The Road Ahead: Gaming Market Outlook Google's Alpagut Çilingir

[Music] so before I start I just want to thank the the constructors of fun team as well I mean over the past three years they've been great partners and none of this would have been possible without their help and collaboration so really thank you and it's great to see that we're kind of fostering this ecosystem together the second things I think which I definitely need to acknowledge is tomorrow's women's today so I wanted to acknowledge and thank all the women in our lives who've made our lives actually much better than than it could have been so thank you all so with that let's get going so first a short look back on you know what we said last year so basically we thought that the gaming the mobile gaming Market would actually start recovering or show signs of recovery we missed right so there was actually a decline in the mobile

market the second I think key theme that we had was we said look you know gaming overall may not be growing as fast but there are pockets of success that can actually be encapsulated and stuff like you know match 3D and connec tiles are kind of actually the shining stars of what has been a very dim year the third message was around IP right we really believe in the value of Ip and how gaming companies can take these big IPS and leverage them for their own use actually both you know gaining users in increasing engagement and I think you know needless to say Monopoly go was the rising star there but there were other Alternatives including a very very big missed opportunity so I think one of the big keywords of 2023 was Barbie right there were almost a billion searches on Barbie but unfortunately none of us were able to capitalize on this

and the last message was around diversification and how as gaming companies you need to look at multiple revenue streams and their hybrid casual Studios so actually the the hyper casuals were trying to Pivot into uh inapp uh purchases have actually been growing so I think we know we got because I'm grading myself I think we got you know three out of four so not too bad but a word on Monopoly go I mean I think you know scop is going to be here that they're going to talking about this this was a phenomenal success I know that there was a lot of news around you know UA and spending Etc but it wasn't only about that it was about how you can actually have a great IP with great gameplay reaching the right audiences and really capitalizing on the value of the IP so uh kudos to the team now going into 2024 I think you know the the bad news first gaming is

dead right and I'll talk about a bit about why I know this is not what you want to hear but what we're seeing right and you actually saw the same chart uh in in the previous presentation as well is gaming overall is not really prospering but mobile games within that is actually shrinking the most and this has been a trend now as a result of this we're also getting more non-gaming apps right who are going after the same eyeballs after the same screen time and they're doing an extremely well job and they're much more sticky right and that's why they're they're growing and soon they will uh overtake uh games now we've been criticizing you know uh ATT a lot but you know from a gaming perspective the ATT rates aren't actually that bad right so there is some visibility but despite of this right what what you can see on the right hand side is

you're spending money on downloads but you're not getting the return right so you're not getting Revenue so this is basically the percent of companies right who are actually getting more downloads than Revenue right that means that they're actually investing into this in a time where money is scars profitable margins are going down and this trend is getting worse so things are getting harder and harder and this is for kind of your feel you look at the top 500 games it doesn't change now what actually makes things worse is it's becoming a Winner Takes It All market right so if you're a new gaming startup and if you're really trying to make a name for yourself well tough luck right because the top five games and this is the top five games in the genre are actually getting more of the pie right so for a newcomer right who probably doesn't have ASD pocket

right who doesn't have an a strong user base right who needs to get you know traction it's going to be much harder but and this is not only limited to mobile games either right if you look at the at the PC side the picture doesn't change right so the big guys are winning so if you want to make a name for yourself it's going to be harder than it was a couple of years back and last but not least uh we're seeing actually a shrinking in all kind of VC funding right so funds are scars and I think Eric said this they're probably looking at other Alternatives so it's not it's both about the number of rounds that they're doing but also how much they're spending per round right so so less investment and less dollars per investment so what does that all mean it means that yes life is getting Tucker tougher but uh as uh Joe would have it

