The State of Gaming 2024: Trends in Marketing, Gaming, and Apps with Sensor Tower's Lexi Sydow

hey folks and welcome to the deconstructor of fun podcast I'm your host Misha katoff and in this episode I'm joined by Lexi Sido director of corporate marketing and insights at sensor Tower and together we're going to have an in-depth discussion of mobile gaming market now if you've been listening to this podcast Lexi has been a guest for years and she's a true expert when it comes to mobile market uh a real OG that has nearly a decade of experience analyzing the market as a whole in this particular episode we're going to explore significant Trends in Mobile gaming and mobile game marketing we're going to delve into app versus game Dynamics uh analyze the rise of platforms like Tik Tok and YouTube in terms of AD spend and Lix is going to share her insights on Regional differences the rise of Ip and Brands uh brand collaboration the future of subscription gaming and and many more uh

I hope you'll get a valuable Insight from this podcast especially about the normalization of the market postco and ATT changes and learn about the tra trajectory of apps taking over gaming revenues if you enjoy this podcast I suggest you subscribe to this deconstructor of fund podcast on whatever platform you're listening it to uh I also S I also suggest and would very much love for you to subscribe to our newsletter um there you will be reading all the uh all the insights it comes once a week and and also you'll be reminded about the podcasts that are dropped and kind of short summary that will let you know if you should be listening to it or making a pass um if you want to join the conversation about this particular episode I suggest you join the deconstructor of fun slack group that already has over 3,000 game industry professionals you can get access to the slack group if you have

enough of Industry experience and just go to deconstructor of fun.com and I'm sure you'll find the link somewhere there but without further Ado ladies and gentlemen Lexie sitto this podcast is brought to you by data AI now you're asking didn't they get acquired by sensor Tower they did and that's awesome here's why whether do you loved using data. a or sensor Tower the combined company will offer customers even stronger and more detailed insights on the full Digital customer Journey exciting times lie ahead as sensor Tower and data I Jo enforces go to data. a or sensor to.com and get on board with undeniably the best data partner in the business now back to the [Music] episode hey Lexi and welcome welcome

back to the podcast hello thank you for having me it's good it's always good to have you we haven't had you on for uh for a hot minute yeah it's been oh God I don't even remember I feel it's been a minute I feel like we've spoken but yeah you were you were the data AI last time we talked that is true that that is true it it's been um I guess not that I couldn't that could have even been last month then but we yeah now at sensor Tower or data Tower or sensor data or sensor AI so quick introduction Lexi sitto uh director of corporate marketing and insights at sensor Tower uh before that before last month you were at data AI for nearly 9 years so you know a thing of two about how the uh how the App Market has evolved during the last decade I know now it's like primary uh

data it's not even looking at market trends it's just it's in my core I feel like your yourself I feel like we've been in this for so long you kind of like no I remember when that launched exactly yes yeah sadly sadly you remember like obscure games from 2015 and um that is not that is not good that is dating yourself so uh so today we're going to talk not about games from 2016 uh we're going to talk about games from 2023 24 and I used uh I have bunch of questions but overall we're going to talk about Mobile gaming market trends mobile marketing Trends and apps versus games and I and for the background if people are want to see the graphs they want to use the graphs in in any way I've used two data sources so data ai's 2030 mobile app marketing forecast and sensor Towers state of mobile gaming report there's Link in the description of this podcast no matter where you watch it so any of the graphs don't email Lexi she's busy don't don't ping

me I don't have this just go to these reports take screenshots and use them for any anything you need um did I get that correct Lexi yes absolutely and we we love to see it used in the wild so please do yeah yeah all right let's jump in so Mobile gaming market trends on a high level when you look at the graphs its total downloads are down on both platforms with cl declining twice as fast compared to iOS and Ina purchase revenues declining on play while keeping steady on iOS so Lexi question for you uh when you break down the market into genres or GEOS what really caused the decline and are there any genres or G or GEOS that we that are actually growing that developer should be maybe looking at so uh floors is yours tell me what's going on yes um so actually we did see some substan itial drops in downloads um

