A perfect storm: 5 industry trends fueling the rise of web stores
2023 saw numerous leading 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.
When trying to drive revenue from a mobile game, understanding the intricacies of player spending psychology is paramount. In this article, we’ll explore five strategies to enhance your web store’s revenue, while constantly reflecting the essence of your game.
1. Harness the Power of Gamification Mechanics
Integrating gamification features into your web store can be a game-changer for revenue generation. Daily bonuses, rewarding progress bars and loyalty programs not only boost player retention but also generate repeating, powerful marketing touchpoints. Your web store isn’t just a place to spend; it’s a dynamic hub where your most engaged players can’t resist coming back for more, leveling up their experience and your revenue.
2. Choose and Place Your Offers Strategically
When it comes to offers, it’s not just about what you offer but where you put it. Choosing and positioning offers in sync with your game’s theme can significantly impact revenue. Temporary, event-related offers, like holiday promotions, should steal the limelight at the top of your store (a calendar of all major national holidays is your best friend here). Permanent deals? Keep them cool below, creating a hierarchy that guides players through the journey of tempting offerings.
3. Localize Prices for a Personal Touch
When it comes to prices, speaking the player’s language adds a personal touch to the shopping experience. Presenting prices in familiar currency terms eliminates the confusion that might act as a roadblock to spending. It’s not just about simplifying the transaction; it’s about empowering the player with a clear understanding of the value they’re about to unlock. When choosing a white-label web store solution, make sure it automatically localizes the currency for users. This will save you time and effort.
4. Streamline Checkout for a Seamless Experience
A straightforward and efficient checkout process is non-negotiable for increasing revenue (nobody has time for a clunky checkout process). Players should be able to complete transactions with minimal clicks, ensuring a hassle-free experience.
Yet, the real magic lies in the familiarity factor – integrating payment solutions that players already know and trust. For instance, providing options like Apple Pay instills a sense of security, boosting the player’s confidence in making transactions. It’s the secret sauce to a positive user experience that translates to cold, hard revenue.
5. Customize Your Web Store Design
One of the key factors influencing player spending is the environment in which they make purchases. By customizing your web store to align with the theme of your game, you create a familiar and trustworthy space for players, a space they feel at home spending their hard-earned cash. This synergy goes beyond aesthetics; it infiltrates the player’s comfort zone, making them more inclined to spend.
If you’re using a white-label web store solution, customizing your store’s design is straightforward. Simply upload your art and assets, head to your settings, select your template, logo, background image, font style and colors, and more. The ease of this process enables you to frequently tinker with your artwork and store design to see what maximizes purchases.
Web Stores for Mobile Games: Dynamite for your Revenue
A deep understanding of player psychology and strategic implementation of user-friendly features can create a compelling environment that not only aligns with player preferences but also maximizes revenue potential. With each click, each thematic alignment, and each gamified interaction, you’re not just offering a product – you’re orchestrating an experience that resonates with players.
Much of this revenue, of course, comes from the minority of players, your VIPs. But the App Store and Google Play make engaging with these players and providing them with deals more challenging than it should be—and they, of course, take that 30% fee. That’s where an off-app payment system, or web store, can come in. Not only can this provide a much fairer deal for publishers—Appcharge, for example, takes just a 5% fee for powering transactions—but one of the biggest opportunities they offer is catering to those VIPs.
These users are the most engaged and highest spending players in your game. Ensuring a good experience, where they feel they are getting the appropriate rewards and perks for their investments, not only helps your title be successful, but can act as a reflection to how the wider playerbase feels about your game. As we noted in the Mobile Game Web Store Designer’s Playbook, building a community is a great way to keep players engaged and bring them together.
One of the best ways to do this (aside from in-game options such as clans, leaderboards, competitions, and various multiplayer modes) is to build your community outside of the app and onto platforms such as Discord, social media and even a dedicated website. These platforms let you engage with your players—and your VIPs—in ways that the App Store and Google Play don’t let you.
