Top News

#1:  Apple Is Increasing App Store Prices Across Europe and Asia

Apple recently announced that it will raise the prices of apps and in-app purchases in several countries, with the change to be executed as soon as October 5th. These changes apply to app purchases and IAPs and do not apply to subscriptions. The list of affected countries is:

• Countries in the Eurozone
• Japan
• South Korea
• Sweden
• Vietnam
• Chile
• Egypt
• Malaysia
• Pakistan
• Poland

While no explanation was given for the price increase, Apple has historically modified prices in reaction to changes in currency exchange rates. This looks to be the same case this time, as a comparison of the new EUR tier price lists and the previous price tiers reveals that the increases in price range from 11% to 25% with an average of 19% across the tiers. This maps closely to how much the Euro has weakened against the dollar (~21%) since the last Euro tier price change in August 2021.

An interesting question to ask is whether this increase in prices will have a material impact on revenue? We’ll focus on the new Euro prices as this will have the greatest impact in terms of the number of countries affected, as well as market share. Europe is facing a difficult time; the war in Ukraine and the post-pandemic malaise have seen inflation and costs increase significantly, particularly energy-wise. With this backdrop, how will players there react to this price increase?

A way to examine this could be to investigate the last change in Euro pricing, which occurred on August 28th, 2021. During that change, prices were actually reduced by around 6% to 14% and the economic backdrop was positive as the EU economy recovered to its pre-pandemic level. This serves as a foil to the current situation, so if we can find that consumers in Europe were more likely to spend during the changes last year, they might react in the opposite manner now. For this quick analysis, we’ll look at the top 5 games by revenue in Europe for 2021: Coin Master, PUBG Mobile, Roblox, State of Survival: Zombie War, and Candy Crush.

This revenue chart shows that the price change did not move the needle in terms of player spending. In fact, the total revenue numbers for December 2021 ($8.3M) were slightly lower than August’s ($18.2M). The finding is corroborated by this study on price elasticity in Candy Crush that was conducted by King, the University of Chicago, and Erasmus University Rotterdam. It found that by “implementing price reductions ranging from 9–70% for large purchases, we found remarkably little impact on revenue, either positively or negatively.” There were four key takeaways, which I’ve summarized below, but the study is worth reading in its entirety.

1. Over a wide range of quantity discounts, revenue and profit were unchanged.
2. Consumers’ spend behavior changed depending on their profile. Medium-value spenders (minnows or dolphins in F2P speak) spent more when given radical discounts, but high-value players (whales) spent less.
3. The quantity discounts did not change how many people spent. Those who weren’t spending kept their pockets shut, while spenders kept on spending.
4. There was limited evidence of habit-formation. Medium-value players who started buying items with large discounts kept on spending when those discounts were removed.

Our conclusion is that we’re unlikely to see any huge change in player spending behavior, which should give developers (and Apple) who make bank in Europe a nice bump in revenue due to the price increase. We’d also expect to see these price changes reflected in the Android versions of their games.

#2:  Wooga Celebrates June’s Journey Hitting $500M in Revenue

A press release by Wooga recently celebrated the significant milestone of hitting $500M in lifetime revenue for its hidden object game June’s Journey. If the $500M figure seems to contradict what platforms like Sensor Tower and data.ai are estimating, it’s because Wooga is adding revenue from IAPs as well as advertising to get its final figure. Regardless of methodology, it’s an impressive feat; the game has risen to become the most important game in Wooga’s portfolio and is responsible for almost 95% of its revenue.

The hidden object genre is a relatively niche genre, and June’s Journey is the standout performer, making $119 million in revenue in 2021, compared to total genre revenue of $250 million. Even more impressively, while June’s Journey has been out since 2017, its revenue has been consistently growing even while downloads remained relatively flat, and it has a healthy all-time RPD of $6.43.

This is a great achievement by the June’s Journey team, and they deserve all the kudos for its success, which CEO Nai Chang attributed to focusing on storytelling in its games, saying “Wooga four years ago was one of the first gaming companies that set out to focus on story-driven casual games, and since then we are proud to have grown into one of the industry leaders in this category with the growing global success of June’s Journey.”

