Mobile Gaming Market in 2024 with Lexi Sydow of Data.ai

welcome everybody to the deconstructor of fun podcast or good morning from my side um this is a special episode we originally recorded this episode as a webinar with data Ai and we had a great chemistry between Lexi from data AI Brett from liquid and grid Jen Crest and myself and so we decided to distribute this episode which we call a twig special to a little bit of a broader audience in this specific episode we talk about with where we are in the cycle for gaming today have we hit the bottom are we heading towards the bottom or are we on the way up we discuss which areas in the gaming are growing as well as going into details of what are the top engagement and monetization features of today and discuss many other relevant and less relevant topics that you will likely find very insightful now the official uh promotion for data is this it's a mobile performance standard providing the most accurate and complete

set of mobile insights helping companies succeed on mobile data AI customers make informed decisions about their app strategies to support tactical planning Business Development opportunities and competitive monitoring The Unofficial Spiel for dayi is is that it's the best platform that I've personally used but what makes it truly special in my opinion is the people Lexi Randy and the whole crew from from day have been nothing but extremely helpful um and insightful and everything you could wish for from a partner whenever we're looking for any kind of uh data and insights and it's been a pleasure working for them for many many years now and um if you're not using data I really think that you're missing out whether you're missing out on the platform or missing out on the um great people that work at the company so without further Ado uh let's talk about the market and uh just wanted to give a special shout out to data AI

[Music] I'm Lexi I'm yeah looking at the insights we're really excited to have you guys here I think for folks who are joining we tend to do a lot of slides in our in our normal webinars but this one's very different we have a great panel as you can see so we actually don't have slides for you guys today um we can link to plenty of data after after we have this conversation and throughout um and always reach out if you're looking for a specific report or specific analysis we're happy to point you there but today is more about hearing from the folks in the gaming world and what we think is coming in 2024 and how to prepare and now I will let everyone introduce thems we'll kick it off with Mishka hey everybody U thanks for having me on so I'm Mishka katkov um first member of deconstructor fund uh my background is in product uh game director and Studio lead positions in in various very known gaming companies uh I've also set up my own start startup so

I have some startup experiences and um pretty active in in Angel Investing so that's my background and that's where my thoughts and ideas that Crest will call stupid during this this webinar are coming from awesome and we've got Brett joining as well I'm Brett Novak CEO and founder of liquid and grit uh the leading product research company in Mobile gaming one of them I believe and I prior to that I was a lead product manager at Zinga and also uh dhis business school and a couple other places as well and excited to be here awesome and we now have Jen as well howdy everyone I'm Jen donaho I'm a strategic marketing consultant at beta hat market research and Jaden Inferno Consulting and I also have the pleasure of being a co-host of twig this week in

games which is our podcast on deconstructor of fun so uh this is this is going to be a fun one to have Brett sit in the guest chair and Lexi uh to what we do on a weekly basis which is basically make fun of the game industry so with data data inspired fun is what we do I love that thank you and we also have um you guys might not recognize from our uh promotions but we have a sneak guest coming in Eric Prest has joined us at the last minute we're very excited welcome Eric hey uh yeah Eric I'm filling in for Mr Nico who uh couldn't make it for whatever reason but um yeah I'm principal Gosman Consulting I run an investment advisory service for investors and then I also consult for industry like Warner Brothers and Amazon and uh TBD for next year um on who I'm going to be Consulting for so yeah and I also help host the deconstructor fund twig podcast every week and talk trash

about the gaming industry awesome thank you so much well I'm going to stop sharing as I mentioned to the folks on the call we are not doing a presentation we're just having a conversation today so with that um we will kick it off the first question I believe will probably be tackled by everyone so fair game for who wants to jump in um but first where do you think we are in the cycle for gaming are we at the bottom are we heading towards the bottom are we on the way up um I'll let you guys share thoughts I too have thoughts from um data AI side but someone please jump in I will jump in since I've been looking at this pretty closely over the last couple years um since since you're invited a few hours ago exactly exactly um I have well I mean I've been looking at this and actually did a presentation in um Istanbul last year you're kind of talking about this

particular issue within the industry as on a more broad basis um and fundamentally I think we have two or one or two years of declines ahead of us uh and then perhaps getting to steady state I think the challenges of Ida um as well as the changes to Google uh and also removable fingerprinting for the rest of the cheaters out there uh will create less Fidelity and and less and more challenges for acquisition on iOS as well as Google um and again the biggest challenges last year is that yields are going down so if you look at the data the yields are flattening while they've been increasing for the last like decade and what that basically means is revenue growth is declining faster than and then downloads um are improving so um and basically I think what this is the cause of is the customers either customers are spending less or the quality of downloads are going down and I think it's the latter because of apple

and um and whatever Google does so I think that's going to be the biggest challenge of uh the next few years and what that also means finally is that we need to see a change in the type of games that are being made the core games are no longer going to be as marketable as the casual and so shifting to the Casual will reduce to will be will result in uh reduced uh Revenue per install which will also put pressure on yields for the overall Market so that's kind of where I see the market for the next couple years and I don't know who else anybody else have a different opinion I oh Jen please oh I was just gonna jump in on on what ches was saying and agree 100% isn't it also the consolidation of companies smaller companies going away consol or getting bought up by the bigger companies because in order for because of everything you're saying it's very difficult to um Market profitably you have to spend a a ton of money to

