Superstar Session: A Look into the Impact of COVID-19 PG Connects Digital #2

i would like to introduce our first speaker from unity emory earpen who's going to talk uh about a look into the impact that the games industry has had as a result of covid 19. emily are you ready to get things kicked off um thanks for giving the time to kind of talk about this my name is emery and i'm here to talk to you about a few takeaways from our investigation into the impact that coven 19 has had on the gaming industry the full report for this is actually going to be available for free download tomorrow but today i'll be giving you a preview of what's inside and i apologize i have my laptop keyboard right next to my computer so you might hear some clicking i'm going to try my best to tap very

lightly so a little bit about me um i've been working on games ever since i was a kid i made flash games way back into pre-adobe days when they're still made of macromedia and i ended up actually working as an artist on several indie titles um i eventually transitioned over to working as a product manager and producer on some games that you might have heard of before such as the sims and call of duty but first let's talk a little bit about unity uh unity is best known for its game engine which powers 53 of the top mobile games on the market as well as experiences on pc console and mixed reality uni has created a complete platform that enables you to not only create authorize not only create but operate and monetize your games as well in addition to our core game engine our monetization platform has massive scale we serve over 114 million abbeys every day and help over 60 000 dabs make a living creating awesome and we actually also recently acquired delta dna last year which provides sophisticated player engagement tools

for game makers and this is powered by deep data analytics um it's an end-to-end solution that enables game developers to better understand their players and create a personalized experience for them in real time and as anyone who has tried to learn a live service before it's not a one-man job and producing these kind of industry insights is really no different our team here at unity has worked at some of the most established developers and have networks in the business so we really understand gaming monetization and most importantly how to both of them work together if you'd like to learn more or get in contact with us about this there's going to be a contact detail at the end of this presentation okay with all that fun stuff out of the way um let's dive into the report so before i really dive into the takeaways i want to talk a little bit about how to read the charts that presented on the next few slides unity and gaming in general have grown a lot every year which means it's hard to compare the raw values of each year so the chart on the left might show what

raw data might look like and as you can see 2020 increased by quite a bit that's hard to exactly compare 2020 and 2019. so to solve this issue we normalized data to the first week of each year which became our baseline value and every subsequent data point is basically a percent change above or below the baseline this means that the first week of the year will start at zero percent and subsequent weeks will be plus or minus the baseline percentage number this way we're actually able to see with more clarity what the true difference was between each year so with that let's dive into some takeaways so this is actually my first time attending a pod gamer connect i imagine from the name of the conference that a lot of you might be interested about mobile games so our first takeaway is about mobile games immediately after

for the declaration of covenant 19 by average um but this increased to around 1.6 or 1.65 after your dependent while this 5.9 increase might not seem like much when you consider the millions of gamers around the world this is actually a really big increase in overall usage we actually tend to see a lot of users playing only one game and then a roughly equal amount playing anywhere from two to four games but during the global pandemic um many of these one game only users picked up at least one other app to occupy their either newfound free time or to work with during the day um so once again this is quite a bit of new gaming traffic when you factor it across every user in the world even if the number itself is small and the spike is actually quite noticeable in march all right for the next takeaway we

actually looked at what kind of apps users were playing so we noticed that many commuter apps which are apps that players tend to play while commuting on the bus the subway or simply during breaks into workday some much smaller usage pump when compared to mid or hardcore apps commuter apps only increase our daily active user count by 4 compared to baseline but mid and hardcore apps increase them by 35 when compared to 2019's baseline so if you look at the chart over here you'll notice that immediately after the pandemic declaration both commuter and hardcore apps spiked in usage above their 2019 baselines but in the weeks following commuter apps actually came back down to similar daus when compared to 2019 which is those dotted lines over there well hardcore apps continue to spike upwards you'll also notice in 2019 both kind of apps generally performed under the dau baseline

so this is actually due to the baseline week being during the winter holiday season which generally has much stronger diu performance when compared to the early half year such as february and march the fact that hardcore apps were able to help perform the holiday season is a strong signal that gaming habits change in 2020 so that's that orange line over at the top so this is actually quite a large shift year over year and you might be wondering why that line actually starts trending upwards above the baseline early in the year that's something that i'll cover in this presentation as well so our next our next takeaway is about mobile ad revenue which is obviously something that a lot of mobile publishers are quite familiar mobile ad revenue has become more and more relevant in the competitive space of mobile gaming as games compete for the same pool of disposable income money as represent a way to monetize the large majority of players who will never spend