Through Discord, you can promote exclusive web store bundles, promote events with special giveaways available only out of the game, communicate directly with your players in a two-way conversation, and obtain direct feedback on specific features, updates, and what your players want to see most in the game. On Twitch, not only can the streaming platform help promote your title, it’s another way to share content and also promote exclusive web store offers. The same goes for social media—you’re meeting players where they are, while also having a platform to offer them the best deals, which you can’t do on closed mobile ecosystems.
It’s in these communities that you can build closer relationships with your highest spending players. Depending on your strategy, you could potentially communicate with players out of the game and through chatbots on Facebook, or via email marketing integration, to promote the latest and best deals. You could even offer limited-time discounts, bundles or even early access to new features, all through a web store that offers a better deal. By creating a direct-to-player monetization strategy, developers can increase their revenue and build a loyal fanbase outside of the restrictive app stores, rather than having to go through them.
A web store can work in tandem with your community strategy, particularly when it comes to VIPs. For starters, you have total control on the deals you can provide players and which price points to choose—and you are not at the mercy of any potential future policy changes by Apple or Google. This means you can provide better offers for players, who can get more bang for their buck when publishers don’t have to account for the 30% revenue share with platform holders.
For VIPs, you can offer a special loyalty program with better rates than in the app. What’s more, by linking platforms like Appcharge to your mobile game, you can segment your most important users and surface deals most appropriate to them. These deals can be personalised even to specific individuals, based on how they engage with the game and their current progress, and this entire process can be automated.
To attract players to actually engage with your web store, however, is no simple task. Many purchases in-game are made emotionally, an experience that is extremely challenging to replicate out of the app. That’s why building a community is important, and engaging with your top players to showcase the better deals on offer from your own store. The experience can also be improved by ‘gamifying’ the web store, making it look and feel similar to what players see in-game.
With AppCharge, developers can automate user segmentation, enabling them to create custom rules based on player behaviour, game progression, spending levels and habits, the country they live in, and preferred payment methods. This personalization means developers can create and surface the most relevant offers to players, helping to increase conversion, and therefore revenue. And this all happens in an environment where publishers can take 95% of the revenue, not just 70%. What’s more, this can all be done without an SDK.
A Fairer Deal
Web stores have the potential to be much more than a way to obtain a better revenue share than mobile platform holders currently provide. They can play a key role in keeping VIPs happy and engaged with your game, ensuring they get the best and most relevant deals for their money, a process made easier by having a web store you control and generate higher returns from. By building communities out-of-app, publishers are able to go direct to players, build better relationships, and provide the most value.
Google Play Proposes Third-Party Payments in the UK – But is it a Good Deal for Developers?
The proposal, if enacted, would enable developers who provide options for both Google Pay and alternative billing to have Google’s revenue cut reduced by 4% to a 26% share (or 11% on their first $1 million)—if users pay through a different payment service provider (PSP). However, if developers do not offer Google Pay as an option, they will be penalised and the standard platform fee would only be cut by 3% to 27% (or 12% on their first $1 million).
Should users choose to pay with Google Pay, the revenue share will remain at a 70/30 split.
The changes would be rolled out for non-gaming apps first, before eventually allowing games developers to be eligible for the new billing rates and options “no later than October 2023”.
The proposed changes would only impact in-app purchases in the UK, though similar actions have been taken in other countries.
Why Proposes Third-Party Payments Now?
Google’s announcement comes in response to an investigation by the UK’s Competition and Markets Authority (CMA), which began in June 2022, to look into “suspected anti-competitive conduct” by the tech giant. A particular focus of the ongoing investigation concerns Google Play’s rules which “oblige app developers offering digital content to use Google Play’s own billing system for in-app purchases”.
At present, the CMA’s position is that it believes the new commitments from Google are “sufficient to address the competition concerns”. While no final decision has been made, pending consultation, the CMA has proposed to accept the changes.