arcade and simulation were two of the biggest sectors on like an aggregate for downloads but both Dro significantly around 16% year on year um so those areas being sort of that drop we saw in terms of growth for downloads actually racing grew modestly um year on year so a little bit of a growth pocket we tend to see a lot of downloads for the racing category come from uh specifically in India um being a huge Market there and some markets in the Middle East actually driving a lot of that for Revenue side we actually saw some of the pullback in core games so RPG uh strategy both sitting at around negative 10% year on year um in terms of growth many people probably would not be super surprised to hear Casino up almost 20% largely due to Monopoly go um and then puzzle so puzzle being that up around 10%

and that's an interesting one where it's not necessarily the the new launches like the Monopoly goes but rather continuing success of Candy Crush Garden Scapes uh and then some really big Milestones being hit by Royal match so they had a really great year and a strong inflection point um in the last year we're actually in the US in particular we saw the sort of overtaking of spend in uh Royal match versus Candy Crush um so that kind of within that space the Casual bucket um um kind of drawing from a number of these genres grew around 8% and so stronger growth happening in that space uh on the whole in terms of geographies you know declines kind of across the board um and then for for downloads in particular and for Revenue we saw you know pockets of growth really Europe um Middle East Latin America North America relatively flat for Revenue but a good sing signal at least

from the decline we saw in 2022 that it's not um essentially declining further um Asia was down around 6% so we did see some declines happening for um across the board in Asia but some strong markets where we typically would have seen more growth like Japan um so still a little bit of a flat flat time there and was was the decline in in Asia driv by China with the uh with the restrictions on on playtimes and and the games yeah so this is this is this kind of fusion where I'll bring in some data Ai and some sensor Tower data while we're at this kind of one month into this crossover here um from the data AI side we saw strong declines in China uh from IOS as well as on thirdparty Android stores so we would Market size for thirdparty Android as well and a lot of that is the licensing restrictions so you're just not getting new titles launched um and then there's been some struggling um SE sectors in the economy

as well as some of the game time as you mentioned from a regulatory standpoint um where we're just seeing that dampened domestic Market what we do see coming out of China is pretty strong traction for Chinese firms that are going global so that's been a strategy for a long time the the emphasis on kind of getting outside of China breaking into Japan is a very lucrative Market but also South Korea and then outside of Asia really looking at the US market um as well as markets in Europe and we've seen some strong indications of of some of those titles doing well um and one of the big ones in 2024 is eggy party so soft had kind of a Chinese launch last year in 2023 and we've seen already strong Traction in the western markets um specifically the US with eggy party being that kind of um coming more from an IP that resonates in Asia but then uh similar functionality in a sense to stumble guys and kind of breaking over into the Western Market there so

interesting still strong Publishers but the domestic Market being a bit of a concern in China you've heard of heroic Labs by now and we keep talking about them because in today's mature Market you need every Edge to be successful rather than spending those precious company dollars on building game Tech focus on building your game and shipping it get into your players hands faster and grow your community heroic Labs is Battle tested partner in front of the podcast their Tech enables you to be flexible creative and scale for Success heroic Labs has your Tech stack covered whether you're looking for a worldclass backend game server an amazing game development framework Fantastic live Ops toing or reliable Mass scalability heroic Labs has solutions for all of these challenges and it's not just us a deconstructor of fund praising heroic Labs the company works with some of the world's biggest Publishers on many of the Beloved games focus on your game save a big chunk of cheese and avoid

