Over the past few years, we have seen many console developers close their doors and their redundant staff set up smaller studios to create casual games. The lure of huge profits generated by the likes of Candy Crush and Angry Birds must seem very appealing, but competition for the casual gamer is huge – games and apps often never make a cent.
With around 300 million current generation consoles, the target audience is far smaller than mobile and casual gaming, but there is also less competition. When you look at the numbers it is no surprise that many games never make it to the top of the charts: Google Play has over 700,000 apps, iTunes has over 775,000 and Facebook users can access a staggering 9 million apps.
The market is also changing almost every day; recently it was announced that Apple’s global share of the smartphone market has dropped to less than 14%. In 2012 they held 16.6 percent, which has since plummeted to just 13.6 percent in 2013, the lowest level since the second quarter of 2010. Strategy Analytics executive director Neil Mawston commented that Samsung is now their main competitor:
“The current iPhone portfolio is under-performing and Apple is at risk of being trapped in a pincer movement between rival 3-inch Android models at the low-end and 5-inch Android models at the high-end.”
For developers, Apple’s loss does not necessarily to translate in to Google’s gain; a small group of gaming enthusiasts known as Jellyfisher have recently released sales data for the game Soccer Blitz. It was released on the Android store on November 26th 2012 and has reached over 50,000 downloads.
Soccer Blitz has in-game adverts and after revenue from these generated just $250, the team decided to add in-app purchases to try to create further profit. They have listed the purchases along with the cost per user and the number of sales of each pack:
- Remove ads – Cost 50p/99c
Total purchases 2 – Total revenue £1.24
- 10,000 coin pack – Cost 50p/99c
Total purchases 13 – Total revenue approximately £7
- 100,000 coin pack – Cost 75p/$1.14
Total purchases 3 – Total revenue approximately £4.85
- 300,000 coin pack – Cost 99p/$1.49
Total purchases 2 – Total revenue approximately £6.20
“In 8 months of being on the store we didn’t even manage to make £20 from in app purchases,” blogged Jellyfisher, “These figures are a huge disappointment.”
Sales of games for the new OUYA console have also been disappointing, with most gamers only playing the free games. During the last month, just 27 percent of owners have purchased a game with only 8 percent of gamers upgrading from the free to paid versions of the top twenty titles on the console.
The console has also lost a number of exclusive games; despite “doing great” on OUYA the top selling title, Towerfall, will now be released on PC, and joining it will be another previously OUYA exclusive, Polarity.
“I tried to negotiate with OUYA to remain exclusive but they were fairly resistant to change,” explained Polarity developer Craig Littler. “As such I think there will be plenty of devs who just use them as ‘another platform’ rather than committing to them exclusively.”
OUYA CEO Julie Uhrman has even emailed early adopters in order to apologise to those who have had “any kind of less-than-OUYA experience” and gifted them $13.37 credit to be used in the console’s Discover store.
Facebook gaming giant Zynga has also recorded a huge loss in revenue, its latest financial results for Q2 2013 revealed a revenue of $231 million, down 31% year-over-year, and bookings of $188 million, down 38% year-over-year.
This resulted in a net loss of $16 million, with the company now in the midst of a massive cost-cutting exercise, “top-to-bottom business reviews” which aim to save $80 million a year. Even with these drastic measures however, the company expects to post a net loss between $14 and $43 million next quarter. This shake-up has resulted in the departure of three company executives – things aren’t looking bright for Zynga.
“We need to get back to basics and take a longer term view on our products and business, develop more efficient processes and tighten up execution all across the company,” wrote Don Mattrick, the new CEO of Zynga. “We have a lot of hard work in front of us and as we reset, we expect to see more volatility in our business than we would like over the next two to four quarters.”
Zynga acquired Draw Something developer OMGPOP for $180 million less than 18 months ago and has recently announced it will shut down all but three of their games, along with the OMGPOP website. Most of the staff were laid off in June but the remaining few made one last attempt to save the studio’s website and tried to buy it back from Zynga independently. After being refused a sale, they offered to run the site for free, though yet again Zynga were not interested.
Other developers have also had mass lay-offs including EA Montreal, the company’s mobile branch, which was hit with 200+ job losses earlier this year and PopCap, also owned by EA, closed a number of its international studios.
However it’s not all doom and gloom for the casual game market: Puzzles & Dragons, which is developed by GungHo, has seen sales increase of 945.5 percent in the last six months alone. The game is turning over a staggering $4.9 million in sales per day which, after costs, makes GungHo mind-blowing $1.8 million net profit per day.[drop2]I spoke to David Fullick of developers Monster & Monster and asked him why they chose iOS as the lead platform for their forthcoming game Deep Loot.
“I think the main appeal in developing for iOS is the still massive user base of consumers who, on average, are more willing to spend cash on mobile content than users on other platforms,” said David. “There’s also the fact it’s a lot easier to create and test a product for a dozen or so Apple devices than it is for the 4000+ android powered mobiles and tablets.
“I think there’s fair few people out there who just assume that once their game is on the store that their job is done and the money will come rolling in. This just isn’t the case. Any smart developer/company knows that to make your product a success you need some good marketing, a strong online presence, good contacts, a lot of hard work and a substantial chunk of good luck!”
Many developers find the pricing of casual games to be frustrating, Lee Perry left Epic Games a year ago to set up BitMonster Games and spoke about the problem:
“We reduced Lili for a week to $.99 and there were forum threads saying, ‘Hey guys, what’s this game? Is it worth $.99? I don’t know; I’m on the fence about it.’ That’s really frustrating because a lot of work goes into this. There seem to be some projects that are pretty successful doing premium stuff, personally, I’m a little timid of that right now.
“In an ideal world, I think it would be great if you could just create a game that people would be happy to pay $5 or $7 for, but I think those are the exception in the app store right now.”
With the market evolving almost daily, it is no surprise that some developers have decided to stick to what they know best. I asked James Marsden of Futurlab why their games have not been released on iOS or Android.
“Our studio is comprised of individuals that don’t play games on our phones. I can’t remember the last time I played a game on my phone,” said James. “Coconut Dodge was published on iOS because EA paid us to do it, but we don’t understand the casual audience.”