The gaming industry in 2023 has kicked off in headwinds, with an imminent recession, decreasing player consumption, inflationary pressure, and upcoming layoffs all putting greater pressure on the entire industry. But just as players get the best weapon when faced with the most threatening bosses, mobile game marketers are always armed with the right tools and knowledge to overcome these challenges.
In Appsflyer's recent State of Mobile Game Marketing 2023 Report, which featured 38 billion game installs and an in-depth look at the key trends impacting 2022, the report found:
Total Android game installs increased by 8% year-over-year, while iOS platform decreased by 5% year-over-year, reflecting the challenges that app marketers are still facing from Apple's privacy policy changes. In 2022, the global mobile game installation advertising consumption scale was 26.7 billion US dollars, of which, thanks to the characteristics of high cost and large scale, the US market contributed 12.2 billion US dollars, and the second ranked Japanese market was far from the champion, with advertising consumption of 2 billion US dollars.
Overall, Android mobile game installs in the United States increased by 19% year-on-year in 2022, but iOS installs decreased by 1% year-on-year. From the first quarter of 2021 to the fourth quarter of 2022, the CPI of the iOS platform increased by 88% to $3.75 per install, as iOS marketers had to accept higher prices to get high-value users, with a year-over-year growth rate of 35%.
In the second half of 2022, in-app purchase revenue decreased by 7% compared to the first half, while iOS decreased by 13% month-on-month and Android decreased by 6%, mainly because the economic downturn seemed to affect player consumption, resulting in lower revenue in high-in-app purchase revenue categories such as RPGs and chess and cards. Android board games grew by 48% year-on-year, more than three times the growth rate of second-place hyper-casual games, and five times the growth rate of puzzle and PRG categories, and board games led iOS growth, with an increase of 17%.
Here's what Gamelook has put together:
After several years of explosive growth driven by the pandemic, the gaming market is heading for a challenging year as the macro environment continues to change. The market downturn has forced gaming companies to put profits ahead of growth as access to funding becomes more challenging and consumer spending is negatively affected.
In addition, the post-pandemic status quo has changed the pattern of installs, costs, and revenues, leading to a chill in digital entertainment as the gaming boom returned to normal levels with the onset of the pandemic. Regionally, the war in Ukraine is affecting the European economy and beyond, complicating the situation for game marketers.
In addition to macro conditions, iOS measurement and optimization in the privacy-preserving era still poses a significant challenge for game marketers, who previously relied on user-level data optimization as the backbone of their entire operating model. It remains to be seen whether the upgraded SKAN 4.0 (albeit with significant improvements) will effectively address these challenges this year. It is estimated that most of 2023 will require "embrace" these changes.
At the same time, media sources said that iOS and Android continue to enforce privacy guidelines, resulting in restrictions in the field of marketing activities. These restrictions limit marketers' ability to rely on MMPs to access user-level data on their own. Therefore, 2023 will see an increased focus on privacy-enhancing technologies and data sanitization rooms to facilitate the use of user data in a manner consistent with privacy policies.
Despite these obstacles, mobile gaming remains strong globally. An unmatched player base (2.7 billion mobile gamers, according to Newzoo), mature distribution channels, and performance marketing capabilities that enable games to scale, continue to drive the growth of mobile gaming appeal.
Newzoo predicts that the market will generate more than $92 billion in revenue in 2022, and while this represents a 6.4% year-over-year decline, the overall situation in the mobile gaming market is not so bad given these challenges and the fact that this figure is compared to the peak of the pandemic in 2021. In addition, Ampere Analysis expects continued growth through 2027.
In fact, some studios have been able to see tremendous growth in challenging environments, by prioritizing the pleasure factor and keeping players open for the long term (30-day, 90-day, 120-day retention, etc.). Since mobile game marketers are good at mining data, they will be able to gain a deep understanding of SKAN 4.0 and take full advantage of the data signals it provides to gain plenty of room for growth.