so for example and from my experiences um games tend to have payer conversion rates of anywhere from two to three percent and you're actually pretty happy when they get to around four to five percent and i've even seen games that go up to eight percent but those are quite rare um this means that anywhere from 97 to 98 of your players will not generate revenue for you at all unless you use that we saw 2020 actually performing above baseline already when it came to ad traffic and overall ad revenue but covet 19 represented a large spike upwards for both metrics after the global pandemic ad impressions which are also known as ad views or you might hear them call that starts um depending on which type of providers that you're working with went up by 56 percent compared to 2019 and have revenue went up by 60 so obviously both very large increases this increase in ad traffic closely nearest the overall dau increase that we saw in the mobile industry

i won't be covering the au trends in today's gaming presentation for mobile specifically but that's actually going to be available in default report which will be released tomorrow that full report also includes data all the way up until mid-may whereas the data we're showing you over here today only goes up until the end of march so be sure to check that out once it gets sent over and the last takeaway i really want to talk about today is how we saw gamers in different parts of the world reacts to kelvin 19. what we noticed was that each region reacted similarly in terms of volume spikes but they were spaced out differently in accordance with the quarantine timing so you'll notice on the chart over here that china was actually the first in much stricter methods with the authorities implementing like a stricter lockdown in the wuhan province on january 23rd 2020 and that kind of spread out throughout the country throughout the rest of the year italy followed along with korea um on february 23rd so i believe that

lombardi and the northern provinces of italy entered lockdown after a sort of confirmed cases in that area an entire country would be locked down by march 8th south korea followed a similar timeline with the residents of daegu being asked to stay home on february 20th and then lastly much of the western eu and the u.s were enabling stricter measures as the world before the health organization announced the global pandemic on march 11. and you'll notice for most of these charts and the ones previous we denoted the kobe 19 line as the day that the old pandemic was actually declared by the world health organization on that week march 11th but obviously before that declaration there was already a lot of traffic changes happening and you can see that phased out in the 2020 gaming volume charts over here by percentage change so if we look at 2019 for a second you'll notice that the line for china spikes up in 2019 and then actually comes back down this is due to the annual chinese new year celebration

which drives a lot of traffic in that region in 2020 you'll notice that that line also spiked up during that same time frame but then sustained throughout the year um due to cove 19 um which is interesting because it means that players kept kind of the same gaming habits and usage as they had during this large regional holiday all throughout covenant 19 for china and specific if you take a look at these specific countries i know it's kind of hard to see with all the lines overlapping as they are you notice that each one experiences a similar uptick in traffic throughout the year during their quarantine timings and one important thing to note here is also because the holiday season was our baseline in 2019 you'll notice that everything kind of performed below baseline that's as expected because um usually traffic is a little bit worse right after holiday season but in contrast cover 19 you actually see a lot of regions outperforming their holiday baselines which is a really really stark

trend that we haven't seen in previous years so what's next um you can download a full report tomorrow june 10th um i actually only went over four of the takeaways that were were in that report but tomorrow we'll be releasing all 19 takeaways along with updated data that goes through may instead of just march um if you'd like to learn more about unity or our offerings their contact emails are located on the screen over here and i think you'll also be able to find them in the pocket gamer connects me and match system as well i know this was pretty brief we didn't want to give away too much about the full report that's actually coming out tomorrow um just timing-wise we want to give you guys a sneak preview about everything so i think that actually leaves us plenty of time for questions i want to thank you for your time and hope everybody's staying safe hey thank you very much we really do appreciate that and yeah we do have some questions that have come in uh i'd like to get to some of those um actually one of the more common

questions i see here is about the data is this data um is this data coming in from just the unity ad network or is this coming in uh across multiple ad networks this is just the data that we can see so whenever we make these kind of reports we feel confident we can actually see the raw events coming in which is coming from unity's monetization platform so um we have pretty good confidence that this encompasses good coverage over the gaming industry we see quite a bit of ad views and that traffic on our network of course we can't say the same for the visibility of data on other networks but this is what we can see on our side that's totally fair enough now one of the things that i've read about happening in other industries is well consumption of the media and other industries has gone up uh a lot of the businesses that have been shut down have reduced their advertising spend so how does this fair for

