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Mobile Games lose their luster faster than ever

Supercell's Clash of Clans followup.


The recent launch of Super Mario Run by Nintendo set a new record, with over 40 million downloads during its first four days on the App Store. While these numbers portray a very rosy picture of the mobile gaming industry, it doesn’t necessarily reflect reality.

Over the years, retention has become a tougher challenge for app developers. A few factors are responsible for this. First, the freemium model enables users to download many apps without hurting their pockets. Second, memory and data costs are less of a concern in developed countries today, enabling people to download games without a second thought. Last, the oversaturated app economy provides users with an overwhelming number of options. Data shows that mobile games have been most affected by this.

A recent state of the industry report from Adobe found that mobile games have the highest abandonment rate among all the app categories. On a similar note, a report from app intelligence firm App Annie concluded that games are maturing at a faster pace than ever before, and actually achieve 90 percent of their market potential after 17 weeks.

Since the life cycle of games is growing shorter, the window of opportunity to gain users is also shorter, and even then, users tend to abandon an app quickly. This worrying trend doesn’t look to be ending anytime soon, and initiatives like Google’s Instant Apps are likely to accelerate this by decreasing the friction of switching between apps.

App Annie 1

What is driving this change?

In order to understand this shift, we have to dive deeper into how digital content is being consumed. Multiple research studies have shown that the attention spans of millennials and Gen Z-ers (people born from the mid-1990s to the early 2000s) are much shorter than those of previous generations. Therefore, the timeframe in which users “test” new content to decide if they like it is also shorter than ever before. As the chart below makes clear, when it comes to games, the abandonment rate is highest among young people.

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The social phenomenon of virality plays its own part in this equation. People are afraid of missing out on trends that the rest of the world (viewed through their social media feed) is participating in. This hamster wheel of the “fear of missing out” is constantly turning in the same direction, just with different apps each time. Pokémon Go is a great example of how virality generated a peak in downloads in a short time period, and how the excitement around it faded in a few months after its launch.

The prevalent use of app install ads also contribute to the problem of high game abandonment, since they connect gamers with new games at a rapid clip, using the power of targeting and appealing creative to convince users to download additional games

KPIs should be measured differently

Developers who acknowledge this shift will need to adjust the way they measure the success of their games. Instead of looking at long-term retention, they could measure the number of engagements within a short period of time. Short lifetime value, or sLTV as we’ve coined it, could emerge as a much more dominant metric to measure user value in games, as developers transition away from a purely retention-focused approach to strategies designed to monetize users in the short-term, before they inevitably move on to the next app.

On the other hand, brand loyalty to specific game studios will emerge as a key concept, as developers will double-down on trying to hook in users to different, successive games as they launch — while cross promoting between them (like Ketchapp, for example). In that context, the aggregated revenue of users across different games from the same publisher will constitute a new evolution of LTV. Furthermore, conversion between in-house games will be monitored more closely and developers will try to keep the user within their own ecosystem.

What does it mean for the industry and game studios

From a macro perspective, we have seen the impact of this transition throughout 2016, with extensive M&A deals in the mobile gaming landscape that hit a record and represented the vast majority of the $28.4 billion in 2016 games deals according to tech adviser Digi-Capital. Tencent’s acquisition of a stake in Clash of Clans developer Supercell, made up almost a third of the year’s M&A deals. At the same time, investments in mobile gaming companies are lower versus previous years, which together could indicate a new stage of maturity as the market starts to consolidate.

On a micro-level, this transition will require a shift of attitude by small-medium game studios. These game studios will need to cut their investment in standalone games and instead run with short, agile development processes which will enable them to launch more games in a shorter period of time. Going all-in on one game will become a luxury that only the big players can afford.

Building loyalty programs which benefit users who keep engaging with other apps of the same brand will become a cornerstone for success, along with a greater focus on cross-promotion and pre-launch app marketing. Developers who embrace this change and adapt accordingly will be the ones who survive and succeed in the rapidly changing mobile environment.

Daniel Herman is a product manager at ironSource and a guest contributor at Forbes and Tech in Asia.

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About Ms. A. C. Kennedy

Ms. A. C. Kennedy
My name is Ms A C Kennedy and I am a Health practitioner and Consultant by day and a serial blogger by night. I luv family, life and learning new things. I especially luv learning how to improve my business. I also luv helping and sharing my information with others. Don't forget to ask me anything!

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