in lfas it's you need to Hope right so without hope there is no future and the sparkle of hope that we see once we look into this is the economy seems to be recovering so the overall inflation has stabilized but you know as an indicator we're looking at uh premium mobile phones right or or premium devices basically and interest and search and appetite from a cons from a user base that seems to be going up but I think much more importantly for you the number of game searches that people are doing is actually going growing exponentially as well so there's a lot of interest there now it's up to you to figure out what that interest is about and how you can capitalize on it but the interest is genuine it's there and for the ones who can actually capture it they are the ones who can actually uh kind of you know separate themselves from the whole

crowd the other point here is you know overall game revenues we talked about but it's the first time that actually they've started outpacing other digital ad spending right so again you know this is a glimpse or you know there is a silver lining to all of this which basically says is yes you know within that growth digital Landmark is actually growing less than games so games are getting a larger share of the digital ad Market which also means that they're getting more eyeballs so what does this all mean and you know how do we actually capitalize on that silver lining when we look at this from our perspective we see three large themes kind of standing out and I'll try to take you through these one by one so the first one's about your business model right how do you organize yourselves in order to be flexible enough to capitalize on these

Trends the second big thing and I think no conference you know this year is ever going to be possible without mentioning AI is going to be about Ai and obviously you know how do you utilize first party data and uh last but not least it's going to be about privacy with everything going on privacy is going to become even more important over the next couple of months and years so you need to be ready for for that from the get-go so without further ado let me kick us off so within that shrinking uh mobile game landscape actually I I talked to the right hybrid games are growing right and the beauty of hybrid games is they've found The Sweet Spot between hyper casual and Casual right when you look at it from a retention perspective as well so there seems to be a lot of users who want to play these games who are sticking with the games who have good return rates as

well and for the studios especially for the for the hyper casual Studios who can do that pivot right it's not an easy pivot but it's doable and we've seen many many cases of this with some clients who I'm working personally with as well it's doable and it pays off big time so what this means for you is look at your business model try to find ways of assessing it and see how you can actually pivot to something new the second big thing that's happening is around subscriptions right so the interest for subscriptions is booming right users are looking at subscriptions as an alternative right and we're seeing a lot of both downloads right as well as increase in Revenue share so subscriptions are here to stay right so I know you know these were experiments and people didn't believe in them but that doesn't seem to be the case it has a really good Landing uh

with the consumers now but when we think about subscriptions you should not think about subscriptions as an alternative to Ina purchases right because that only means that you're going to be limiting your Revenue what we're seeing is that for the successful companies out there they're taking a very different approach they're using this to prize right or they're basically looking at as a way of retaining and engaging with their user bases Mario Kart is just one example right it's around you know how do you differentiate with you know gifts and challenges and badges and and they're actually borrowing from the MMO RPG genre as well and how do you kind of you know make this a very unique and special occasion rather than saying okay you know what if you've got a subscription I'm not going to charge you anything there is a growing Trend here and it has

a very strong resonation with uh users as well the second thing that or sorry the third thing that's happening here is we're seeing a merge of different genres going on as well right so uh Mo some of the more success or up and cominging games are actually trying to mix and match different game plays different genres stuff that we thought would not be possible into one and although interest for what we're calling Legacy games so games that have been uh launched for or which are older than 3 years have stagnated right so users aren't that interested they're not you know really looking more or they're not searching more for that these new games that are actually being able to mix and match genres who are borrowing the best of different worlds and really make them making them into unique game plays are thriving so with that uh let's move on to AI now when I talk about Ai and gaming I

always find it very difficult because I think AI is within the DNA of gaming right I mean I don't know if there's anybody here who actually played Oregon Trail back in uh the early days or you know I used to love playing Monkey Island and you know these were yes they were rule based but every experience was different right you you would make different choices the characters would be different they would respond in a different way so gaming and ai ai have been interwined now I think it's time to take it to the next level right and this is actually a progression right so first and foremost right in order to capitalize on AI you will definitely need first- party data and then you can use AI for optimization right uh so basically how do you kind of you know create levels Etc but you can also use it for price discrimination if you want right so if you've got two different users one of them in the early stages of the game while as others in the later stage of the game do you charge them the same for the same Ops do you

