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#1: Google Bans “Unexpected” Interstitial Ads

In a move that likely sent shockwaves through the Hypercasual development community, Google introduced several updates to its Google Play policy last week that will significantly impact the monetization of Hypercasual games. The policy update in question is the banning of the use of interstitial ads that appear unexpectedly. Here is Google’s definition in full:

• Full screen interstitial ads of all formats (video, GIF, static, etc.) that show unexpectedly, typically when the user has chosen to do something else, are not allowed.

  • Ads that appear during game play at the beginning of a level or during the beginning of a content segment are not allowed.
  • Full screen video interstitial ads that appear before an app’s loading screen (splash screen) are not allowed.

• Full screen interstitial ads of all formats that are not closable after 15 seconds are not allowed. Opt-in full screen interstitials or full screen interstitials that do not interrupt users in their actions (for example, after the score screen in a game app) may persist more than 15 seconds.

Note that the changes to this policy do not affect opt-in rewarded ads.

Interstitial ads are an important source of revenue for Hypercasual games. One Supersonic Product Monetization Lead called it the most “valuable ad unit we have in our games.” These ads are typically displayed based on two triggers:

• Timed Intervals: For example, ads are shown every 25 seconds. This can mean that ads may appear right in the middle of gameplay.
• End of Level: Ads are displayed at the end of the level. The ad can be displayed automatically upon level completion or when the user taps on the continue button to go to the next level.

Publishers are constantly testing best practices such as interstitial intervals and placement. As seen in the slides below, taken from Supersonic’s livestream titled “How to Find the Sweet Spot of Retention and Revenue with Interstitials,” optimizing interstitial ad intervals and trigger points can have significant outcomes on a game’s ARPU.

Based on our interpretation of Google’s new policy, timer-based triggers will be most impacted by the policy change. These ads can appear anytime during gameplay, are very obtrusive and are the very definition of “unexpected.” The other type of trigger method that would now be disallowed is the triggering of an ad after tapping on a continue button at the end of the level.

While this announcement is likely to cause consternation amongst Hypercasual developers and publishers, it resolves one of consumers’ main gripes against mobile advertising. According to a gaming spotlight report by data.ai, video ads (not including rewarded video ads) were the most loathed ad type amongst US mobile gamers.

With the changes due to come into effect on September 30, a significant source of revenue for Hypercasual games will be taken away. What options will developers and publishers have? There are two possible routes. One, optimize gameplay to increase the uptake of rewarded ads. In the same data.ai report referenced above, rewarded ads had the most positive sentiment among all ad types.

To increase uptake, developers must make design changes that make rewarded ads even more appealing. Most of the rewarded ads in Hypercasual skew towards getting more currency with the occasional gameplay boost. That dynamic will have to switch so that gameplay-boosting rewarded ads become front and center. An interesting implementation that I’ve seen is to show contextual gameplay-boosting rewarded ads like the examples below.

On the left is the typical rewarded ad; you watch an ad to increase your cash. The two games on the middle and right display contextual gameplay boosters (the “Cool Down” and “∞ Capacity” buttons), appearing when you most need them which increases the likelihood that players will watch the ad. Beyond these small changes though, I believe the structure and design of Hypercasual games itself will undergo a small evolution to focus more on rewarded ads and we will see a lot of experimentation in the months ahead.

The second option is doubling down on hybridization, namely making IAPs a larger portion of the monetization strategy. We’ve already seen this happening as Hypercasual games have seen a 16% YoY increase in H1 2022 revenue, something we covered in our half-year review. This strategy really only works on games with enough depth, and this deep dive on Lion Studio’s Army Commander by data.ai suggests that the Action sub-genre may be best positioned to take advantage of IAPs.

With mobile advertising still coming to grips with post-IDFA realities and now this policy change by Google, the Hypercasual genre has certainly been put under a lot of pressure, pressure which will increase if Apple follows Google’s lead. While Apple is not part of the Coalition For Better Ads that inspired Google’s policy change, it may need to adopt the policy to keep up with the Joneses and maintain its image as a consumer-friendly brand.

Is this the death knell for Hypercasual? Hardly. As they say, “Neccessity is the mother of invention” and as we’ve seen in our research essay on Hypercasual, this segment is always ready to reinvent itself. Perhaps it moves into real multiplayer as we suggest in the essay or it goes down the UGC route as postulated in our July 20 digest. Whatever route it takes, Hypercasual is here to stay; it just may look a little different.

Game Launch Radar

#1: Boom Beach: Frontlines

• Publisher: Space Ape

• State: Soft Launch
• Territories: 20 Countries
• Classification: Midcore – Shooter – Tactical Shooter

• Quick thoughts:

  • Boom Beach: Frontlines is a 9v9 top-down shooter, developed by Space Ape games using Supercell’s IP. Gameplay looks fun, if a little frantic with 18 players on the map, and the core objective is to capture control points. Players can earn currency by making kills and use it to purchase vehicles, build defensive structures like machine guns to protect control points, and launch special abilities like an airstrike. Of course, there are a variety of heroes, vehicles, abilities, and armaments to unlock via loot boxes.
  • It exceeded 1 million pre-registrations in 2 days after the announcement of the soft-launch expansion and now currently has 2 million pre-registered users.