The only thing casting shade on this announcement is the fact that Wooga has failed to release another successful game since June’s Journey. Its latest release, Switchcraft, came out in October last year but has not met expectations, and Playtika announced in its Q1 earnings call that marketing support had been pulled and the team redeployed within Wooga. Switchcraft, like June’s Journey, has a heavy storytelling element (essentially, Royal Match but with narrative instead of decorating), so it looks like its strategy of focusing on story-driven casual games is yet to bear fruit in another product. A look at the retention of June’s Journey and Switchcraft shows that Switchcraft starts off well but loses its audience at a faster rate.

There’s also an interesting difference between the audiences, with June’s Journey clearly resonating with older, female players while Switchcraft leans towards a younger and more equal spread between the genders (though still leaning more towards females, as the majority of puzzle games do).

This pattern of Switchcraft attracting a younger audience also applies when compared to other top-performing puzzlers. Notice how a quarter of Switchcraft’s audience is under 25.

This could be a result of its theme, which features a young witch during her freshman year in witch college as she explores the strange disappearance of her best friend. The story includes elements of drama, suspense, and romance and could be straight out of Episode – Choose Your Story. In fact, the presentation bears a striking resemblance to the user-generated story platform.

The resemblance also extends to the ages of the player population, with both games having an average audience age of 31. Yet, Episode skews even more females and has more players under 25.

Based on these findings, Switchcraft’s failure may have been a misalignment of audience fit. Perhaps Wooga intended to reach a new, younger audience in an attempt to diversify its portfolio but has found that the story-based puzzle formula does not work on younger players. We’ll see if Wooga continues to believe in storytelling-based casual games and whether it will continue with its pursuit of a new demographic, or it will revert to whom it knows best — older, female players.

Game Launch Radar

#1: Single City

• Publisher: A Thinking Ape

• State: Hard Launch
• Territories: Global
• Classification: Midcore – Strategy – 4X

• Quick thoughts:

  • This game is a 4X game in clever disguise. Its portrait mode, theme (you’re building a Hype House of influencers), and bright and colorful graphics present a casual surface that can attract players who would have given games like Rise of Kingdoms or Lords Mobile a hard pass. Anecdotally, it is pretty effective at easing players to the systems compared to those other titles. As I downloaded the game without much prior knowledge, I was happily decorating my Hype House and sending my Roomies for “Collabs” before I realized I was actually playing a 4X! The theming is on point here; for example, attacking other players is “Causing Drama,” and leaderboards are “Trending” charts.
  • Developer A Thinking Ape specializes in strategy games, though it hasn’t had a hit in a long time. In fact, its best-performing game is Party In My Dorm, which was released 12 years ago! Its last release before Single City was Kingdoms of Heckfire, which had middling results, earning around $21 million in revenue since its launch in 2017.
  • It’s no secret that 4X games skew heavily towards a male audience, and Single City’s positioning makes it clear that it is aiming for a blue ocean audience — the female 4X gamer. A Thinking Ape has experience in creating a female-centric strategy game—Party In My Dorm—as well as building a 4X with casual theme with Kingdom of Heckfire. Single City is an evolution of both products, and the company’s bet is that it could attract an audience that may not give its genre competitors a second look. Only time will tell if it succeeds, but we’ll be keeping an eye on it for sure.

#2: One Punch Man: The Strongest

• Publisher: OurPalm

• State: Hard Launch
• Territories: Global
• Classification: Mid-core – RPG – Turn-based RPG

• Quick thoughts:

  • This is a turn-based RPG based on the popular manga and anime franchise One Punch Man. It features all the wacky heroes and villains from the IP, such as Mumen Rider, Vaccine Man, and of course, Saitama. The game is incredibly slick and intersperses cutscenes from the anime when performing ultimate attacks, which helps tie it in with the IP even more.
  • The game was developed by Playcrab and published by OurPalm in China way back in 2019 and has been slowly rolled out across different territories by partnering with local distributors like FingerFun, Gree, Moonton, and VNG Games. Southeast Asia, Hong Kong, and Taiwan got the game in 2020, Japan and Korea got it in 2021, and now it’s being rolled out globally.
  • As with any other turn-based RPG these days, having a gacha system for recruiting heroes is a foregone conclusion. To its credit though, the game does a good job of displaying drop rates and the heroes front and center instead of hiding them behind layers of UI.