Last but not least, the emergence of new channels such as CTV can make their mark among mobile game marketers. In fact, CTV is now a performance channel that drives installs, which means not only exposure and accurate measurements, but also lower friction barriers, as well as new capabilities to target users better than linear TV.
Global and advertising consumer insights
With the advent of the post-pandemic era, we are witnessing a slowdown in digital entertainment. Although game installs on the Android platform are still growing year-over-year, this growth rate has slowed down significantly. In 2021, the year-on-year growth rate was only 8%, a far cry from the 60% year-on-year growth rate in 2020.
While iOS installs also grew by 19% from 2020, changes in privacy policies and the release of iOS 14 led to a 13% year-over-year decline. However, advertisers adapted to the new SKAN 3 and as the platform's higher user LTV returned to iOS, the decline slowed this year, falling by only 5%.
However, the impact of Apple's ATT policy is not small, because the number of installs driven by mobile game marketing is very large, so it affects the overall install number, which is more obvious compared with Android.
While hyper-casual game installs grew year-over-year overall, it declined significantly in Q4 2022 as Google introduced a policy banning interstitial ads. The category also suffered setbacks on iOS, with a 15% decline leading to a 5% year-over-year decrease in downloads across the platform.
However, board games were the real winners, growing 48% year-over-year on Android, mainly thanks to India, Brazil and Turkey, more than three times faster than hyper-casual games. Despite the poor overall download performance of iOS, board games achieved 17% growth on the platform. RPG performance is also promising, with growth approaching 10% across both platforms, meaning the category has untapped potential.
Eliminating games is a notable exception on Android, where downloads fell 6% year-over-year on Android and 1% year-over-year on iOS.
Despite the challenges, paid installs have seen growth, with Android platforms all growing month-over-quarter except in 2022Q4. Android paid installs increased by 16% year-on-year in 2022, with a year-on-year increase of 9% in 2022Q1. In 2023, we expect marketers to be cautious in the first half of the year, as many gaming companies cut back and reevaluate their marketing strategies.
Conversely, paid installs of iOS games saw a year-over-year decline in Q2 2021, mainly due to the release of iOS 14. However, in Q1 2022, buying activity picked up, but due to the increase in CPI, the purchase volume of the iOS platform declined throughout 2022, resulting in marketers having to accept lower installs and explore other ways to drive growth, such as leveraging their own media.
Despite these difficulties, iOS paid installs saw a 10% year-over-year increase in 2022, with the DIFA match rate growing to 26% as marketers became more and more knowledgeable about SKAN 3.
Regional installs were mixed, with Android mobile installs in the U.S. up 19%, but iOS down 1%. Asia remains the fastest-growing market for mobile gamers, with Android installs in the Philippines up 30% year-on-year and iOS installs up 64% in Indonesia, meaning Asia remains a mainstream growth market.
In contrast, mobile game installs in Russia have dropped significantly, with Android platforms down 27% year-on-year and iOS down 30%, and it's clear that regional military conflicts have affected the region's gaming market.
iOS is also not performing well in many mainstream markets, such as China (-30%), France (-12%), Japan (-13%), Australia (-9%) and Mexico (-31%), which means that the mobile game industry in these markets has changed, and game companies that want to continue to grow in these regions should pay attention.
Android mobile game consumption increased by 2% year-on-year, mainly due to the relatively stable CPI difference, while iOS platform consumption increased by 20% year-on-year, mainly because of the significant increase in CPI.
While paid installs declined and subsequently stabilized, CPI prices continued to climb, resulting in a relatively flat overall ad spend growth in 2022. However, increased CPI means lower paid installs, as advertisers prioritize high-quality iOS users.
The growth trend of iOS platform CPI is relatively stable, reaching $3.8 in 2022Q4, an increase of 88% compared with 2021Q1 and a year-on-year increase of 35%.
As mentioned earlier, higher CPI leads to advertisers having to accept the same budget for lower installs. In the face of ever-increasing buying prices, marketers are forced to keep running given the higher LTV of iOS players, even if it leads to increased costs.
