After several years of explosive pandemic-driven growth, the gaming industry is facing a difficult year as macroeconomic conditions continue to impact the industry. As securing funds has become far more difficult, as has consumer spending, the market downturn has compelled games to prioritize profit over growth.
Simultaneously, media sources' continued enforcement of privacy guidelines across platforms (iOS and Android) has resulted in limited marketing campaign fields. These constraints limit marketers' ability to access user-level data on their own, forcing them to rely on MMPs. As a result, in 2023, far more emphasis will be placed on privacy-enhancing technology and data clean rooms to facilitate the use of user-level data in a privacy-compliant manner.
Let's dive into the following topics:
- Gaming app markets outlook and forecast 2023;
- 6 major gaming app genre trends & insights;
- What game app marketers should do to seize app growth opportunities in 2023?
The looming recession poses a significant challenge for all gaming companies, particularly those with an IAP-based business model. Gaming companies will need to cut costs even further, including marketing spend and hiring, as well as improve advertising and operational efficiency, and strictly control marketing budgets based on ROAS performance.
The current state of gaming app marketing
In-app purchases (IAP)
will be down YoY in 2022. The impact was more severe on Android apps, which saw a -14% drop year on year, while iOS apps saw only a -1% drop.
When comparing H1 and H2 of 2022, consumer spending is down -7%, with iOS
games down -13% and Android
games down -6%. The downward trend was observed across all genres examined in the report, but the most notable decline was observed in the genres that account for the lion's share of overall IAP revenue in both iOS and Android: RPG and Casino
In contrast to the more micropayment nature of causal games, these genres are distinguished by high IAPs. As the economy slows, it appears that consumers are holding back on spending more money on these types of games.
The ban on intrusive interstitial ads on Google Play has caused quite a stir. Since the ban's implementation, games, particularly those in the hypercasual genre, that rely on these ads for revenue have seen a significant comparative drop in in-app advertising (IAA)
Indeed, while IAA in hypercasual
on Android has increased by 25% on average in nearly all quarters since H1 2021, it has dropped by -6% in each of the last six months - still higher than the Q1 2021 baseline.
IAA for iOS has steadily declined in 2022, falling -26% since January. However, unlike on Android, where hypercasual games account for a large portion of IAA revenue, there were significant IAA revenue declines not only in hypercasual games but also in match, simulation, and puzzle - all of which account for a similar portion of IAA revenue as hypercasual.
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6 major gaming app genre trends & insights
- Hypercasual game;
- Match game;
- Casino game;
- Role playing game (RPG);
Google's ban on IAA on Android has caused some concern
The impact of Google's ban on interstitial ads in hypercasual games can be seen in many countries. Marketers must adapt quickly to an ever-changing environment.
iOS CPI is decreasing
Despite the fact that CPIs are trending higher for iOS across all gaming apps, we are seeing a slowdown in hypercasual games. Now is the time to capitalize before demand rises again.
India saw a healthy 32% YoY increase in overall hypercasual Android installs, and it may prove to be a strategic frontier for marketers in 2023 and beyond.
Paid flat globally but increasing in the United States
Paid Android installs for Match games have flattened globally in H2 2022, but there has been a sharp increase in the US, indicating a concentration of marketing activity in the region.
CPIs are rising on both platforms
Match games are one of the few genres that have seen an increase in CPI on Android globally, and we expect this trend to continue in 2023.
China is in decline
China has a 41% YoY drop in overall Match installs on iOS, which may indicate a long-term shift in gamer preferences toward RPGs with long tails.
Casino CPIs are the highest of the bunch
As of Q4 2022, iOS Casino games had the highest average CPI of $11.45 during the examined time period. Considering owned media may be a more cost-effective option.
Casino IAA revenue is declining
On a global level, IAA is down 33% and 29% on iOS and Android, respectively, as marketers consider other monetization methods and take care not to irritate loyal Casino whales with intrusive ads.
US Casino is still going strong
Casino games performed well in the United States, with 17% and 10% YoY growth on iOS and Android, respectively.
4. Role playing game (RPG)
The Rise of RPGs
RPG games experienced massive growth in the United States, with a 90% and 41% YoY increase in overall installs for iOS and Android, respectively, in 2022. Players are looking for rich, immersive environments that will keep them engrossed for extended periods of time.
IAP and IAA are declining
Monetization revenue has decreased in 2022 as more developers create lengthy RPGs to compete. With inflation on the rise, consumer spending on high IAPs appears to have suffered.
Advertising spending is increasing
We expect total ad spend to rise sharply across both platforms in H2 2022, and this trend to continue in 2023 as marketers try to stay ahead of the competition.
Paid installs on Android are up 33% globally
The importance of simulation games and the specialized user base that they continue to attract were demonstrated by immersive games like Animal Crossing. Paid advertising is viewed by marketers as a simple technique to increase the player base.
IAP steadily declining
Contrary to IAA, which was particularly consistent on Android, IAP decreased across both platforms quarter over quarter in 2023.
iOS stagnant, Android erratic in North America
Although overall Android installs are down 30% YoY in Canada, they are up 28% in the US. In the meantime, iOS is just -1% lower in Canada and 1% higher in the US.
Ad spend rises steadily on Android & iOS
Both platforms experienced a consistent increase in ad spend in 2022, with iOS seeing a 37% increase and Android leading the pack with a 52% YoY growth.
CPI in the US is convergent at $3
Rarely, we see iOS CPIs drop to $3 and Android CPC rise to $3, bringing both platforms to parity and revealing the managers of Puzzle UA's preferred platforms.
India CPI under $0.1
India's CPI for puzzle games remains below the crucial $0.1 barrier in the years 2021–2022, making it a potentially lucrative market for 2023 investments.
What game app marketers should do to seize app growth opportunities in 2023?
Hybrid monetization is crucial
Since RPGs and Hypercasuals both like IAP, there is no reason why they cannot combine the two. A/B testing can be used to compare the two alternatives and determine which one your users prefer.
Keep an eye out for the Apple award
Don't be discouraged from investing in the platform by iOS's high CPIs and aggressive bidding, especially as SKAN 4.0 approaches. In H1 2023, updating your campaigns to be SKAN 4-compliant is a simple approach to keep one step ahead of the competition. Nevertheless, in order to fully utilize the new mechanism, it's important to fully comprehend its complexity.
Pay attention to regional app growth trends
Despite the intense rivalry, investing in the nation is crucial because the United States accounts for over half of all global gaming advertising spending, or $12.2 billion. Yet, populations of gamers are expanding in other nations, where there is less competition for paid installs. Countries with large populations, like Indonesia, India, and Vietnam, are constantly yearning for fresh material.
Don't forget remarketing
Remarketing is still very much alive and well, particularly on Android. When you need to increase sessions and maximize LTV, reach out to lapsed and current customers to let them know about new expansions, new seasons, or new promos.
Use the media account to promote for free
With consistent brand messaging and alluring calls to action, gaming marketers continue to use owned media to connect with both new and seasoned players. Practically free channels are more enticing than ever when money is limited.
Create a community
It could be tempting to eliminate Community Management positions from your organization during cost-cutting measures. Consider this: gamers frequently turn to Twitter, Discord, and Twitch to talk about their favorite games. Businesses with a sticky userbase are those who listen to player comments, publicly address common issues, and genuinely interact with users.