Tech risks with heroic Labs interesting uh and then of course for uh outside Chinese companies they can't enter China uh well the Chinese companies can't even publish in China so it's kind of a closed market and everybody starts from from outside China and then some of them are able to then eventually launch inside China interesting uh the the overall trend then when post post at when when everything was happening when idfa was deprecating and we were predicting this sort of a thing that the rise of the middle that's what we were calling so meaning that these purely ad monitors monetized game like hyper casual games uh would be challenged and perhaps even that whole business would go down at the same time we're we're looking at whale monetized games uh core games casino games uh predicting that they would suffer also because the targeting would be much more limited does that prediction ring true now that we're looking at the data I know casino is up but that's Monopoly go that's IP that's

sort of like a casual casualized version of Casino like was was this prediction mildly true not true what do you think I mean the data is showing it is it's showing that hyper casual has struggled and from the download side we saw that some of the worst performing sub genres of games were hyper casual sub genres um that being said still the top three sub genres are for the most download still come from hyper casual so it is a bit more of a Nuance story with downloads but um we're seeing some indications of some Revenue uptic in hyper casual which indicates to your point exactly ad monetization is not performing as well so there's this hybrid monetization approach within app purchases taking over a little bit or at least some sort of innovation in that space um hybrid casual is that big term that we're seeing kind of show up where um there is this sort of Middle Ground emerging between the two um uh decline happened

in midcore games um which was around 9% there was a drop in Asia in particular um but then on the whole these sort of this indication of these hybrid mechanics um so casual Revenue kind of tipping up there but the long and the short of it I guess is that yes this is I mean this prediction is effectively has come true and we are seeing difficulties um that there are other sort of macro elements that play I think as well with sort of game spending and I know you mentioned at the beginning we'll talk a little bit about apps verse games yeah and I think that there is a story to be told about potentially some things around you know is Tik Tok eating Gaming's lunch and we first looked at that for time spent but now there's this indication of you know if we only have so much money in the bank um and we're spending more and more on Tik Tok does that eat into our entertainment funds at large um and you know do we view those as that kind of what we spend on games so there could be a bit of attention happening there as well yeah I

definitely want to talk about games uh games versus TRS this is something that I've been naturally talking about writing about and it's a triggering topic for a lot uh in a good way and in a bad way so it depends on uh who you're talking to if you're talking to investors or or or um or uh more of a leadership of a company they would be more positive about this and then when you're talking about to developers and and those who are tied to the the game economy they're naturally U not happy about this type of a trend or even discussing it so let's leave it to the end so that so that those who don't want to talk about it can skip it and those who are interested can can dive in I wanted to ask a couple of more questions regarding the gaming Market because often times we not oftentimes we normally compare it everything to a previous year and in this case it's it's a challenging because the lockdown years were were um anomaly in any ways not only on human life but uh but especially on gaming so it's always weird that we compare what the industry growth was in

21 or 22 when we know that that was insane like we locked people down in their homes and said hey like you could watch Netflix or you can play games so or you could do both because now you have a lot of time but that's not the uh the world where we live today and so I wanted to ask like how does this Market compare to 2019 before the lockdowns like like is it up is it you know like if we we take this anomaly years out how how how what's the comparison it's a great question and I think um in in terms of downloads and there's a really good chart for people who are chart people like myself um in the state of gaming report um state of gaming by sensor Tower which will be hyperlink there's a great chart that shows these trend lines and across most sectors for downloads we've sort of seen that return so it's you know we had this exogenous shock in 2020 uh 2021 that really shook the system and demand spiked so downloads really grew we saw consumer

spend also up around 15% um as well during that time year on year and what we've seen sort of happen in 2022 um especially for Consumer spend or for Revenue through the app stores is that pullback where there was this Market correction kind of at play where we had that big boom from demand and then we kind of pulled back um and now I think across Mo both metrics it'd be safe to say we've sort of stabilized um and returned to a little bit of that on the curve of where we would have normally have been if covid hadn't happened um and I mean for downloads it's really a lot of the categories are sitting more towards their pre covid boom levels so I think there's a bit of Market normalization that we saw in 2023 um and this year I think is where it's going to be really interesting to watch the kind of growth sectors especially years on from covid um years on from ATT like those sort of big factors this is an interesting year to be kind

of monitoring it closely I think because 2023 really to me was that year we saw the kind of returning to normal after the covid Peaks we really saw in 2021 and 2022 yeah it's good that you mentioned again AT&T AT&T at AT&T is a story uh so at because um on the one hand like we could just kind of erase the co years and and and focus on what the trajectory would have been without them but then again ATT happens exactly during that time so it's kind of hard to say like what affects the what uh because there's broad you know consumer Behavior changes disposable income changes and then changes also on your marketing targeting so uh hard to dissect of of what affects what um but overall when we look at the uh the sort of a game preferences widely between different regions um we know that there's certain games that are big in