uh to make sure that your games rise to the top so only the big are going to be able to fish in the new pond that's coming isn't that right Crest like we've talked about that before 100% like cost of development's gone up but cost of marketing has gone through the moon so yeah it's G to all these policies are benefiting the big uh that are happening out there and yeah without a huge budget it's gonna be really tough yeah I think Eric wasn't negative enough so let me just continue uh and just broaden to a to a little bit of a broader uh gaming market so I think starting off with macroeconomics like we can see that the Investments through the interest rates Rises we can see that the Investments are being decreased and that means less new games that means um you know less risky bets and more focusing on key franchises uh macroecon economy also means that people have less money to spend so that of course affects the

the game industry as a whole and uh with the higher interest rates we can see that m&a and IPOs are both kind of out of the question in larger scale of course m&as on companies that are profitable is going to be still happening uh and then we have two other factors that are on the econ economic side we have geopolitics that are affecting companies with you know some companies as losing big markets that they used to be successful at and they can't uh maybe publishing those markets anymore so that's going to be an effect and there's a competition that gaming faces from other sources of entertainment that it hasn't faced in previous economic downturns so uh whether we're talking about dating apps whether we're talking about streaming apps whether we're talking about social media apps or any type of apps like we've seen from data AI reports apps are pretty resilient to the uh the economic downturn and it looks like games are not that resilient as we thought after the 2008 um downturn and then when breaking

gaming into PC console and mobile um PC I think we see only few games as a service titles it's a very red market and if you talk to any developers who have for example published before on mobile and are now moving to PC steam they would say that marketing even though mobile has gotten significantly difficult is still more difficult on PC side than it is on mobile so that sort of a silly Rush that was happening that we're going to move to PC that's uh that's from a puddle to a pool ladies and gentlemen then we have the console that is kind of struggling between three different business models not struggling but juggling between three different business models while the uh the user base is pretty much static so we have um subscription model that we've going to talk about probably later in this in this uh not podcast webinar uh we have the uh the premium games that are getting constantly more expensive and we have the games as a service which essentially rely on uh users time which

is again a very um feeble resource and then finally going to Mobile privacy apocalypse I don't have much to add to what Chris was saying but we know that marketing games is more expensive and that leads to challenges for especially smaller Studios to to find their Niche and um and I would just say on a positive side there you know the way to counter all these negative effects is really to focus on efficiency that we're seeing from a lot of compan compes and efficiency in all Simplicity means doing more with less and of course uh that means in many sense many would adequate that to AI so AI is naturally a big help for for many companies but it's overall that thinking of of those um those more um Jolly years are behind us for now and you have to figure out how to be more efficient as a company and and that in my opinion also means that companies need to be more deliberate and it's sort of a time that we're going to start like

kind of trying everything and just like throw ideas on the wall and kind of try all different type of games those are over so you have to be very deliberate and very efficient as a company to uh to survive the twoyear downturn that I think we're we're in yeah I don't disagree with any of those assessments I would put it as we've hit the bottom but stabilized here I think a lot of the gaming companies have obviously made adjustments in terms their cost structure which will help with the loss of profit margins that we've seen because of idfa and once they do that and then move players off of the platform and get more uh profit the they'll be allowed to experiment and that's and that's what's really I think going to bring us out at least in terms of the mobile gaming development Market out of where we are now is the ability to experiment and cres alluded and Jen alluded to that fact that we've become more of a large company industry and

that's reduced experimentation but once we start getting more profitable smaller midsize gaming companies going to start experimenting with different platforms different channels and eventually just mathematically a company is going to find useful ways of find getting users whether it be through Tik Tok or celebrities or YouTube or whatever it may be we won't be able to probably predict it uh that will lead us out of this what you know bottom I I think the the other thing that we're is very hard to predict is larger impacts to the industry we we wrote about recently in the digital markets act that's going to go live next early next year which will allow more companies to move off platform or or more companies to move more users off platform and things like that I mean Apple and Google may make a a move to to make the um environment easier for

developers so there are some larger impacts that we can't predict that I could I could very likely see happening next year for the positive so um like I said I think we're at the bottom but stabilizing and kind of I think it'll be another year before we come out I think we're I think the bottom is going to be in 24 sorry Jenna had to jump in but I think what we're not accounting now is a lot of startups will will fall in 24 so now we've seen big companies get more efficient and I think they will continue to be more efficient I 100% agree on on off store revenues etc those are like in my opinion efficiency elements uh but the startup wave I think is going to be in 24 and that's going to be a um you know a blood bath yeah I just I want to just plus one what everyone's been saying and dive into just two topics one on marketing uh Mishka is right that please don't run to

