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.