Japan and not big or nonexistent anywhere else same goes with Korea same goes largely with China um when we look at the uh the West uh the different markets like what are the sort of a preferences that we're seeing on a on a high level out of the uh the accessible markets to's put it that way so uh perhaps like Latin America Western Mina regions uh is there any any highlights for uh for developers to to focus on yes absolutely I mean the biggest contrast we'll see um from a regional standpoint you when you look at it is basically APAC versus like say America's um APAC exes roughly 60% for at least for Consumer spend for RPG and strategy whereas Americas tends to not it tends to be um less of a com comprehensive skew I think RPG represents around 14% of Revenue for the Americas whereas like

match and Casino have an outsized portion of that total so that tends to be sort of what I would distill it from the just the two markets the two big major market segments that we tend to get asked about match and Cas uh Casino skew more um in americaas so in North America we see also like a 60% casual skew Europe's around 52% versus like a 44% midcore um and then we actually see Latium and Middle East are more bucketed in similar ways where there there's this slightly more midcore skew of 54% compared to say around a 42 to 44% casual skew um and I think that would check out with what a lot of people might feel to be true um and then when you get into the genres and the specific titles they do shift um significantly so we do have things like for Revenue where you're spending that money um in Asia we tend to see games like Han Kai star rail G impact and we also have game for peace in honor of kings that are very focus in the domestic Market in China in North

America Monopoly go was the big one there followed by Candy Crush coin master in Europe Candy Crush as well Middle East is pubg um in Yola Ludo and then laam we have free fire Roblox coin Master sort of top performing from a grossing standpoint um so there is that point of difference but then you do see like we mentioned you know Lam Middle East uh both have a battle royale game for instance that's showing up number one it's just kind of a different title um and free fryer did a great job of localizing specifically in Brazil um so that would be a great example um of how they've sort of penetrated that market versus say pubg you did a great job in Middle East this podcast is brought to you by apps flyer in today's Digital World understanding your app's Journey from Discovery to download is more than just insightful it's essential enter apps flyer the leader in Mobile attribution and marketing analytics that allows you to measure the full potential poal of your marketing efforts making

every ad dollar work smarter with apps flyer that's your new reality dive deep into datadriven insights that reveal exactly where your users come from and how they interact with your app app sler where your app's potential meets performance I think that's really important for for Publishers developers to keep in mind that that different geographical um Pockets can can provide growth not only uh looking at the genres so um yeah different games make it big in in different regions um I had a I had a question about like this is constantly on my mind I don't know why but like we keep talking about Netflix games before that we were talking about Apple arcade games and and um I mean talking about it because Netflix has spent over a billion record uh I think they they they uh they publicized that that they spent billion on on games so looking at the traction of Netflix and apple arcade do we see

meaningful growth in subscription gaming is this a is this a new growth vector or is it just a money sync this stage the growth rate is very compelling it's 180% growth year on year and some of the downloads of these apps um which is an exceedingly strong growth rate but when you look at where it compares the rest of the market it is a very teeny teeny tiny slice of the pie um so it's that classic like Fast growth but like very small base um um I have never been super bullish on the subscription gaming aspect it reminds me of sort of paid games where we sat with uh like there are successful paid titles where you pay to download you know it's that gate up front versus freet to playay and then you have inap purchases that happen as you play uh Minecraft is probably the one of the be best performing paid title still but I I I do think that there the free-to-play model is largely going to be way more