What Do the Changes Really Mean?
Any climbdown from the standard 30% revenue share should be considered significant, as Apple and Google fight tooth and nail to retain the status quo. This latest proposal is another example of platform holders making as small a concession as possible to retain their lucrative cash cows.
But while it may seem like a concession, for developers, the reality is that it will not make a notable difference to their businesses on the current terms. A reduction of 3% to 4% will not cover the costs of using an alternative billing system, where the revenue share is often 5% or more (AppCharge takes a 5% cut per transaction).
PSPs charge such fees to cover the costs of billing, invoicing, fraud, chargeback cover, etc. Such a small reduction in Google’s share means that, should customers use another payment system, it would actually cost developers a greater share of their revenue, not reduce it.
These terms mean that Google Pay keeps its position as the preferential payment method, while creating a challenging environment for alternative options. And of course, in any event, Google will continue to maintain its standard 30% share on all Google Pay transactions, thus effectively retaining the status quo. Of course, if you’d like to discuss potential alternative PSPs for an both in-app and out-of-app solution, you can speak to the AppCharge team.
Rick VanMeter, executive director of advocacy group The Coalition for App Fairness, which champions app store reform, told TechCrunch he believes the proposals would enable Google to “continue taking a massive cut on services they do not even provide”. He added: “This solution will not create meaningful competition and is a bad deal for developers and consumers.”
It remains to be seen whether the CMA will ultimately accept or reject Google’s proposals, and what the future of third-party payments will look like on the marketplace in the UK.
Apple and Google have both come under increasing pressure around the world over concerns about anti-competitive practices, namely over the exclusive use of their own payment systems in their app stores.
The UK proposal is now following suit with its previous successful negotiations with regulators.
While it’s a positive step for Google to introduce alternative billing systems on its UK Play store, the current proposals aren’t a particularly attractive proposition. For developers really looking to take advantage of the $30 billion opportunity in the mobile games market – which is the amount of revenue the App Store and Google Play took last year from in-app purchases – the best solution still remains in utilising web stores.
By bringing your community of players to a web store, developers can offer better deals to players, all while retaining a higher share of revenue. Regulators continue to chip away at the app store monopolies, but the industry is a long way off from a fairer deal for all.
The Mobile Game Web Store Designer’s Playbook
There’s a monumental shift happening in the mobile games industry. Since Epic Games’ lawsuit against Apple centering around a dispute over the right to use its own payment system in Fortnite on the App Store—rather than being forced to use Apple Pay—governments and regulators around the world have increased their scrutiny over potentially monopolistic app store practices.
Specifically, their concerns have focused on the 70/30 revenue split, whether it’s fair, and whether companies should be able to integrate their own or other third-party payment systems. There has been resistance from Apple and Google so far, but that hasn’t stopped publishers from opening their own web stores to skirt around the app store tax. The clock appears to be ticking on the established revenue share model and moving in favour of the creators, not the platform holders.
But it’s not a simple case of ‘build it and they will come’. Creating a successful web store and getting players to use it requires a thoughtful strategy—but the Appcharge team has you covered. We’ve put together a list of top tips to help you build the best web store possible so you can unlock a new, potentially lucrative revenue stream that’s free of the 30% app store tax (in fact, Appcharge only takes about 5% for powering your transactions).
Price IAPs Differently
The global mobile games market may have generated $110 million in 2022, but a sizable chunk of that is sucked up by the business expenses of running a successful title. The chief among them is the 30% revenue share Apple and Google take from each in-app purchase (with the exception of titles that generate under $1 million in a year or repeating subscriptions).
As a consequence, in-game economies have to be built around this cut to ensure a title is profitable, which can lead to inflated prices compared to what they might be otherwise. On a web store, purchases such as currency, boosters, cosmetics, season passes—anything you have to sell—can be priced differently. Without having to worry about losing 30% of each in-app purchase off the bat, developers can give players better deals reflective of a transaction’s true value, which can lead to better engagement and a more enjoyable spending experience.