for games and for ad revenue uh if are people going to stop seeing as many uh you know new ads come in to fill their inventory so that's a that's an interesting question um we have seen pretty curious performance that actually behaves in the inverse to a lot of traditional brand spend as we would call it from non-gaming advertisers um right now gaming advertisers are actually spending roughly actually the same amounts as before so immediately after the crisis kind of happened a lot of the clients that we work with decided to pull back a little bit but what they also notice and you'll see this tomorrow actually when we release the full report is that the cost per install um to get a new user um through mobile advertising actually dropped by quite a bit um and then sensing this opportunity of mobile advertisers decided hey this is a great chance to get um using this quote-unquote on the chief because there's a lot more users in the system who are actually more willing to

convert when they look at ads so they actually ramped it back up so we ended up kind of at the same levels but with a lot more traffic overall that's fantastic to hear for right now but you know how how long does a fairy tale last when does this go away does it go away if i if i had a crystal ball i would be a very rich man right now if i could tell you it exactly um but i would say that we are starting to see a little bit of slowdown in that regard um especially um in early may so you'll see that once again the full report that we're releasing tomorrow i would anticipate as you go into let's say e3 or q4 you might see a little bit more change in overall habits from that especially as other industries start to pick back up and the overall world starts turning again but i think overall um gaming itself as an industry is has weathered the storm so to say

quite well um and then we'll probably continue to throughout the year um who knows what happens you know later in the year and everything else but at least that's our current prediction so here's uh here's an interesting question um how's the d do you have do you have country level data uh that you can access um so as you saw in the um i believe it was the last slide it was like before it when we broke it down by region we do have country level data that we do take a look at terms of prep so how has sweden done because of all the countries that lock down well sweden didn't really did they see similar trends in advertising uh revenue and advertising rendering um so that's a good question and i probably couldn't tell you off the top of my head without you know thinking back into data and looking at sweden specifically um but i think it would be something that's interesting to explore i think sweden if it followed the trends of the western eu probably saw that same small spike upwards on the week of march 8th which is the

week that contained march 11th i couldn't give you with any 100 clarity without going through and doing the queries myself again fantastic one last question that just came in um how did ecpms and arpu of ad monetization get impacted okay also a great question we have that data in the full report that's dropping tomorrow to give you kind of a hint of it um ecpms did overall decrease compared to baseline but that's kind of expected when you look at a the increase in volume as more users compete for the same advertising budgets you're going to get lower cpms as well as the lowered cost per install coming through those um but overall revenue as you can see from the ab revenue graph that we showed earlier went up despite the decrease in individual ecpm and that's just due to the massive overall traffic that we saw all right so i don't want to steal too much of the thunder from your release tomorrow but i am kind of stalling as we wait for the next speaker to get ready so i'm going to ask if there are any if

there's any data that you have around in-app purchasing volume um so we do actually have data around in that purchasing volume um we talk about it in tomorrow's report as well i keep saying check back tomorrow which is a great way to kind of pound it off but i think there's going to be interesting insights into that so if i talk about it at a high level we actually saw overall in-app purchasing volume increase but individual revenue per player actually decreased so you had a large increase in the volume but then the individual i guess ltv coming from in-app purchases from each individual player went down and that kind of echoes with a lot of people with what a lot of other industry reports have started saying as well and we didn't see anything different on ours so we have more people spending but they're spending less yes uh i god i really can't wait until your report tomorrow these are fantastic teasers um now is

this a report that we can look for quarterly from unity or is something that you've just decided to do uh just as a result of covid so um our team over at unity um has really started to leverage the kind of data that we can see coming into our systems um what we want to make sure it was a that the data is always anonymized and aggregated we work with a lot of developers and a lot of major developers and publishers all over the gaming ecosystem and we want to make sure that we're not giving away anything specific by each one so what we've actually started to do is do almost a yearly roundup um at the end of each year of aggregated performance across every single publicly available app category so stuff like puzzle um mastery et cetera they're also all included in that report so we actually released a 2020 mobile monetization report i believe earlier this year in february if i remember which sums up all of 2019 in terms of ec from ecbm performance in terms of cpi um basically all the metrics that you