differentiate is it possible to do it or not how do you actually predict churn before it happens using AI to stuff around generative Ai and kind of using that capability to actually help you in not only in your game development like you know testing games or levels but actually predicting how engaging a level is all right so can an AI play a level like a person and then predict a engagement score for you saying you know what this level if you do it this way is going to give you a score of X whereas if you tweaked it with you know this and that you know one more Shooter two more bombs whatever it would have changed basically helping you develop uh your gaming and this is happening it's it's been going on for a while as you can see right so like I said gaming is one of the early ones and just expected to explode right and basically the G G development which is what you're doing

now will be eclipsed right by new experiences and the ones of you who can actually get into that space earlier will be much much more successful oh so okay what does that mean basically means from a generative AI perspective you can do two things right a either you can use this to scale your game development right so looking at your teams how do I support them uh from anything from you know level creation to testing to how do I give these new gaming experiences that can actually catapult me in front of my competition and there it's around like NPC so if if you're game as an NPC how do you make that smart how do you integrate user generated content into your game without obscuring the gaml but making it even more personal and then of obviously you know how do you create endless worlds which is going to take

away from your developer time we are seeing examples of this right it's still in the early stages but as Google you know over the past I think eight months now we've had two foray into the field first with flip and Matt was also mentioning this it's about Genie if you haven't experimented I think it's really cool there's a paper out there on Genie which actually helps anybody almost create a game for themselves so it's it's we're moving into a very new world and then when when it comes to using it for enhanced gameplay the reaction from the early set is super phenomenal right it's really engaging and users love this right so you know you can do a quick search on Google or on YouTube you know see the content but the amazement the engagement from the users that that they're getting is so strong that you can instantly see why it would have a positive impact in deren rates so that's AI for

gaming and uh last but not least I also want to talk about privacy so a lot has been happening over the couple past years and probably more will happen uh going forward now what this means for all of you is we're seeing install growths slow down or decrease right so that's impacting how many Souls you're getting whereas your costs are are actually going up right so these privacy changes are actually having a fundamental impact both on the top line and on the bottom line of your business so you need to act now actually you should have probably acted yesterday right with dma but you know if you haven't taken any action you need to act now and you need to start collecting onep data now when I talk about this with my uh clients the the first push back I get is but that's going to obscure game play right that's going to

hurt and and users don't want to give me first party data they don't want to share uh emails Etc now what we know however is if you find a way of collecting that data it's going to not only impact your uh Vue generation right but also it's going to help with your costs so spending a moment trying to come up with a creative way of collecting this St data is going to be instrumental for all of you moving on if you want to both Leverage The Power of AI right because that's going to be dependent on first- part data as well but also make sure that you have a much more robust business now coming back to this question around yeah but you know nobody wants to give me an email and you know there are some more strategic games who actually don't let you log on without an email but then you know is that really true for all games we've seen different companies look at this

from different Alternatives and there are ways of actually collecting that onep data as an identifier without intruding on the gam playay and these are just some some examples right there's always an Associated benefit with this for the user right but if the user knows that they're getting something out of it they are more willing to share that data they will trust you with that data and once done this is the the the path that's going to open up uh a new stream for you so in summary I think what I want to leave you all with is we're going through troubling times gaming is the future might be dark but there is a bright silver lining and that silver lining will probably get bigger and bigger for the ones of you who can actually you know re-evaluate your business models willing be willing to Pivot and willing

to experiment who can capitalize on the power of AI as we move on right and and Le and make AI work for you right and number three who can Embrace privacy in the new world which is changing and it's probably going to get uh more and more complex so with that I want to uh conclude my words and thank all of you for listening and for coming and I hope you have a great day and I'll pass it over to our very own KY and Belinda to talk about how AI will actually help grow your business thank you