Since 2021Q3, the Android platform CPI has stabilized between $0.68 and $0.72, but in specific markets, the Android CPI is significantly higher, such as the United States and the United Kingdom, and the CPI of the Android platform is almost three times the average level, and the cost per install has reached $2.03.
As a result of the above, ad spending on both platforms grew in 2022 to reach $26.7 billion, with the United States accounting for nearly half of ad consumption with $12.2 billion. Due to high traffic and high costs, the United States has become the most competitive mobile game market in the world. Relatively speaking, mobile game ad placement growth in developing countries has been relatively sustained because the cost of advertising in these regions is much lower than in the United States.
From the perspective of game categories, the top three categories such as elimination, puzzle solving and chess and cards accounted for 44% of the purchase amount. Among them, elimination games accounted for 20%, and puzzle games accounted for about 5%. In addition, chess and elimination categories account for one-third of the advertising volume on the iOS platform.
In 2022, the trend of mobile game in-app purchases has declined year-on-year, with Android platforms being more affected, down 14% year-on-year, and iOS platforms only reducing by 1%.
However, if we compare the first half and second half of 2022, we can see that the overall consumption of mobile games fell by 7%, iOS decreased by 13%, and Android consumption fell by 6%, but most notably, RPGs and board games, which accounted for a relatively large proportion of in-app purchase revenue, showed a significant decline on both platforms.
Google Play's ban on disruptive interstitial ads has had a big impact, especially for hyper-casual games. In fact, while the IAA for hyper-casual gaming on Android has grown by an average of 25% since the first half of 2021, it has declined by 6% in each quarter of the second half of the year, but it is still higher than the baseline in 2021.
iOS has seen a steady decline in 2022, with a 26% decline since January. However, unlike the Android platform, in addition to hyper-casual games, IAA revenue in categories such as elimination, simulation and puzzle solving has also declined significantly.
Category trends
Ultra-casual
In many countries, we can see that Google's ban on interstitial ads has had a clear impact on hyper-casual games, and marketers need to adapt quickly to changing markets.
While the iOS CPI growth is more pronounced, for hyper-casual games, CPI growth has slowed, meaning marketers can seize this rare opportunity to launch.
India was the market with the highest growth in hyper-casual installs, up more than 30% year-over-year.
Eliminate the game
In the second half of 2022, the growth of paid installs on the global Android platform for eliminating games was flat, but the US market saw growth.
Elimination games are one of the few categories in the world where Android CPI continues to grow, and this trend is expected to continue in 2023.
The number of eliminated game installs in the Chinese market decreased by more than 40% year-on-year, which means that players in this market are more inclined to long-term game categories such as RPGs.
Board games
From the perspective of purchase cost, board games are the highest, and the average CPI of iOS board games reached $11.45 in 2022Q4, so considering self-owned media marketing may be a more cost-saving choice.
IAA revenue fell 33% on iOS and 29% on Android, mainly as marketers began to consider other ways to monetize and tried to avoid intrusive advertising to stimulate loyal players.
The U.S. is the best-performing market for board games, with the category growing 17% on iOS and 10% on Android in the US.
RPG
The RPG category in the US market has grown significantly, with iOS and Android installs increasing by 90% and 41% year-on-year, respectively.
As more and more developers enter the RPG field to compete, the revenue of this category will be significantly affected in 2022, especially due to the impact of the economic downturn, and the payment of large R users will be significantly reduced.
However, it is clear that advertising in this category continues to grow, and marketers are expected to continue investing in 2023 in order to maintain their position at the top of the game.
Puzzle game
Puzzle games grew steadily on Android and iOS, with dual platforms up 37% and 52% respectively.
Rarely, the turf of puzzle games on the iOS platform in the United States dropped to $3, while the CPI on the Android platform increased to $3, and the cost of puzzle games on both platforms was flat.
In contrast, the CPI of puzzle games in the Indian market is less than $0.1, which means that the market has greater user growth potential.
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