and Lego, ClockStone's Tri Do Dinh gives advice on targeting, obtaining and working on licensed games.” (Link)