lucrative Netflix I think has a stronger opportunity than Apple did just because you've got that cross media play where you have titles that are hopefully relevant on the streaming service and then having that kind of Port naturally um it feels a bit like a a marketing funnel uh that you're kind of sending people through but at this point the traction's still so small so I mean I I don't even think this year in 24 or next year we're going to see that meaningful piece of the pie but I the growth is there it's just will it get to a meaningful threshold of people yeah I I I would uh I would actually counter Apple has the store and they actually you know and the subscription service is a part of apple one and every time you get a device that give you Apple arcade for like three months just don't don't worry about it here's here's game so I think they're they've been pushing almost more effectively their Subscription Service versus uh I mean I don't want to turn this into Netflix games discussion but

when you look at the when you look at the graphs or like what are the driving growth uh what what games are driving growth for Netflix games it's GTA and that's that has nothing to do with Netflix's catalog and if you take that one away um it doesn't look as as impressive afterwards so anyway that's a fair point yeah it's more of the IP play there and we did see some strong boost in some of the other um GTA titles just like on mobile as well um in tandem with some re-releases of things so I I hear you I I still am not super bullish on Apple arcade I do think like from a distribution standpoint absolutely like if you're coming from the Apple side it's you know it's partly why iMessage you know has done so well on Apple as well you know you have this sort of natural um onboarding from getting the device but the subscription gaming to me the best option for the Apple arcade

Universe was likely with kids uh for parents who can allow for a subscription to games that's capped at a price um and kids kids is a big growth sector actually we saw last year especially in Western markets strong growth in Revenue strong growth in downloads um so that could be a a strategic opportunity too that's where I I saw it sitting mostly yeah yeah 100% uh they don't have ads and those and and it feels like like something something you could give your kids uh the games you can give your kids the game you the games you can give your see it's a morning I'm I'm losing my words anyways so uh so um yeah uh there's there's definitely thesis for both but it hasn't really materialized um last last ones about games Market is uh looking at Publishers and top games um what are the uh the top games of of of today is is Monopoly go the biggest title at the moment um is that the case in 2024 it definitely would be one of

the ones um it depends on the market so Monopoly go did exceedingly well you know in North America and in some European markets um so globally in terms of what happened in 2023 we still see big titles like honor of Kings Candy Crush roblock uh genin impact being another big one um and then on a regional or a country basis they will change Monopoly go had an outstanding launch year and from everything we've seen so far in 24 they've already hit two billion in um spend on their game since they launched so it's less than even like a year um huge success there um and there's a lot of I think we've talked in other areas about this too they've done so much with um engaging from a user acquisition standpoint in like a community and a and sort of leveraging user generated content or or facilitating perhaps um and letting it kind of go in the directions that It Go go um that would be a definitely a

breakout and I think the other compelling thing to note is just some of the longstanding titles that continually do well um like Candy Crush being a very especially in Western markets but Royal match as I mentioned is one that we saw hit new Milestones um last year as well as some of the titles from play rck so I think definitely some of these uh titles that have been around for a little while not necessarily new that are are really seeing a strong Global base as well um Royal match and Candy Crush being more Europe and North American focused yeah that's and how about on the Publishers side like uh I assume tensen is still number one n is number two is uh play Rick's number three how how are things going there yes so um last year players in terms of Revenue was number three uh we've got Activision blizzards still showing up and some of this depends you know largely fueled by King

within that space as well um some of the ones I'd call out in terms of like what changed would be scopely so again that's that Monopoly go piece where they sort of leap frogged from outside the top 20 in 2022 to number six in 2023 um and then we also saw things like moonactive saw a boost as well there was still strong growth within moonactive which tends to bucket closely um with Monopoly gal uh and then robloxs being another one so Roblox as an entity sitting at number 10 on the publisher level um moving up a few ranks as well so still strong ecosystem happening there growth in downloads but also around a 20% growth in spend for the ROBLOX Corporation too so um those would be some of the the movers and shakers there but you're absolutely right 10cent still number one holding down the fort year on year for many years yeah yes yeah it seems like it um all right let's talk a little bit about the marketing Trend so this is something that I I know