Developers can also price outside the parameters of the app stores. Previously the App Store capped in-app purchases at $1,000, though these rules have since been relaxed.
Personalisation and Segmentation
Game stores shouldn’t just offer generic in-app purchases for sale (though web stores do offer plenty of opportunities for better deals, as our previous tip shows).
One of the best methods of making a shop successful—on mobile or in the browser—is to surface personalised deals to your players, segmenting them based on their playing habits, their progress and personal profile. Offering a starter pack after letting a new player progress through the early stages of the game, once you know they are engaged, is much more effective than notifying them of the deal as soon as they open the app for the first time. Similarly, other special deals can be presented to players that are adapted to their skill level, or perhaps surfaced when they are stuck on a particular level.
These same practices can be brought to web stores. By segmenting users based on their customerID and linking this across from the mobile app to the browser, developers can surface special deals for anything from a season pass to in-game currency like gems can be tailored to individuals. Conversions can be challenging when creating the barrier of a web store to payments, but when successfully implemented, this strategy could improve the lifetime value (LTV) for the most engaged players who feel they are getting a better deal.
Promotions can even be set for specific dates and times, such as deals of the month or promotions that encourage not only player spending, but other free bonuses on top, again further encouraging engagement and retention in the long-term.
Ultimately, a web store can provide a key function in live ops, powered by personalisation and segmentation. And with a service like Appcharge, much of this work can be set up for automation, meaning fewer resources need to be spent on managing the payment system and the offers it surfaces.
One crucial step to creating a successful web store is to ‘gamify’ the design and experience. Significant time, investment and testing goes into creating in-game shops and the entire in-game economy in mobile titles. That exact same mindset should be brought to the web experience. It’s easy to just create a simple, run-of-the-mill storefront in the browser with a few good deals and leave it at that.
But to really maximise their potential, web stores should provide a similar experience to what players have in-game. Making purchases should be part of the fun and welcoming, not just a bland experience for the simple purpose of making a transaction. Free-to-play mobile developers already excel at this, so why should bringing this to the web be any different?
There is clearly a challenge in pulling the player out of a mobile game and having them engage with the web store, but by gamifying this experience, developers can help this become more seamless and satisfying. The rewards for players are better deals, and for developers, better returns. Working in tandem with better online pricing and personalised deals, you can build a satisfying experience for your players.
Many of the world’s top publishers excel at building communities around their top games. Creating a social experience in-game, whether that’s through PvP, PvE, tournaments or full fledged clans, can be a huge boon for engagement and long-term retention. Building on this outside of the app and onto other platforms, such as Discord, social media and/or dedicated websites, is another great way to keep players engaged and bring them together.
Bringing your most loyal players into a close-knit community outside of the game can not only improve their enjoyment of it, but it provides a chance for the developer to engage directly with them. This could come in the form of getting feedback on the latest updates, or having the ability to direct them to special deals on your web store that could get them more bang for their buck thanks to the lack of store fees.
It’s important to note that, at present, App Store game developers cannot directly link to a store outside of the platform (‘Reader Apps’, such as magazines, newspapers, books, audio, music, or video apps, can link to external websites for account creation and management). So building your community outside of that ecosystem early on is critical.
You Don’t Have to Build it Yourself
Following the best practices we’ve set out in this article can help you make your web store a success, and while it takes careful planning and a solid execution, you don’t have to do it all yourself.
A partner such as Appcharge provides an off-the-shelf solution to help you create a gamified, mobile-first web store. Taking just a 5% cut of each purchase, we take away the admin work of payment and billing, removing admin headaches, so you can focus on building your game and its community.
Appcharge’s Merchant of Record services offload operational burdens, managing anything from collecting sales tax, ensuring Payment Card Industry (PCI) compliance and dealing with refunds and chargebacks, effectively managing all payments and associated liabilities. The extra benefit of this model is that, given games are a global business, Appcharge simplifies the process of selling across borders so you don’t have to. You can learn more about these services in our guide to merchant of record services for mobile games publishers here.