#2: Lord of the Rings: Heroes of Middle Earth

• Publisher: EA

• State: Soft Launch
• Territories: Philippines
• Classification: Midcore – RPG – Turn-based RPG

• Quick thoughts:

  • It’s being developed by Capital Games, EA’s mobile studio that also made Star Wars: Galaxy of Heroes, another Turn-based RPG, and thus far, LotR: Heroes of Middle Earth’s gameplay looks similar to its predecessor and feels a little dated compared to newcomers to the genre like Cookie Run: Kingdom.
  • Amazon’s new LOTR TV series will be airing in September and EA may be positioning itself to piggyback off the press and (hopeful) success of the highly anticipated show, which is the most expensive TV series ever made (Amazon made a 5-season commitment worth $1 billion).

Other Game Announcements

• Raid: Shadow Legends crosses $1 billion in revenue. Link

• BGMI, the Indian version of PUBG Mobile, has been removed from both iOS and Android app stores in India. Link
• Diablo Immortal hits $100 million in revenue since launch. Link
• Apex Legends Mobile has earned $20 million since its launch. Link
• Game industry veterans, the Oliver Twins, unveil RichCast, a storytelling platform to rival Episodes and Choices. Link
• Torchlight: Infinite to go into open beta in October. Link
• Netmarble’s launches its 3v3 shooter with NFT elements, Golden Bros. Link
• Square Enix releases more trailers of Full Metal Alchemist Mobile ahead of its highly-anticipated launch in Japan. Link
• Snowprint Studios’ Warhammer 40,000 Tacticus will launch on August 15. Link
• MLB Perfect Inning: Ultimate by Com2uS is now available world-wide. Link
• HoYoverse’s upcoming ARPG Zenless Zone Zero will undergo a “tuning” test on the 5th of August. Link
• Snap releases AR game Ghost Phone inside SnapChat. Link

Company Announcements

• Ilhan Yimaz, CEO of Turkish gaming hardware company Monster Notebook announces a new mobile gaming studio, Semruk Games. Link
• Former Tencent bizdev exec joins Playstation Studios Mobile. Link
• Ex-Ubisoft creative director Ashraf Ismail joins Tencent’s TiMi Montreal studio. Link
• Mobile game studio Hyper Hippo announce two hires, Mary Kaye (MK) Fraser as Executive Producer and Michael Aaronson as SVP Audience. Link
• Sega’s Hardlight Studio is working on a new Sonic game. Link

Ecosystem Announcements

• TikTok launches 7 HTML5 games on its platform. Link

• Apple announces two additional placements for ads in the app store, including inside app pages. Link
• Supercell take legal action against the organizers of Latin America Master League 2021. Link
• Nexon announces an initiative to support up-and-coming game developers. Link
• Concept Ventures launches £50 million pre-seed fund, backed by British Business Bank. Link
• Embria Ventures, a European venture capital fund, announce a $500,000 seed investment into mobile publisher 10K Riders. Link
• StreamElements’ monthly “state of stream” report shows that the most popular platform for streaming mobile games is Youtube. Link
• MTV’s VMAs now include a category for “Best Metaverse Performance”. Nominees include BLACKPINK’s PUBG Mobile concert. Link

Content Worth Consuming

• The Games Market Will Show Strong Resilience in 2022 (Newzoo): “In light of market developments in the past months, we’ve updated our game revenue forecasts since we first published them in April. Our latest market forecasts show that there will be 3.2 billion gamers worldwide in 2022. These gamers will help the global games market generate $196.8 billion in 2022, up by +2.1% year on year. Our April estimates had projected the market to surpass the $200 billion mark. ” Link

• How Big Fish Games Is Focusing On Casual (Venture Beat): “For us, we definitely see value in IP. We’re going to evaluate how we can continue to extend our own IP. Do we take Evermerge and turn it into a sustainable brand across many titles, or not? That’s a decision we have to make. I think it makes sense to do so. Then we have to look at licensing opportunities. There are plenty out there. The fear is, what we see in early stages is there’s too much being put into the value of a license, and then it doesn’t pay off. We will be very cautious with external third-party licensing. It’s not something we won’t do, but we’ll be much more cautious than others. The data doesn’t support the value statement.” Link
• Surviving the mobile marketing winter: customer unit economics (MobileDevMemo): “An LTV model uses some set of trailing cohort monetization data to generate estimates. The longer the performance timeline required by the executive team (eg. ROAS of 110% by Day 30 vs. Day 90), the more trailing data is needed, which is obvious. But establishing credible estimates for various time-based waypoints on the predicted ROAS curve requires a great deal of data, simply because later-stage retention for cohorts is often very low relative to a cohort’s initial size. ” Link
• Ep. 90: The Balancing Act of Product Management (Mastering Retention): “The role of a product manager can vary widely depending on what industry he/she is in, and even then, companies within the same industry often define that role differently. Regardless of how a product manager role is defined, it requires someone that can balance the “Big Picture” and the small details. This week on Mastering Retention, Tom speaks with Stav Klauzner (Head of Product at SciPlay) about the balancing act of being a product manager and loosely defines what the ideal video game product manager should look like.” Link