much less about uh and you know Performance Marketing has been the driving force for game growth uh when it comes to mobile the whole LTV being bigger than CAC or customer acquisition cost is the is the combination since 2011 it's still the combination it's still the graphs that I that I'm seeing from from the uh from the different b games the cohorts LTV cohorts versus customer acquisition cost with a payback time show but um on a on a higher level kind of zooming out from from that like what are the marketing Trends right now like different channels the demographics and so forth what are you seeing on that end this is a really interesting area I feel like Jen would have a lot to say about this too um in the marketing realm I know we spoke about it at GDC a bit um and I think we've got some conversations planned for the future around it too um some of the big things on a high level last year were some of the IP and brand collaboration So within real

blocks even embedding Brands within that universe but also strong IP I mean we Monopoly go I feel like a broken record but that's one very strong um IP that did exceedingly well I mentioned heavy localization so this is also a bit of um one of those topics where I think it touches on some of the other marketing channels is it's about that kind of GEOS specific or Market specific localization so going Beyond translation of language but going deep into the GEOS um so using micro influencers local celebrities for ads um you know streamers that are prominent in that region um who might be smaller on a global scale um and there's some really strong examples of that that have been used I think that's still a big Trend to kind of pull on that thread um I do think there's something as well um around sort of user generated content

and that authenticity we you know we've talked a lot about Tik Tok over the years but um even at Ma or mobile apps unlocked in Vegas and I'm sure at GDC there was conversations around ads that are user generated in nature and how they perform and can engender trust as well um and be an interesting play and then the last one and this is an example actually one of my colleagues um we were talking about some of the success of Monopoly go and and talking about communities and targeting them very strategically so I really liked What Monopoly go did when they launched where they had Tik Tok so you're activating that younger demo there's a high growing cohort of older people on Tik Tok as well but it tends to dominate for j z and Millennials and we saw the Tik Tock um just sort of verality around Monopoly go where it sort of had a life of its own and creating that community and fostering that as a brand to live um did

very well conversely also very very well with um thousands if not millions of users at this point on Facebook trading groups so again you're unlocking a very different demo than what you'd unlock on TI Tok um it's not like passive watching videos or like watching sort of real time um I know it was like stealing from friends got really big on uh Tik Tok for Monopoly go Facebook was more about Trading Group and actually one of my colleagues mentioned this one um one of the Facebook ads for Monopoly go from a Performance Marketing standpoint got did exceedingly well in terms of comments a lot of people um were commenting about the trading aspect on the ad itself which whether this was intentional or not from the marketers for Monopoly go the effect is that if you're commenting on an ad that high level of Engagement will make the ad go farther and perform way better uh because it's that organic traction and you just don't see that

type of engagement on an ad usually um you know you're usually optimizing for that click through and then like if you can deep link Beyond so those are just some of the areas where I do think this there's that communities as a marketing play doing it in a way that is um not just like blasting but very targeted to the people who are on that platform is important and we've seen this as well with genin impact honai star uh star rail they activate um events via their social channels as well in a really good way and we tend to see when they have these monthly events where they release new characters or new themes in the game um you see the revenue spikes tied to that as well directly after these events which um I know we talked about live Ops and events as well but that being another area where you can kind of activate your communities um strategically for specific to what that community and the demographic faces and how it might um

activate a piece of that game so I think that's a really interesting one I mean not everyone can turn an ad into like a comment thread but it shows that like they met the audience well with how they were activating those Community uh those communities step into the future of game monetization with exola exola empowers developers and Publishers to market sell connect and optimize their games globally from payment solution to a full suit of tools designed to grow your game's Revenue while fostering a lawyer player base exola is your gamees gateway to worldwide success with exola the world is your playground visit exa.com today and find all the solutions that will help you to power your games into success everywhere that's that's fascinating and you mentioned Tik Tok like every I mean everybody mentions Tik Tok all the time is that now the largest channel because everybody keeps talking about it or like