Appcharge also offers a variety of templates developers can utilise to build out their web stores, supporting you with the best practices of building a storefront for the browser.
Ultimately, by working with a partner, developers can save money and resources on building these services from scratch and focus on development and publishing successful games. With Appcharge’s solution, there’s no SDK involved, and requires a minimal amount of integration – it just requires elements such as the customerID and balance report, while segmentation data can be utilised to personalise the web store experience.
Capitalise on the Shift to Web Stores
Web stores help you design your game economy differently, in a way that offers players better deals and puts more of the revenue generated to where it should go: you, the developer. By implementing the tips in this article—offering better deals, personalising offers, gamifying the experience, and building a community—developers are well placed to take advantage of this shift in the mobile sector to new payment options.
The world’s biggest mobile games companies, including Clash of Clans developer Supercell, Star Trek: Fleet Command publisher Scopely, and RAID: Shadow Legends’ Plarium, are all doing it. Now’s your chance to join them.
Interested in finding out how Appcharge can help you build your own web store? Contact us today. Our team can provide you with a demo and further discuss the benefits of adopting privacy-compliant practices and leveraging new technologies. Don’t miss out on the opportunity to stay ahead of the curve and position yourself for success in 2023 and beyond.
Mobile Games: $30 Billion Overestimated!
The global mobile games industry generated $110 billion from player spending on in-app purchases during 2022, according to data.ai’s State of Mobile report.
Despite representing a 5% decrease year-over-year—caused by factors such as Apple’s App Tracking Transparency (ATT) changes, global economic challenges and the post-pandemic return to normalcy—it’s still a sign of an enormous and wildly lucrative industry.
But the headline figure and top success stories mask a hidden truth in the sector: as much as 70% of that figure actually represents expenses to developers and publishers. Partnership deals, tech licences, service provider fees, user acquisition costs are all a weight on profitability, albeit necessary ones.
But the biggest chunk of revenue loss is the 30% share taken by Apple and Google (while in China this fee can in fact be greater). Off the bat, as far as developers and publishers are concerned—the companies fueling this industry—the mobile games market is actually worth $77 billion, minus the further costs of running a successful business.
It’s still a hefty sum, but the platform holders are arguably holding the industry back from delivering more for the creators themselves.
There are signs of a sea change, however, with the 30% revenue share by Apple and Google facing significant challenges in recent years. Perhaps the most famous example is Epic Games’ lawsuit against Apple over the fee, as well as other complaints, which came after the company introduced its own payment system into battle royale hit Fortnite in August 2020, a move that broke App Store rules. Apple summarily removed the title from its store—despite having generated $1.2 billion on the marketplace, according to Sensor Tower—leading to a lawsuit that has since put the 30% platform fee under the spotlight. Governments and regulators across the world have since taken increased notice, and more importantly, are taking action.
Different remedies have been put forward by Apple and Google across different countries to appease local laws, and while the platform holders have been resistant to loosening their grip on these highly lucrative marketplaces, the genie has been let out of the bottle. It may take a long time, but the 30% fee has come under immense pressure, and change could one day be on the cards to lower this substantially—though not without a fight first.
Some of the world’s top publishers aren’t waiting around, however. While current rules mean that game developers can’t direct users to pay off the platform, that hasn’t stopped them opening web stores to navigate around the fees. Scopely has launched a web store for one of its hit titles, Star Trek :Fleet Command to PC and browser, with purchases able to be accessed within the mobile game. Plarium’s flagship title RAID: Shadow Legends, which has accumulated an estimated $1 billion+ on mobile, can also be accessed on PC and Mac through Plarium Play, with purchases under a user’s account accessible across devices.
Even Supercell now has its own web store, available in select countries, for players to purchase in-game currency such as gems in its blockbuster titles like Clash of Clans and Clash Royale.