Other Game Announcements

• NetEase and Tencent get approval for one game each in the latest round of Chinese game approvals. Link

• XD’s T3 Arena is now available for pre-registration on Android. Link
• Netflix announces its October games lineup, including Spiritfarer, Nailed It!, and Hello Kitty. Link
• Riot’s Valorant Mobile is reportedly undergoing a private beta test. Link
• Afghanistan is about to ban PUBG Mobile. Link
• Genshin Impact may soon be introducing a TCG in the game. Link
• Fitment, a “cosy fitness game,” is out in early access on iOS and Android. Link
• HoYoverse releases a long gameplay trailer for Zenless Zone Zero which shows off more of its setting and combat. Link
• Google’s Art & Culture division releases an educational Zelda-like adventure game about Mesoamerica. Link
• Genshin Impact surpasses $3.6B in revenue as it reaches its 2-year anniversary. Link
• Ustwo’s Desta: The Memories Between will be released on Netflix on September 27th. Link

Company Announcements

• XD Inc. hire the creator of Diablo, David Brevik, as a consulting producer for Torchlight: Infinite. Link

• Keywords Studios announces the conditional acquisition of Canadian developer Smoking Gun Interactive. Link
• Mobile-first game development platform Sceneri announces $1.5M in funding from venture capital firm SNÖ Ventures. Link
• Zynga opens a new headquarters in San Mateo, California. Link
• Former President and CEO of Sony Interactive Entertainment America, Shawn Layden, joins Tencent as a strategic advisor. Link

Ecosystem Announcements

• A Genshin Impact anime is coming, courtesy of anime house Ufotable, responsible for the mega-hit Demon Slayer: Kimetsu no Yaiba. Link
• Microsoft is open to more acquisitions beyond Activision Blizzard to keep it competitive with Tencent and Sony. Link
• Third-party app store TapTap announces a visual rebrand. Link
• Mobile game publisher Azur Games sells off its Russian and Belarusian assets as a result of the ongoing war in Ukraine. Link
• Twitch reduces top streamers’ revenue share from 70% to 50%. Link
• The US Department of Homeland Security has awarded a grant of almost $700K to terrorism and security researchers to investigate extremism in gaming. Link
• A Roblox version of a Carolina Herrera dress worn by Karlie Kloss has sold for $5,000. Link

Content Worth Consuming

• Insights Into Indian Mobile Gamers and How to Reach Them (Newzoo): “With 373 million players in 2022, the Indian games market is the second biggest in the world by players. And 91% of them are playing on mobile. In 2022, the Indian mobile games market alone will generate revenues of $2.2 billion.” Link

• Netflix Game Desta Marks a New Era at Ustwo, and Monument Valley 3, Free-to-play Are Next (MobileGamer.biz): “Today, in Netflix and Apple, Ustwo has two suitors with deep pockets, and platforms that fit the Ustwo ethos. “We’ve ended up in this really, really nice position where, luckily, when someone has a new platform or product, usually we’re one of the first people who get a phone call about it,” says Gray. “And that’s kind of what happened this time – we didn’t even know Netflix were doing games stuff.” Link
• How should the UK video game industry self-regulate loot boxes? (Gamesindustry.biz): “The gambling laws of most countries (e.g., the UK and Denmark) are incapable of regulating most paid loot boxes because their rewards cannot be transferred to other players and do not possess real-world monetary value. What then does effective industry self-regulation look like in a loot box context? The short answer is that we do not know, yet. We do not know what measures will reduce overspending and prevent potential harms, and we do not know whether any self-regulatory requirements will even be effectively complied with. We do, however, have some helpful insights from empirical assessments of previous attempts at loot box regulation either using law or industry efforts. All of these have their shortcomings that we can improve upon in this forthcoming UK attempt.” Link
• X-Hero is the weirdest hit game yet, earning its maker $52M from 14M downloads to date (MobileGamer.biz): “We’ve seen UA ad mechanics make their way into games as ‘real’ gameplay before, but we’ve not seen a developer just glue two wildly different ideas together into one game, until now. The physics puzzles in X-Hero appear to be lifted wholesale from another game, Save The Dog, and are all over TikTok right now.” Link
• Beth Goss: Leveling Up Games for Kids (Venture Beat): “What the pandemic has done is it’s changed this family purchase choice and play choice. Family time is becoming a more important part of children’s play time. That’s a real opportunity. Being a part of that, trying to make not only the games, but the point of purchase more of a family decision-making process, that’s crucial to how we move forward. When I don’t have some of the tools that all audience gaming has, I can’t do social. There are things I can’t use. So how do I connect with my core audience?” Link