how does it compare to you know YouTube or or um or Facebook or like Instagram terms size of Channel this actually challenges I think a lot of preconceived notions uh YouTube was actually the top social ad Network for gaming spend in 2023 and about half of all the spend being on YouTube still um YouTube is still the biggest platform in terms of like time spent and engagement so it dwarfs everything by a lot um I remember even a couple years ago when we looked at YouTube globally it was like of of all streaming and social it was like this gargantuan share of time you know almost half if not more was being spent on just YouTube so YouTube is still a huge channel uh after that is Tik Tok but that's at around 14% of gaming spend for adet networks and then it's Facebook at 13 Instagram at 11 and

then Snapchat at 4% um so this one actually surprised me a bit um it is interesting to see that Tik Tok has usurped Facebook as an entity obviously meta properties combined is bigger but um number two is not bad for uh the Facebook ad excuse me the Tik Tok ad platform yeah over over Facebook and Instagram that's a that's a that's a pretty surprising so um you talked a lot about you know we talked a lot about Monopoly and and IPS and Brands uh I remember like maybe five years ago see I'm dating myself again uh with with the the reports coming in from like Korea where one out of 10 games did not have an I so out of all the games that that were downloaded one out of 10 did not have an IP or a brand so everything was very uh focused on on on different IP Integrations or just games made around an IP um is this kind of like the trend

that we're seeing on in in the western markets at the moment like are we trailing behind the the key Asian markets I think we are I think that is a big area that we're seeing that IPS are sort of um are back in a big way I I guess the interesting thing that's happening now I think as well is that a lot of these IPS are sort of they might be like mobile native or like gaming native right like you've got um IPS that developed out of mobile titles that are still performing exceedingly well um I do think I mean Monopoly go is we've talked about it probably at nauseum now but like they being the big IP that did exceedingly well in terms of I mean so many factors at play and how they performed But ultimately familiar title they've made it a mobile first experience poor game that you you know the board game kind of what you love about it is incorporated with other elements that are very mobile first um I

do think what's really interesting as well is some of the IP that's coming out um that is resonating in Western markets um might not be what people would anticipate so we're actually seeing a fair amount of traction from gaming pubs leveraging like anime IP so it might not be super mainstream like your Pokemon go right but things like one punch man um it's a crunchy roll game so crunchy roll the streaming platform for anime titles that does very very well for genen Z and has the US is the biggest market for Consumer spend on that platform for video streaming that game Saw 45 million downloads in the first four weeks and really resonated with like the US market um that is a kind of an IP that like maybe many people would not be as familiar with um but we've seen anime as an art style grow for streaming and for gaming in

Western markets which typically did very well in Asia with a lot of Ip attached to it um and so that's actually a really interesting sector as of even in the first couple months of this year um maybe a different view of Ip than we you know not just Monopoly but these smaller IPS that might not be as well known um that are doing well in the US market in particular that makes sense I remember now from the Newser report that there was also something about Brands and IPS and and Anime being like the second most popular um source of uh on IPS so yeah interesting how how even that trend is coming from Asia kind of like trailing behind even on on that that level um last thing about about marketing is is of course trans media so now I'm seeing you know my feed is is filled up with people watching Fallout and posting you know steam charts of how well Fallout is doing now naturally um theow growth might be like the way I'm I'm reading it

is of course the growth on Fallout games is significant because there were no new game so you kind of like the uh the the base level was very low and now people are rekindling that interest or maybe downloading them for the first time and uh and any kind of growth it seems major to to not having growth for a long time but is this sort of a trend media Trend like like how are you viewing this like is there a true impact or is it uh sort of like a flee fleeing um fleeing impact if you will I guess so what what the way that in the report um for the state of mobile gaming report by censor towerer that they kind of talked about trans media as sort of they looked at things like shows advertising on different channels um within games or within other social apps and then I also think there's that piece of like how we leverage you know maybe shows across the portfolio and I mentioned like one punch man just end about how it's almost like this title got very big and then as the