PC and console and think that the marketing efficiency and attribution there is better it's not it's worse and um especially with the concerns around using um you know your IP track like it is not better so please don't like run there thinking that it is however there are other options that are available in marketing there is a lot of growth coming up obviously with Tik Tok massive massive success there YouTube shorts um they are now starting to roll out YouTube shorts uh it's not everywhere yet but it's getting there so imagine that that's competing YouTube is still the number one platform for Gen Z to be able to discover new brands including games so don't count out uh YouTube and and what YouTube is doing there on the gaming side um the other thing I want to touch on is um real-time payments and web shops and so while this is and this goes to what Brett was saying about off platform because of what the dma rules

are doing in Europe so in March of 2024 the dma will go into effect which um iOS will have to actually almost allow Sid loading um and so in iOS 17.2 side loing is likely going to be permitted we'll see um but because of the dma rules a lot of the um ability to to tie into web shops will increase what we know and hearing from people that work with web shops are um making up a lot of the declines that we're seeing in IAP revenue and are becoming ways that are um driving I think accounting for 11% of the overall Revenue according to Chris hsh who I just interviewed at exola um these are some numbers that he is giving out that says that off platform payments are um a great way to drive Revenue so a lot of companies are going to be investigating um more of these types of systems yeah but the problem with this

argument about off off and know exol is a great business and they're doing really well and there's other Kota and others that are doing it but the problem with this analysis is that this isn't solving the problem of acquiring new users right cor so if users are churning and payers churn just like regular people uh non-payers um you're still having no way of of filling the filling the buckets so to speak of Spenders and it's a temporary solution to a longer term problem of lack of quality of of user acquisition and attribution and targeting and that's the bigger biggest challenge and I don't the only argument the only thing I'll push back on a little bit is I don't believe in the macro I mean there's no real evidence that macro is really having a big play in this uh from a from a from a game perspective and a user perspective maybe from from a company perspective in terms of how many games are being made maybe um but I I would not put macro as as a reason to why we're seeing declines this

year and last year what do you mean in the present Chris when you did the presentation at at in Istanbul you were followed by the uh the Google um head and he had the uh the inflation rate and the spending in games just like correlate and I know I've been reading data AI reports as well it's like he was showing apps and he was showing games and he was showing inflation and when inflation went up uh the spending on it not purchas went down but the spending on it on apps was stable we've seen that I mean yeah in our reports as well so that was one of the that surprised me to be honest was that you know when we started to look at disposable income across multiple multiple countries particularly the us we saw that as disposable income shrink your spend in game shrink uh whereas for non-gaming it actually increase which for us was saying more of your wallet just kind of migrated to mobile right like maybe you're not directly spending it on a desktop subscription or

something like that like you're actually just doing it through mobile all right compelling yeah I'm going CR on this I think I think potentially what it's having effect on is stock prices which is having effect on how these large gaming companies are spending their marketing which is in then in turn reducing Revenue but the financial uh downturn in what was it 2008 I mean it was didn't hit Mobile gaming at all so like console there wasn't a mobile console right like Facebook but Facebook like you know the equivalent of it right I mean like microtransactions didn't move right so no there was there was uh I was Zinga poker lead Revenue PM there was we had Zing a poker Revenue back then um you know so it it was it didn't it didn't touch us so I I think it does have an effect in terms because we've Consolidated and because more large console companies now or mobile gaming companies which which the stock prices impacts it but yeah I would agree I mean

I think that's I don't think that macroeconomic inflation causes someone to spend like5 Dollar on an app dude they're they're spending yeah the entertainment in fact I would say the opposite when people lose their jobs they generally turn to distractions and entertainment as a source of escape and it would I think it's somewhat inversely correlated to down terms right we what we were saying is is that when they turn for that escape they give that escape money to Netflix to Tinder to you name it they don't give it to zingga no I mean not because of not yeah but not because they don't have a lot of money I mean just be like I think that would happen regardless of whether inflation was happening or not they're just choosing I mean streaming and certainly is getting more competitive for the gaming Market I agree with that as a percentage of total revenue gaming is declining on on mobile devices so it's certainly getting more competitive but I don't think that's I don't think that's related to the them making a financial

decision I mean a $5 transaction in a game versus $15 on Netflix I mean at this point I spend more money on streaming than I do on gaming and I think a lot of people do too so I don't think that argument stands up um I think it is getting more competitive and that is what's happening but I don't think it has to do with macroeconomic decisions like individuals aren't that logical in terms of their five to $10 spending budget right I mean what what kind of Dent does that have in their overall budget and also just to look at the data itself like according to data AI anyway you know we're up 11% in France we're this year we're up 9% in the UK 6% in Germany like they're not having great Economic Times in those countries yet we're up right you know and then Meanwhile we're down 20% in China which is a the China Market is definitely macro right that's a problem in China but I from a western perspective I think it's all idfa it's all Apple it's all the things that they've done to make this business so much more difficult for

the incumbents and without some of these bigger games which we're going to talk about later like the market would be a lot worse right Monopoly go is basically carrying this whole industry from a growth perspective it's nuts you know every genre is down except for puzzle to some degree but then and then primarily because of U Monopoly go which is insane you know um so I don't see anyway we we'll continue this with with what what the the the title slate I don't see a title next year that's going to comp that at all so we'll see we have a few great questions I just wanted while we're we're only on question one I was ambitious there's five questions folks we've gone through question one so there's one question that I wanted to ask that actually spoke to something Misha mentioned and and we sort of all were discussing here um about how will AI Tech promising to bring AAA quality to smaller mediumsized gaming Studios level the playing field making it less about Studio size and budget and more about creativity and

