A Perfect Storm: 5 Industry Trends Fueling the Rise of Web Stores
2023 saw numerous leading mobile game publishers build their own web stores, allowing them to sell directly to players – and bypass the usual 30% fees in the process.
But what’s driving this strategy? Why are web stores emerging as must-have monetization channels now?
Below, we unravel the threads that tie key games industry trends such as extended development timelines, rising user acquisition costs, and the changing face of hyper-casual, to the pivotal role web stores play.
You’ll come away understanding how exactly web stores can fuel sustainable revenue growth for mobile game publishers in 2024 and beyond. Let’s jump in.
1. Extended Development Timelines
Trend: Developing games now takes considerably more time. “Gone are the days of creating a new prototype weekly or even a few each month”, John Wright, VP of Publishing at Kwalee, notes. “Teams are now investing more time in research, ideation, and game development, resulting in fewer opportunities”.
Enter, web stores: With the days of rapid prototyping and frequent game launches seemingly over, studios must focus on really squeezing the lemon from their existing successful titles. Web stores provide a way to both meaningfully increase bottom line profit and retention rates.
With gamification mechanics and exclusive offers that give players more value than they’re able to get anywhere else, web stores serve as a powerful antidote to the financial impact caused by the reduced frequency of new game launches.
2. The evolution of hyper-casual
Trend: Hyper-casual was not just a game genre, it was a business model. One that revolved around aggressive UA, ads, and rapid game prototyping. Hyper-casual games are still around, but the boom has dissipated. Testament to this is the fact that revenue generated by hyper-casual games dropped 10% in 2022 compared to 2021, down to $12.3bn from $13.7bn.
With aggressive UA and a profitable game an increasingly elusive combo in the post IDFA landscape, many studios who focused on hyper-casual in recent years have been forced to deepen their game mechanics, develop more complex and innovative games, and shift away from the ad-centric model.
Enter, web stores: With web stores enabling publishers to sell digital items directly to players, outside Apple’s walled ecosystem, it’s now far more viable to shift away from the ad-based model and operate an IAP-centric game.
The reason is simple: publishers’ margins are higher for every transaction.
Studios can either develop their own web store in-house and pocket all of the revenue (minus payment fees and the high cost of actually developing the store), or use a white-label solution that takes a marginal fee but allows them to quickly build a powerful, customizable web store that still massively lifts their profit.
3. The demand for compelling meta
Trend: The shift away from basic hyper-casual game mechanics, and users’ high expectations for games to operate as live services, has led established games publishers to double down on compelling storylines and meta games.
Enter, web stores: If compelling storylines, deep meta games, and robust live ops are the engines behind established, evergreen games, then web stores are the top up of fuel to help keep everything running.
That’s because web stores have the potential to increase retention: publishers can delight their most engaged players with so much extra value, and use gamification mechanics like daily bonuses, progress bars and loyalty programs to create a fun experience.
In doing so, publishers can create a virtuous cycle of growth of increased profit, higher retention rates, and more engagement in their meta features and liveops.
4. Major Publishers are Focusing on High Revenue Potential Games
Trend: John Wright revealed how Kwalee is testing fewer games now, focusing more on those they believe “can become tier 1 launches generating $5-10 million or more in lifetime revenue”. Similarly, he shared how Kwalee is “prioritizing an understanding of monetization results over marketability”.
Enter, web stores: Studios looking to work with top publishers must prioritize making sustainable, profitable games. Web stores provide one of the most powerful yet simple ways to achieve this.
Customizable designs that feature your game art, a seamless checkout process that supports hundreds of payment methods, localized prices, and a whole host of gamification mechanics make web stores engaging for players and dynamite for mobile game revenue.
And the best part is white label platforms like Appcharge handle all the heavy lifting for you, meaning web stores are not only accessible to the biggest publishers who can afford to build their own store in-house.
5. User Acquisition Costs Are Rising
Trend: The primary challenge many gaming studios are facing is running effective UA at scale while ensuring profitability. Kwalee, for instance, is investing 25 times more in user acquisition per title. This has to be compensated for somehow.
Enter, web stores: As should be clear by now, web stores – when managed smartly – provide significant uplift to profit margins for games selling digital items to players. White label web stores charge anywhere between 5%-15% in fees, in addition to minor payment processing costs – a far cry from Apple’s 30%. With this added cash flow, studios are afforded a lifeline that they can reinvest into their business growth.
All of these trends create a perfect storm for web stores. Sometimes this industry has seen tech solutions being made for problems that don’t yet exist (*cough* web3 games *cough*).
But web stores have emerged at a time where there is a real need for mobile games to find new revenue streams. Not only did Apple turn the industry on its head by deprecating the IDFA, but their 30% cut from every in-game transaction adds insult to injury.
Thanks to Epic Games, studios can break out of this walled garden and usher in a new era of monetization.