But it’s not just an opportunity for the largest companies in games to take advantage of. Any sized developer can and should be able to leverage a web store to help spur on greater returns. That’s why we founded Appcharge, to make web store creation accessible to everyone, while only taking a small cut of about 5%. If you don’t make any money, neither do we.
Appcharge’s founders have extensive games industry experience with top games companies such as IronSource and Moon Active, giving the team inside knowledge of the potential of web stores for developers, and what it takes to build and manage them successfully. To that end, Appcharge has built a direct-to-player platform that helps studios unlock the full potential of their business by selling digital goods and building stronger relationships with their players outside of the app stores.
But how do we plan to achieve this?
A web store means you won’t have to split your revenue share with Apple and Google. Using Appcharge’s platform, you only have to pay a share of around 5% of revenue from player spending.
Appcharge provides an off-the-shelf, mobile native web store built specifically with games in mind, with developers able to completely customise templates to their own needs. Developers can also integrate pricing tiers to any amounts they like, rather than be restricted by set steps and tiers required by platform holders.
We also aim to provide mobile-first, ‘gamified’ solutions to the web store pages, ensuring they look like a marketplace you’d find within a mobile game, and not just a boring, run-of-the-mill web storefront. To make a web store successful, it’s important to translate that in-game experience over to wherever your players are, particularly when they are making purchases. What’s more, our payment solution doesn’t require an SDK, making it easy to integrate into your game;s economy.
As well as operational functions, Appcharge acts as a payment and billing solution, taking away headaches such as invoicing, VAT, fraud, localised payments, tax and documentation, effectively acting as the merchant of record for any transaction through the store.
Appcharge also enables segmentation, allowing developers to personalise store pages to individual players, rather than offering users generic bundles.
There’s a clear opportunity for developers and publishers around the world to diversify their revenue stream, earn more for their efforts, and engage directly with their players. It’s time the industry knocked down the walled gardens and put more of that $110 billion market value into the pockets of developers and publishers, rather than the platform holders.
Interested in finding out how Appcharge can help you build your own web store? Contact us today. Our team can provide you with a demo and further discuss the benefits of adopting privacy-compliant practices and leveraging new technologies. Don’t miss out on the opportunity to stay ahead of the curve and position yourself for success in 2023 and beyond.
Beyond the App Store: The future of IAP monetization
The future of in-app monetization is, well, out-of-app.
With Apple’s deprecation of the IDFA and longstanding refusal to adjust their 30% tax on developers, in addition to an overall drop in game revenue across the board, the mobile gaming landscape has been feeling the strain.
But the industry received a lifeline thanks to Tim Sweeney and Epic Games. As a result of their much publicized legal battle with Apple, it was ruled that app developers can, through communication with users outside of the app only, direct them to their own external web stores to purchase in-game items, bypassing Apple’s 30% commission.
While industry giants have been quietly building out their web stores with in-house resources, the vast majority of studios don’t have the war chest to do the same. And so we launched AppCharge. Our mission? To revolutionize IAP monetization with a direct-to-player monetization platform that gives developers a headstart from the get-go, rather than a handicap.
Keep reading to learn more about the rise of mobile game web stores and how you can use AppCharge to skyrocket your game’s monetization – without doing much at all.
The growing importance of out-of-app (OOA) monetization
Looked at solely through the lens of bypassing Apple’s 30% tax, web stores are a no brainer for games. But the need for web stores is made increasingly urgent when you consider three trends that are making monetization of game items all the more crucial in our industry.
The emergence of games-as-a-service model
Gamers have increasingly high expectations of what a game should be; games are expected to constantly evolve, add new features and experiences. On one side of the coin, this puts a strain on the budgets of studios, who need to hire liveops teams.
On the other side of the coin, a natural product of a liveops strategy is greater room for IAP monetization. New battle passes, in-game items, and special offers are hallmarks of liveops strategies – it’s just when you cut 30% off from all transactions, there isn’t much room for error in order for the investment on those liveops salaries to pay dividends.