Innovation I know we spoke about the effects on small pubs and um Indie pubs specifically and we mentioned efficiencies through AI so um I think that question was more towards you Mishka but anyone can jump in uh so efficiency like through AI like yeah how would um AI Tech uh promise promising to bring AAA quality to smaller mediumsized gaming Studios level the playing field essentially will it make it less about Studio size and budget and more about creativity Innovation I think I think the uh the communication that I'm hearing and at least what the executives are saying is that we will be able to make more with what we have now and that is the kind of a communic so we're not we don't need to hire that many more people to make bigger games uh but I think on the the reality will be is that there will be a lot of Studios who will be fine with what they have now and they will just try to do less of that with the help of AI there's a lot of different AI tools coming in for game development and uh

and we'll see kind of where the pendulum sets and it will be based on the appetite of investment for these companies but for sure especially when it comes to AAA uh with and why not even modern mobile games um that any kind of efficiency is very important because it can cut quite significantly the cost of getting the game to the market okay well let me give you an answer not a non-answer the fact the thing is like we don't know yet no we know specifically it's very specific right like one of 100th of the budget is making these games and 99 is marketing these games so therefore it doesn't even matter if you save 20 or 30% of making the games if you can't don't have the money to actually Market the games it's freaking irrelevant if AI is is building the whole freaking thing you know like let's be real like that's where we're at right now it's for successful games that's what you're saying Crest like for the top grossing games yes the smallest

percentage goes on development but then there's a ton of games that get killed all the time in development or in early soft launch because they've spent too much they've been too slow they've been too this too that and then the executives don't have the appetite to push on the marketing because they've spent so much till date okay you you can fast prototype better and get more products in Market we testing still the problem is that you need you need the 99% of your budget that you don't have to spend on marketing so where's that money coming from but think about it there games like raid Shadow Legends I it was developed by like 800 people and like yeah like that was 10 years ago well almost 10 but anyways like those are big games and those type of games are being made on mobile with hundreds and hundreds of people and that's a huge investment and when you start racking up those costs and especially if somebody's kind of looking behind your neck like what's going to going to happen with this are the numbers so promising or should we go

through this like if if there's any way to get more efficient I think that gives more leeway to the teams yeah I just I'll just say it's just the development cause is such a small part of the overall budget I'm not really too sure if saving 20 or 30% on that is really meaningful in the context of what it takes in order to build a mobile game and then console game it's a that's completely console PC is a different discussion which is probably not part of this conversation I just don't think AI is going to really really that relevant um there as well from what everyone I talked to anyway only on the margin then what your answer makes sense right on the margin it helps the the teams become more efficient yeah it's like a web shop it's not going to make or break your game but it's going to be additive to the uh bottom line yeah and it's helpful to the marketing teams to create assets to repurpose assets but it is not uh game-changing same the same thing applies especially with branded content like if

you're a brand uh AI just doesn't help you because you have so many different requirements for your branded content that you know maybe your background changes or maybe you repurpose it but it is it's it's not a b all end all solution for marketing either great thanks guys okay we'll jump into question number two um what are the specific growth areas for gaming next year um any specific titles specific games um and more through the mobile lens but happy to chat if there's anything on the PC or console side that you think's bubbling up um Geo GEOS um or genres any specific areas that are growth um this could be growth in downloads or or direct spend as well I I'll jump in first on a couple of things um one is casual action RPGs and so one of the games that we covered recently was called mod . Co coming out of supercell and it's the idea of like

Hey how do you take uh Diablo light uh or Diet Diablo and find a way for that to be successful on mobile and so um mo. Co is a game to watch um another one you know if I were to make a prediction would be uh Social Casino hybrids and so with the success of Monopoly go and the the success of you know building on the success of coin master um I I I think companies are starting to look at ways that they are going to take some of those asynchronous multiplay or a asynchronous features or the Revenge mechanics that we see that came from you know Mishka pointed out building battle back in you know back in the day that are now showing up in these social casinos uh I I would be on the lookout for hybrids just like what survivor IO did uh maybe like earlier in the year last year and start to like hybridize midcore and Casual um so hybrid casual was a thing earlier in the year so maybe

it's hybrid Social Casino coming those are things I would look out for yeah I mean I would say on a Geo side like the one the couple markets that have been actually growing through all this transition um has obviously been India which we've covered on the podcast um ad nauseum interesting Market but lots of challenges there um let's see I was just looking at this uh South Korea for some reason had a great year this year and I didn't really delve into why Taiwan um and some of the European countries I've mentioned European uh yeah sorry uh France Germany UK like from a Geo perspective it just it's still kind of a mess in the west but there are some pockets of growth um um and then from a genre perspective it's really quite simple it's it's not rocket science it's like go casual and forget core because core is is is struggling across the board in the west um so um so