might be interested in i think the full report is over 20 pages so definitely something to worth looking at over there i think that's available somewhere on our website i couldn't tell you it exactly right now but i'm sure our pr guy is texting me right now as i like to use this link um but we're also releasing a demand focus report so for advertisers looking at conversion rate ipm in cells per million as well as cpi cost per install um very soon i think actually this week which is going to summarize all 2019 for the demand perspective and then lastly we have this one that's coming up um the ko19 one now we usually try to limit his reports to around once a year just because they involve pulling quite a bit of data on there if anybody's ever used google cloud before you notice query cost can rack up every terabyte that you're pulling out and when we're pulling across uh millions of devices and thousands of developers and hundreds of thousands of games they do tend to stack up so we tend to try to do these

once a year um but they did a coveted situation we saw a lot of interesting insights we decided to release one around half your point instead of just at the end as well no though i'm a huge thanks to unity for actually doing that and making that data available um i did get another question in um so if you were working in a project right now as a game developer would you kind of put the pedal to the floor and try to get it out before the you know the quarantines are lifted or do you think you kind of ride it out and wait until things get a little more normal so it depends on what strategy you want to have right so like let's say your game is heavily ad focused right now ad revenues are up by quite a bit so it might be worth pursuing that if your game is really only iap focused um as we talked about overall overall iep revenues are up but individual rpoo per user is down and if anybody is familiar with uh the mobile gaming ecosystem the way

that you end up running your advertising is user um user acquisition costs have to basically be under your overall user ltv or lifetime value that is if a user brings you a dollar over the course of their lifetime your user acquisition costs on average should probably be less than a dollar so you can make money off of each user in a way that's sustainable so depending on how your game is actually set up if it's mainly iep focus you want to revisit how that ltv model looks for that game if your game is more average you focus like a lot of hyper casual games that we've seen as of late um and you can just kind of coast off a lot of the increased volumes right now um then you might want to try to push it sooner but it'll vary base by game i don't want to give like an overall blanket answer no that's and that's good i mean it again it does depend but it seems it seems to me that uh getting more people even if they're spending less now gets more people used to spending in your game and they might pick up their spending a little bit later when their

jobs and and income and employment is all more secure um i you know i i have a hard time seeing this is anything except a wonderful opportunity to ride the wave that you showed in your first few slides with just a lot more people playing games i mean maybe they're playing the same number of hyper casual games but the number of mid-chord games that people are playing to seem to be going to the roof um yeah midcore is definitely a great opportunity right now just because a lot of people have more time to change their habits um a lot of these commuter apps that we saw are you know things like puzzle games or quick pick up and play things things that you might play between walking between a meeting at work or while waiting for the bus to arrive whereas the mid-core titles are sometimes even full ports of games that you might see on pc and console that are now on mobile and they require you to sit down and have a concentrated session for almost 20 or 30 minutes people used to not have that kind of time in their busy work day but a lot of people working from home or working

remotely there's a lot more attention for those longer experiences yeah um one one quick way uh question to finish up here um we have people asking uh the report that you dropped tomorrow where can we get it is it at the url at the bottom of the screen currently showing um so i would have loved to include that link in this presentation as well but um i think they were finalizing it up as we were kind of wrapping this one up as well i think the easiest way to keep like abreast of what's happening is a you can probably follow unity on linkedin and twitter they'll probably drop it at the link over there as well i've been told that the full report is going to be entirely free it's not going to be gated behind an email sign up for anything um but that's what i've been told don't take my word for it um so that should be available to everybody uh pretty soon tomorrow i think also we talked with um the folks over at pocket gamer yourselves and when you guys send out the kind of like video recordings and such tomorrow

um because i'll be tied with the full report release i think it might be the link might be included in there as well that is fantastic thank you very much um hey if you know give a great big virtual round of applause to to henry um thank you and thank you for getting us kicked off on this track and for offering such a lot of valuable data again i can't wait to get my hands on that report tomorrow yeah i think at the last count when i was looking at it it was over 30 pages of content so definitely a lot of cool takeaways in there and the team at unity has worked quite hard in the report and they're all obviously excited as well to come get it out in public all right thank you very much you