Webstores represent a major boost to liveops-focused games. Not only do they provide studios with more breathing space and better return on their liveops investment by bypassing Apple’s 30% cut, but they actually facilitate more robust and engaging offers for users. From highly personalized offers to new loyalty programs, webstores serve as the backbone of a profitable and sustainable liveops strategy.
From hypercasual to hybrid casual
The second trend that highlights the growing importance of IAP monetization is hypercasual’s shift to hybrid casual in recent years. Apple’s deprecation of the IDFA essentially killed the hypercasual industry, which relied on hyper-efficient, targeted user acquisition, and quick ad monetization from users with low LTVs.
This model has been jeopardized as a result of Apple’s changes: revenue generated by hypercasual games dropped 10% in 2022 compared to 2021, down to $12.3bn from $13.7bn.
As a result, hypercasual developers are being forced to find ways to add deeper layers to their games, in order to increase user retention and LTV, and add IAP monetization to the previously ad-focused model.
Overall reduction in ad monetization
It’s not just the hypercasual category that’s feeling the heat. Following the IDFA apocalypse, games across the board are spending less aggressively on UA.
Consequently, 2022 saw a reduction in eCPMs compared to the previous year, causing games to earn less money from ads. And it’s unclear if the industry will recover to its pre-IDFA levels of ad monetization in the near future.
In order to survive, games must build out their IAP monetization strategies.
Direct to player: A new era in gaming
A perfect storm
All of these forces, and the Apple-Epic legal case, combined to create a perfect storm for the rise of D2C web stores in mobile gaming.
Industry leaders like Supercell, Moon Active, Playtika and Scopely, all of whom monetize heavily from IAPs, already launched web stores for their hit games. Numerous others have followed suit.
The benefits to game developers of D2P web stores are obvious: a significant uplift to their profit from sales of game items. Instead of losing 30% of all revenue to Apple, developers who build their own online stores pocket all of the fee.
Challenges of web stores
However, there are challenges posed by web stores. Firstly, Apple forbids games from advertising their external stores inside their apps – meaning developers need to find alternative ways to inform users. For large, legacy publishers with strong followings on social media, this isn’t such a big issue. For smaller outfits who are still building their brand, it requires some thinking – like partnering with influencers and building a strong community.
It’s also much more convenient for a user to make an IAP within the game, rather than going to an external web store. Because of this, developers will need to find a way to incentivize this change in user behavior. However, given the large boost to their margins afforded by web store transactions, discounts and incentives like loyalty programs can be offered to get the ball rolling and begin changing user habits.
Lastly, building and maintaining a web store using in-house tech requires time and investment. AppCharge’s co-founder actually led the development of Moon Active’s web store and knows first-hand how time consuming – and expensive – it can be. Giant companies like Moon Active can afford to do this, but most others need a third-party tool that makes it easy to launch a web store.
AppCharge: Powering the D2C mobile gaming economy
AppCharge offers a white-label web store platform for mobile game developers. Taking just a 5% cut from purchases, our platform allows for total customization, with developers able to design every aspect of their store, use gamification elements to boost engagement and encourage repeat purchases, set up segmentation to provide the most relevant offers for all users, and seamlessly handle payments and billing.
The best part?
After the initial integration to update the balance in customer accounts, the entire D2P monetization strategy can be managed by live ops and monetization managers – no technical development needed.
Compared to building your own webstore, this saves significant resources and allows teams to focus on building out a winning D2P strategy that improves user engagement, strengthens retention, and increases repeat purchases.
The future of IAP monetization is here, and we’re proud to be leading the way.
Unlock Your Game’s True Revenue Potential with AppCharge
Ready to transform your game’s monetization strategy and reap the rewards of out-of-app web stores? Get started with AppCharge today and watch your revenue skyrocket while creating a more engaging and personalized experience for your players.