things like match are up like 14% uh party which is basically um bumble guys Monopoly go is up 106% or something crazy uh so those are the genres like if you stay casual then you know I think there that's where the opportunity is going to lie when you don't have the ability to Market uh Target audiences so from a gen perspective there as well match has been doing well oh I'm sorry what did I say did I say puzzle you said party which I think maybe I meant match I meant match sorry there's a different classification on on your competitor so match is up huge and party I mean you just got to look at the big play rcks and dream right what those guys are doing because they're just destroying it out there um yeah okay well let me take a little bit difference so when we look at the the number number of players overall and like what is the growth of players as a

as amount so Mina is is six times faster than us and EU at the moment and it's twice faster compared to APAC so really like Mina is is the the most growing area in terms of looking into the future uh in terms of like if we're looking at the uh the genres like of course uh as casual gaming was mentioned like match with tile traditional match three with match three with visual progress with merge all of those are seeing significant growth both in revenue and maybe not that much in downloads and then some some genres that I think Jen was kind of referring to is like uh these casual casino is like I would put solitire type of a games there like a casual card games we see hidden object games we see building games all kind of doing pretty well on the on the Casual side and I think honorable mention are up quite significantly at the moment

that's of course Monopoly go but even before them we're seeing uh Casino doing pretty well on the download side we see Revenue trailing there just like we see in the uh in the more core titles but at the same time we don't know what their off platform revenues are Casino especially is very much customer uh relationship focused type of a business where I would assume that they are would be the first ones in the line to push their customers to make their purchases outside the platform um you know closely followed by the strategy in the RPG games and then uh in terms of like the fastest growing genres that are maybe not the the biggest ones extraction Shooters huge growth I think that's the uh the biggest growing genre at least when I was looking at my little bit of outdated numbers in data AI um and then uh the the Rogue likes so anything hybrid casual is is Big right now so habby of course has been the at the Forefront with our chero then you know Survivor iio

snaker but we see hom games wodoo um qual all really jumping in into this hybrid casual pool where they are leveraged their publishing capabilities having strong uh building their live Ops capabilities and really um getting that bulk of fun marketable easy access core gameplay and then settling up with enough retention meta mechanics to allow them to monetize much more efficiently so I think that's kind of a like my Spiel on that yeah one note there Casino companies are already doing it pretty effectively playtika just reported they have 25% of their revenue off platform already and their goal is to hit 30 in the next year so I would expect again with the dma that it might even go way beyond that um yeah I mean I think the not to I don't want to say the same thing but the over overall theme is similar that games that have figured out

how to find users are going to do well so I I I don't necessarily think that fits into a specific genre but games that have wide user base or wide appeal or are associated with a specific group that can be easily marketed to right like if there is a uh a younger group that it's specifically targeted and it's broad-based it can be effective right or if it's casual and it's broad-based even if it's even if it's core and it has some type of user that it's specifically targeting like you're seeing that with IP successes like Monopoly go and things like that where they can they can find a group of people through the current marketing landscape they can be effective so I don't necess you know word games are another example pretty broad-based specific to a specific group so I don't necessarily think that one genre or next is is that much better there are sums I mean casino is very difficult to break into right there are

some that you can look at and you can kind of not not talking about Social Casino I'm talking about traditional Casino which I debate whether the games and social casinos should have Casino associated with them uh and I won't get into that too deeply but that's generally my take on where the growth aspects are and of course what Crest said in terms of GEOS there's some some positives there although I mean predominantly the money is still going to be in the major countries for the companies right like they're just the in US Europe countries are just going to dominate in terms of of Revenue production and will for the next several years still so um yeah those are those are my takes yeah just just from the data perspective if you just look at you know since the peak in 2021 um just to be clear casino's down 16% racing is down 50% shooting is down 50% like building a shooter in this space is Insanity right simulation down 25 strategies down 18 RPG down 20 puzzle

is basically flat match is up five and um was the other one that you guys were talking about oh of course the the party thing is up 100% because of Monopoly go um really no this is all revenue all revenue um is 2021 yeah 2021 20 23 vers yeah um year-to date versus 2021 so it's a disaster out there is what I'm trying to say go casual don't make don't make a casino game like you'd be mad it's Madness to go out there and buy build a casino game or a strategy game or even an RPG unless it's like really highly I mean the counter the counter to that is it's always been Madness right I mean the gaming industry has always been a sweep Stakes mechanic I mean if you look at the history of Casino we've said that for a decade that you should never enter casino and there's been one or two winners in that market every

few years that we you know haven't expected so I mean the gaming industry has never been a safe bet I mean it's just never hadly there's like there there's degrees of how safe it is right I mean Misha can probably talk try to do but I'm just saying there's not that many new games that are successful in the gaming industry every year I mean it's the handful or two right but when when cpis are almost double like for strategy for instance they go from 6 to 12 right I mean strategy games there are three big there are three big I get your argument I get your argument that it's very difficult and it's even more difficult now right and you can go through the numbers but I think that the logical like this is going to be a difficult thing to do was the ca was was the case five years ago was the case three years ago it was the case seven years ago gaming has always been an extremely difficult business to go into it's it's you either are super successful or you're not for the most

