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Chasing the (CPI) Dragon; the ever-increasing cost of mobile user acquisition


Will Freeman has written a good article for PocketGamer that examines the increase in mobile game user acquisition costs over the festive period.

I find this upward trend and one-dimensional thinking to be very sad and worrying for what it means for the larger mobile games ecosystem. The ‘cost’ is not simply fiscal (e.g. in terms of CPI) but much wider in terms of the impact it is having on the wider mobile games ecosystem. I believe that it is damaging to games makers and failing games players alike.

I recently attended the App Marketing Summit in Berlin and many speakers there were proudly talking about how enlightened developers should focus on profitable installs (where LTV>CPI) instead of simply aiming for high chart position or ‘simply’ building huge DAU/MAU levels. Whilst this is true, it is also obvious (sell stuff for more than it costs to make and market….duh!) and doesn’t address the fact that we are fast reaching (or have reached?) the point where only well-funded studios with a portfolio of products, strong IP and which already have an existing audience, have a chance of being commercially sustainable. Is this not the exact same scenario that drove developers away from the traditional triple-A console/PC games market?

My point, however, is not that the temporary utopia where anyone can make a mobile game has been eroded, because it is still perfectly viable for anyone to make a game on mobile. Rather, what vexes me is that if you make a GOOD game that is polished, technically robust, novel, great fun and demonstrably ‘worthy’ of an audience (e.g. the metrics show people engage with it), without the aforementioned commercial capacity and advantages you will have zero (OK, maybe 0.1%) chance of a major breakthrough. There is very little chance, even, of achieving financial breakeven. Ergo, mobile game development is not commercially viable for most game developers.

When the entire industry focuses on using paid-for user acquisition (in-game adverts and cross-promotion) then it is only focussing on ‘pushing’ to that vast ocean of mobile device users, and pushing is proving to necessitate an ever-increasing amount of marketing spondoolies. Focussing only on ‘beating’ the CPI is, ultimately, a battle we are destined to lose as CPI is only ever going to increase. Paying for users is an addiction that this industry has and, currently, accepts but one that needs to overcome for our collective health.

Paid-user acquisition is also highly geared towards supporting large-scale F2P games that successfully milk a minority of users or premium games based around very strong IP that people will pay for before properly trying the product. I have no axe to grind with either – I’m a big fan of F2P, when done well, and who doesn’t find a Minion funny? – but it makes the range of games available very limited in nature. It leads to an endless number of ever-so-slightly improved clones of a small range of game genres and themes (fancy another match3 or endless runner game anyone?).

That means that the vast potential for smaller-scale but creatively and technically innovative games, or simply games aimed at smaller niche audiences, is completely neglected. This isn’t a plea for artificially propping up wannabe indie dreamers; this is about wanting to engender a genuine ecosystem where consumers (our users, our customers, the nice people what pay our bills) get the games they want and those that make them can afford to do so. Should it not be possible to make and games for, say, £100k and to achieve net sales (after Apple, hosting etc) of £200k? Would that not be a good commercial outcome? Is that not profitable? Could that be sustainable?

The paid-user acquisition model is ever so wasteful; it is like paying a bunch of rich foreign fishing boat owners to hang a 10-mile long fishing net off the back of dozens of boats to catch one million sardines when you only want (and can only sell!) the couple of hundred tuna that also get caught. Everything else gets thrown back into the sea. The rich boat owners are the plethora of advertising and cross-promotion networks and the dead sardines get resold again and again to the next unsuspecting and naive customer (aka games developer). Now you can argue (as indeed I have done) that this ‘waste’ is irrelevant so long as the net (pardon the pun) result is that there is more cash in your bank account that when you started. How sustainable is that though? No matter how clever you are with data analysis, ultimately games making in involves creative and commercial risk. I keep hearing that F2P is now well-understood, yet we all see plenty of F2P games continue to fail commercially even though they, presumably, survived the ‘culling of the ugly children’ stage of development when the metrics are not strong enough. The costs of production and the cost of marketing are rising sharply. Would not a more intelligent approach be to try and find ways to acquire users at a lower cost? This industry has always been at the forefront of technology development. It is strange that it isn’t using that expertise to improve the ways in which we match games with gamers.

Paid UA will always exist and will rightly always be part of the marketing mix but right now it is pretty much the only strategy and vast sums of money that are being spent in/on games is leaching away from those that make the games to those that operate the advertising networks. Does it really make sense that those who spend months or even years toiling away, taking creative, technical and commercial risks are simply the means by which another industry (advertising) gets wealthy?

Don’t hold out for the app stores of traditional games media to be the panacea that fixes this problem. The app stores are the means of distribution for all mobile games but the means of discovery for only a tiny proportion of games. This will not change to any significant degree. The vast, broad mobile games audience does not engage with traditional games media. The dozens of ‘discovery apps’ that are out there currently are (largely) characterised by paid-for promotions and, quite often, dirty underhand tactics to promote shoddy games or to grab advertising revenues from unsuspecting users.

I am convinced that we need to be thinking about how we can ‘pull’ users into games by understanding the interests, behaviours, actions and characteristics of individual users and applying all kinds of (well understood and proven) predictive modelling and targeted recommendation techniques to show them the games that they will more likely enjoy and more likely play for extended periods.

That is what we are working towards; “Making it easy to find good mobile games you will enjoy”. If you are open-minded (or just plain utterly desperate) about the state of mobile games user acquisition, then please drop us a line. We’re largely in stealth mode still but keen to talk to anyone in the industry about how things can improve….hell, even fat fishing boat owners.

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