The Rise and Relevance of Webstores
The gaming industry is facing tough times ahead, as the pandemic-induced surge in growth has come to a halt. Companies are now prioritizing profits over growth, and finding funding has become a major challenge. The collapse of Silicon Valley Bank, which was known for providing financing to technology companies, has only added to the industry’s uncertainty.
One of the biggest challenges facing gaming companies is the increasing competition for user acquisition, which has resulted in skyrocketing marketing costs. The cost per install (CPI) has continued to climb, leading to a flat ad spend trendline in 2022. Marketers increased their budgets to capture the attention of gamers during the New Year and regional holiday seasons, resulting in a bump in app install ad spend for both Android and iOS gaming apps. Although paid installs dropped due to seasonal trends, CPI continued to rise. Android saw a modest 2% YoY increase in spending due to a steadier CPI, while iOS witnessed a significant 20% YoY growth in spending due to higher CPIs. The average cost per install on the iOS platform reached $3.8 in Q4 2022, an 88% increase from $2 in Q1 2021 and a 35% YoY increase. Despite these rising costs, marketers remain invested in iOS games due to the high lifetime value (LTV) of their users. (AppsFlyer, The state of gaming app marketing 2023 edition)
“[The impending recession] is a big challenge for all gaming companies, especially those with an IAP-based business model. Gaming companies will need to reduce cost even more, including marketing spend and hiring, improve their advertising and operations efficiency, and strictly control marketing budgets based on ROAS performance.” Vickie Chen, CEO, Avia Games
The gaming industry faced numerous obstacles in 2022, yet there was still a glimmer of hope for iOS paid installs, which saw a 10% YoY growth. Marketers adapted to the changing landscape by maximizing the potential of SKAN 3, while IDFA matching rates rose to 26%. These developments offered some relief to the industry’s ongoing struggles, demonstrating that companies that can adapt to new technologies and strategies have a better chance of thriving.
The Power of Webstores: A New Revenue Stream for Mobile Game Developers
Gaming companies can also consider utilizing a webstore platform as a new revenue stream. These platforms offer all the necessary modules and features needed to launch a branded webstore for your community, without the need for in-house development. By leveraging a webstore platform, gaming companies can save on the costs and resources associated with building and maintaining their own webstore, while still being able to offer promotions, discounts, and direct relationships with customers. This approach provides a cost-effective, and proven successful from the leading gaming studios that have all built their own internally, alternative to monetizing through app stores and allows mobile game developers to increase their margins and diversify their revenue streams. In addition to cost savings and increased revenue, utilizing a webstore platform also offers benefits such as privacy and optimization features that are already built into the platform.
Privacy and Optimization: Navigating the Challenges of iOS 15 and SKAN 4.0
The enforcement of privacy guidelines across platforms continues to present significant challenges for gaming marketers in 2023. With restrictions limiting the ability of marketers to access user-level data on their own, many are turning to MMPs and privacy-enhancing technology to facilitate the utilization of user-level data in a privacy-compliant way. At the same time, iOS measurement and optimization in the age of privacy continues to present significant challenges for gaming marketers. The upgraded SKAN 4.0 offers significant improvements, but it remains to be seen whether it will effectively address these challenges this year.
Surviving and Thriving: The Gaming Industry’s Path Forward in 2023
To succeed in the long run, gaming companies need to focus on optimizing their operations, cutting costs, and embracing new revenue streams. Utilizing an off-the-shelf mobile webstore platform can be a cost-effective way to diversify revenue streams without in-house development. In addition to this, gaming companies should also adopt privacy-compliant practices to build trust with their customers and maintain compliance with regulations. Ultimately, the key to success in the gaming industry is to stay ahead of the curve and adapt to changing market conditions. By embracing innovation, thinking outside the box, and leveraging new technologies and revenue streams, gaming companies can position themselves for success in 2023 and beyond. As the gaming industry navigates the challenges of the year ahead, those who focus on levelling up and emerging stronger will be the ones to come out on top.