right you're dead it's always been a sweep Stakes mechanic and it is more a sweep Stakes mechanic now than it was before but it's never been like a a liquid andit like business model right like people don't go into it to I mean there are like the companies that generally do this all I'm saying is like I just think that the arguments that we have right now have been true for 10 years you know I'm gonna I'm not going I'm GNA let you go one Brett like because the rug has been pulled from under everybody in this industry by Apple um in terms of user acquisition right so when okay how about this when Facebook removed uh uh sorry when Facebook removed the ability to Market games on their platform you know what that was incrementally more challenging on canvas to survive in that industry and that industry basically went away right it it's just it's gone now right because they changed the fundamental Al nature of the platform itself right and

what I've been arguing since this beginning of this is that is exactly what Apple has done it's made it almost double I I don't know what the number is but it's like incrementally it's not gonna stop people from trying to do it it's the same thing I mean Chris we talk about we talk about basketball with our kids right like think about the the chances of any child becoming an NBA basketball star it's not that's not a logical argument would mean don't ever have body play basketball right millions and millions of people are having their kids train every single day to become an NBA basketball star the same thing happens for I guarantee right now there are gaming companies getting started today and they're like we're going to be the one to do this because the the becoming a successful gaming companies is the Pro Sports of the tech world so I don't know I'm just saying like I don't think people are making that argument no one wants to like start a fintech company today and hit it big those people want to start a gaming company I mean Misha is a super smart guy three years ago or how many years

ago he's like I'm going to start a gaming company I I think he wanted to be like make I wouldn't categorize myself as super smart let's not like I super I said smart guy I don't think I said super that was also that was before ID that was before idfa before the changes you it's it was still it was still what were the chances of it being successful I mean it was still bad look if if even worse now yeah yeah if you look at the maret worse I I totally agree it's worse I'm just saying I don't think it's going to stop people from starting game okay no no sorry just let me just be clear on this point if again if if you are if you're playing to the market then you build things that are can be successful in this market what I'm saying is that you cannot build a strategy game you cannot build a traditional RPG game you cannot build traditional casino game and hope to be successful that was not the case before idfa these comp companies came and they replicated the success of every other game out there by creating a better

mouse trap because the market was there the the cpis were at a level in which you could be profitable by your with your spend that is no longer the case right so it's a different Market that's what I'm trying to say so things have changed and apple was the Catalyst and Google will continue it next year and then Apple will continue it with uh fingerprint removing but when UA costs go from $6 to $12 for RPGs and probably $10 to $20 for strategy games that's a problem right that that's that that is a fundamental problem in this industry that um that is needs to be addressed in terms of what K types of game games you're marketing or whether you're licensing or all these other is things that you can do in order to count rck that that's different on a positive note you know having access to some of these younger companies that um you know many of them of course suffering but some of them are reporting incredibly good numbers and growing very profitably so that on mobile and and I just wanted to

say that there is still space and they are very smart in what category they're investing and who they're competing against uh but but there are companies that are quite successful even startups and are able to find their but they're not doing the stupid thing when they're going in competing in RPG or strategy or Casino or any of the genres that that chis mentioned but if you get data AI you would see there's a lot of different sub genres that you could choose from and and rather Target those than maybe the the ones that are declining for the sake of time I'm going to jump in and ask another question but this this has been very good I like the debate and discussion um I do want to see so we talked so much about like user acquisition I know that's definitely a hurdle in the industry um that unfortunately is just very difficult to overcome at the moment on the other side with it with respect to what you can control since we can't control those those costs um from a CPI

perspective when you're we've got like really great product people on so I wanted to make sure we asked a question around um what features essentially can you can you kind of focus on and build um to increase engagement and monetization so I'm just curious about from your perspective you know for Jan and Brett especially what are the kind of top engagement and monetization features you're seeing On The Rise um or expect to see more of in 2024 that can help um increase that uh profitability go for Brit sure I'll jump in and you know the in the essence of time I'll I'll keep it pretty high level but the the couple things the first thing that we're seeing is longer and more engaging new user progressions so companies are going back reinvesting reexperiencing released my design Journal which did very very well it increased D D30 retention by 11% and

revenue by 6% month over month and that made the early progression more comprehensive more involved and uh actually included ugc as well the uh second thing is we're seeing still this a lot of mini games do extremely well and they're more complex I think this is somewhat of a reaction to what we're talking about here which is trying to be a little bit more broad-based as a game so core games are releasing casual mini games casual mini games are releasing more core based uh casual games are releasing more core based mini games so they're giving a broader offering to their players to keep them engaged and stop them from jumping to another app the third is we're seeing more social hubs in places that we would not expect to see them places like Casino and other genres again trying to cultivate more

