The Ups And Downs Of The Casual Gaming Market

Some you win, some you lose.

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.

zyngraph

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.”

Sources: 123456789101112, 13, 14, 15, 16, 17, 18

16 Comments

  1. Some very interesting facts and figures here, the Soccer Blitz info especially. Good stuff TC.

    • Did you get any figures from ad revenue for that game? That’d be very interesting.

    • Quite clearly it was a rubbish game. 50k downloads and 49.5k uninstalls. Bet they didn’t mention the retention rate…

      I have stuff on Google Play, and pretty much every month make $300+ from AdSense and this is a spare time dev work, it pays for beer, motorbikes, consoles and phones.

      • Hi,

        I’m one of the jellyfisher guys. Yes the game isn’t perfect but if you read the article it was an experiment to test the market. I’m a huge fan of this website and really appreciate you guys sharing our message. We are working on our next title which will be MUCH better! Hopefully we can do an exclusive feature soon. Thanks for the feedback good and bad.

        Thanks! :-)

      • @hunter Also I’ll happily share all our info/analytics/data. I don’t know the average retention rate or what to expect. We all work in well known companies, check my twitter. This is our first app and the mobile market is new to us. Congrats on your numbers they are much better than ours, maybe you can share some insight.

      • Good luck for the future, it’s a hotly competitive market!

  2. Great article with lots and lots of background info in there. Well done Sir!

    Personally I feel that the whole gaming-on-my-phone period has already died. I played Angry Birds and a few other tower defence games and then got quite bored of it all… Back to the console of choice.

  3. Fantastic read. Really interesting stuff.

  4. One of your best articles, fella. Very informative and a little heartbreaking for the devs who really should be making more money from all of this.

    The gold rush is over and the mobile-device gaming market will settle over the coming year. We’ll see plenty of people give up developing for such platforms and maybe try their hands at indie entries on the X1 or PS4, I reckon. Especially for the more committed little studios who actually want to charge a handful of ££ for something particularly good and maybe in need of buttons! :-)

  5. Yeah I feel it was ‘cool’ for a while to play Farmville etc. My girlfriend would play one iPhone game constantly for a month and then go to a different one and never play it again. Everytime not paying a penny for it, choosing instead to wait to play (W2P) rather than paying for an extra life (for example). I hope that indie games become slightly deeper experiences on the PS4 and X1. Just that some have a simple, albeit addictive, gameplay mechanic that just repeats throughout. Only giving insentive to continue by slowly drip feeding collectibles and ranks.
    Also I believe the unofficial 79p price tag for the iOS has had a detrimental effect on the developers’ chances of success on the platform.

  6. That was a good read and James Marsden provided a refreshing point of view i thought.

    The casual market does seem fairly discombobulating when you consider people spending up to £300 on iaps in Candy Crush. As a premium game it couldn’t be worth more than a tenner. :/

  7. The main problem I have with casual games is the obfuscation of pricing. In app purchases are the main offender. The games I buy are the ones that have free content or a demo to try it and then a fixed price for the full game with everything.
    One of my favourite games is Riptide GP2. I loved the first one after playing the demo so I bought it and when the second came out I bought it straight away (at £3). That’s how it should work.
    People need to stop all the BS with pricing. I have bought a couple of Ouya games which were the same, I liked the free demo content so bought the full game. What I object to is paying for some crappy weapon or level etc only for it to be basically useless 5 minutes later. I’m not paying to win the game!

  8. Unbelievable that they could have 50,000 downloads and only make a few quid. Seems on mobile you either make millions or hardly anything. I think a lot has to do with getting on the promoted pages of the app store.

    • This is the difficulty of setting your prices for mobile apps. There are so many apps and games and so cheap, people are unlikely to pick up anything over £3 without a lot of hype or experience of the dev/series.
      If you keep a low and accessible price point, you have to sell shitloads to make any money (a la Angry Birds).

      This is why a lot of people go for advertising, it allows you to give the game away free which encourages people to take a punt. Then you can go for an ad-free version or charge for a sequel or your next game.

      Unfortunately, a lot of developers go for free games plus in-app purchases. I can see why and it’s a decent theory but most of them implement it incredibly poorly.

      • I bought a £3 game for my ipod and a iphone-owning co-worker couldn’t believe I’d paid £3 for a game.
        I saw a comment/review for a 79p game that said “this game is great but it should be free”

        Shows how attitudes have changed. Maybe it the “download generation” who are used to downloading things for free.

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