engagement and retention with the current user base because as again we've talked about it's extremely difficult to get a new user so what can product teams do but invest in retaining their current user base and also increase AR down numbers and then The Fourth Kind of a little bit more hot take I think is the sweeps mechanic is an interesting new submarket that I think will be a place of potential growth for a lot of more core Casino genres as the experiment we're seeing a lot of growth with that off platform and now that a lot of these mobile companies are having closer relationship with their users there is an opening for a different type of business models that they can develop it could be real world stuff it could be more of this sweeps model thing it can be a lot of different things as they have like a onetoone relationship with their users as opposed to going through a platform that places more regulation on how they can monetize these users and then the fourth is something that we've

talked about I think more interactive stories more Dynamic stories with the Advent of adding AI logic to games is a a pretty interesting thing in 2020 uh 24 let me just my FL let me just add one thing to Brett's uh number two I think your two was mini gamess so um and it ties into UA so fake ads everyone talks about fake ads they absolutely f up your retention features in your game because a player comes in they think they're getting one thing they get something else so the way that you can utilize the idea of if your UA is drying up and you start to experiment with a fake and by fake ad it just means like Hey we're going to show you a game experience that doesn't actually exist in the game what you can do in conjunction with your product team is have a button on the side of your app that collects all of those mini games so fake ad equals miname in this case tile Busters does this Envoy does this in Forex strategy

you come in and there's a place to go inside of your app where you can engage with these features it increases your retention and increases all of the kpis coming out of out of out of your UA so that's one way to tie in the idea of overcoming Thea challenges with a product feature it's also an excellent way to experiment with new game development too that's Whately seeing in some of these games yes this is a really like uh you know catered topic for Brett I mean he literally runs a company with like 50 people who just investigate on which feature work and how well so uh so let me take a more like a high level stand on this and how you could use Liquid and GD to to uh to populate these different strategies so overall like I was actually today I was doing some work and I was listening to uh Adam telfer's GDC president presentation from 2014 and it still makes sense and he broke down long-term retention in in five different

steps and you can populate this with all these features so first and foremost was creating a long-term goal or an aspiration and I think Brett you talked something about story but we think more about games as like they they have to create a feeling like why do you want to invest into this game why do you want to play this for for the coming month or so uh then the second one was creating a mechanic that encourages players to invest into the longterm of the game and that's what we have in most of the games it's the uh the collection the crafting the evolving of various items and characters and those metag game features that play in your head where you're not playing the game um again liquid and grid I believe does RPG uh um the uh RPG analysis so I think you can find every single feature in your mind from from there that would fit here uh the third step was creating a session design that both pull pulls players in daily as well as Paces players naturally in the progression I think this comes down to like social media apps are best here

because they create that social pressure like you can't just post and ghost I mean there are some people who posting goost but most people need to come back and see what what is happening with that post that I made and that is a sort of a self-inflicted social pressure and I think these type of elements as we're talking about different social elements entering into different genres uh in the end it comes down to the social pressure of the third point that Adam mentioned and the fourth one was like a cre that social mechanic that PE that people require for others to do their best meaning that in order to be at the top in order to be competitive in whatever game you're playing however casual it is you have to be you have to engage with social mechanics to be to be at the top and then finally is is the most important piece this is where the AI comes in and that is the understanding the cost of content production by your team versus content consumption by your consumer consumer so basically how are you going to past the development so you can keep on that content treadmill

whether you're doing it internally whether you have your users generate uh or whether you have um procedural content generation and in these five elements like I think they're still valid maybe they're more valid now that they are they were a couple of years ago when you can just play the marketing game and not even make games with longterm retention just milk them with uh with uh with inup ads and don't care about more ization but those days are over and now you have to really concentrate on retention and now the uh the things that we were focusing on in 2014 are you know important again and features and meta games are becoming more important because marketability is becoming less important I'll do a really simple one on this one so this was a strategy that Kevin Chu said when I was at cabam ages ago um and he basically and at the time I poooo the idea but I I was ultimately wrong particularly now that with idfa and everything that's happening build

casual games with deep monetization design like that that's kind of the strategy that needs to be taken to get attract the broadest audience possible and provide the most highest Spenders the ability to spend um at depths that you and I would be uncomfortable with so that that's that's my advice I wanted to just quickly um kind of double click on two things something Jen said and Brett so one thing we did have a question um and from the audience as well um Brett can you explain the sweeps mechanic for folks who might not be aware what that is well I I think it's in reference to yeah the sweeps mechanic oh well it's like a real money RMG style of play where players are playing the game and they're getting tickets and then whomever like wins the sweeps can win a real world prize so it's it's kind of a workaround uh real money gambling I think you were using it though in the example of there can be only one winner when you were yeah I used it twice the

other I used was for uh was for um the the fact that like in gaming industry overall there's one winner andless losers and then I wanted to also ask I think we've got second Brett showing up yeah I wanted to ask as well so you mentioned sort of in my dream journal um as part of the flow you you sort of mentioned the early progression of users but also user generated content and I wanted to kind of ask especially with what Jen said in reference to sort of how maybe product features can help with UA is you know we've seen how popular Tik Tok is Monopoly go use Tik Tok very effectively um for both alike and this is something Brett your team did a great analysis and you can see it on Dat AI we published it as well about um how leveraging communities especially Tik talk and like in influencer style but then letting it be everybody right like

just people communicating about the game how does user generated content within a game as a feature how can that help as well with your UA is there a world where you can encourage that posting to Tik Tok and that that could come and pay dividends in some way eventually or is there any any there there essentially just wanted to double click on that piece you mentioned well ugc is obviously an awesome mechanic to develop in a game if you can I mean it's very difficult in red cor's case it fit within the style of the game where players could create things that were designed um but certainly it helps with virality because players are more likely to share it to their you to their feeds or whatever they're going to share it to I mean I'm thinking back to feeds I mean I'm thinking back to uh when Farmville allowed people to share their farm right like people were bragging about that right like it's a good example of it and certainly now in today's world they're posting videos to Tik Tok of their game

experience which is a huge way to get users so yeah I certainly think that that's a great example of how they can create a channel it's it's difficult to do and it's really only specific to certain game types that said I think developers today that are creating new games need to factor that into their Concepts and when we did a tear down a fortnite for example they thought about the the angle of of the the shooter partly to be back from the character so that it was uh more engaging to share uh there was more of like and then that made the Cosmetics more valuable because the Cosmetics were in the Forefront of all the virality and that led to obviously the monetization structure of it so um it's certainly something to consider and if you can get it to work it's awesome yeah this is a whole other podcast about how do you build either features or um provide the tools through cap cut tools on Tik Tok yeah this is a

whole other like how do you allow your community to better leverage your app through the use of ugc material let's do one Lexi we got this yeah okay followup I love it I I'm a big watching Tik Tok over the years I think I remember gosh I don't even know 2017 or 2018 where we felt very proud of ourselves we had a very catchy title of a slide in a state of mobile report where we said the title wave of Tik Tok and now when you look back it's like this tiny blip that like at the time seemed massive and we were talking about it now it's so big but I think the the thing that really got me with Tik Tok early was um sharing your video to anywhere right like you could share your Tik Tok video to Instagram very easily and it just had at the very end that little like Tik Tock you know it said your name and where you're going and it was hard to make to film or do something on on Instagram and repost it to something else I think that was kind of closed loop and I think Tik Tok really did well by that like I think that was that social the network effects

really took off and their verality and it was a very simple it wasn't a push necessarily just said you would just kind of go find that user after whatever it was and that I think has been a very powerful lesson for some Brands like now we see you know other companies leverag letting you post other places but for a little while that wasn't an embedded feature for some social um apps as well okay we've got two minutes um we've got a lot of questions I don't know if we have time to actually ask any of these there's questions around how you know if the if the industry is unable to acquire and Target high quality users what can people do to better improve retention and monetization I don't know if everyone has like a two word a couple a one sentence answer that if you were to look at improving your monetization and retention of your game in 2024 because targeting um and acquiring users are so difficult is there one snippet that each of you guys would recommend see above what's that sorry see above I

think we we hit on a bunch of those fake ads no yeah with the mini game yeah email Brett like seriously liquid and grit offers great great solutions for this like aark yeah yeah listen to the deconstructor of podcast we'll we'll follow up on all these questions on the next podcast yeah let's just send Brett invoice after this well I I'll give you one quick one one really cool idea I heard and I'm try to explain this very succinctly is creating a game that funnels people in based upon their behavior so they they they get pushed around where to different parts of the game that um cater to them so if they like puzzle they go to puzzle if they like simulation they go to simulation so the execution seems impossible but you're like creating an app for everybody type thing and I think that kind of design would be really really cool I haven't seen it in action yet really um but uh

but that that's interesting idea so it reminds me of what teemu's done with um leveraging ios's um custom product pages where you can have your app store assets appear very tailored to one area so when you have UA coming in like because te is so broad if you're targeting someone with um fast fashion and you're competing against Sheen you can have your custom product page be fast fashion assets versus um if you're targeting home Wares right like you can your ads are talking about the lamp you want to buy and and you get when you land on the app store Page it's all about the lamps and the whatever um and they've done very well at those custom product pages of like funneling People based on what they're sub subsetting them in some way whether it's a behavior or in this case more of like a product interest that was a much better explanation thank you Lexi I mean I finally it's 7 AM for me here my brain finally turned on so I'll leave

with one little gem as I'm finally awake all right thank you guys this has been fantastic it's really fun to have more of a dynamic conversation and we've had a ton of people stick around for the whole time so this has been great um especially after for those in the US you guys hopefully had a great Thanksgiving and a nice little break so it's good to turn your brain back on after I guess and before the holiday so thanks to everyone I'm just going to quickly I know we're over I'll pop up um a quick slide for folks we do if you want to continue this conversation we actually have a community as well for data AI to talk about all things um gaming mobile um you can continue the conversation here there's a QR code um but you can go to data. commmunity as well um and post questions to other folks and hear from some of our Champions as well thank you to everyone for joining thanks

everybody thank you for listening to the whole episode if you like this podcast please do leave a comment and share the episode if you want to access the deconstructor of fun Community with hundreds of Senior Games folk go to our website and appli to the slack group and if you want to get notified of all the new content we have coming out every week do subscribe to the weekly deconstructor of fun newsletter finally do remember we love you guys and we appreciate you guys catch you next time