show Progressive progresses it's also like a natural kind of it's not a free ad you had to pay to produce the show but it is it's not like an ad you're running an addition um and actually some conversations we had at GDC around um you know Arcane being almost like a free ad for League of Legends and sort of these transm media Integrations uh obviously Netflix wanting to get into games is sort of a market indicat that there could be more traction there um we've seen just in general some of these shows like The Witcher you know 50% of his ads were on Instagram The Last of Us 32% of them um of ads were um and uh or 25% on Tik Tok and I think around 32% were on um Instagram as well actually so there's like some interesting titles and like opportunities Happening Here I I do think that there's a really strong case

for this sort of social streaming space and how this all works together and it kind of dovetails into that entertainment conversation it's it's sort of this passive and active entertainment in my mind as well like you're watching the show um but then you can kind of take it to the next level in a sense and the playing a game and some of these so I think there's there there's an element there and it reminds me a little bit of what um in the non-gaming space we saw Sports were a big breakout sector in 2023 along with other Live Events like concerts so ticketing apps did exceedingly well I mean Taylor Swift basically broke some of them um but that's we do see that happening where you know people want to watch live sports and then we saw in tandem you know uh what used to be the FIFA game or EA Sports Football Club did exceedingly well off the back of just watching the World Cup in 2022 and

the Women's World Cup in 2023 um so I do think that kind of touches on a similar thread where I think this like natural streaming and like having that kind of passive and active participation might be a little bit at play um not the only driver here but something in terms of a consumer Behavior Trend or seeing that emerge in a couple other places um so the trans media conversation I think that that's an interesting an interesting place especially with Tik Tok being often passive you know passive entertainment you're watching but then you can produce your own video so it kind of does this dual aspect um but I I I'm very interested in how this evolves this year this is one that i' I'd be watching quite closely as well yeah yeah I mean it it makes sense when something is on top of your mind you're interesting and interacting with it in various different way in in that aspect then I think Netflix games is really under delivering because most of their games are not even about the shows or

with the IPS that they have on the platform it's just like just random collection of uh of old titles uh anyway so enough about Netflix games let's talk about let's talk about let's talk about games versus apps so so this is kind of like the biggest Trend that I've been seeing from data ai's report is is is how big of a share apps have been taking because for the longest time we kind of considered app stores being essentially game stores with 75% of the revenue coming from games and during the last I would say like even last quarters not even last years like the the change has been really rapid when you start looking at the graphs where apps are picking up steam especially in the inapp purchase front uh so uh but now even on on the download front as well when you talk to uh to any of these social media networks they would say that spend spending on app marketing has significantly increased compared to and and actually

overweighs in many ways game marketing so what what are the uh what are the trends that you're seeing I know this has been a contentious discussion whether disposable income has an effect on your app purchase or not or how much are the web stores really taking out of all the revenue um you know and in I've been asking about web stores a lot as well and and um it's it's uh it's not that big of a chunk at the moment as as people are um putting you know way on it maybe so anyways what's what's your take on game sources apps this is I feel like a very fascinating sector so I basically from a download standpoint which would you know kind of our proxy for just like demand like what do we use relatively steady so we've basically a third of all downloads have been games and it's been that way for 10 years we'll date date ourselves again and it's projected to be that way through 2030 um so this data that I'm referencing we uh just put out

a 2030 Market forecast um it's available and free for anyone I guess it'll be in the show notes as well but there's some really you don't see that shift that much and it makes inherent sense we see in most markets um your tools and utility apps are the most downloaded and they're just not the ones we talk about the most it's like vpns and uh maybe some widget or customization apps or tools um so they're just not as excited but the app space we tend to have the most downloads it's been the inverse for spend so first mover in the market with games um the most natural business case um we already spend money on games on PC console um this is a natural Evolution um so historically as you said I mean it's been around 75% it's sitting when you include third party Android in China it's around 63% in 2023 and what we project by 2020 excuse me

2030 is that's almost at parity so apps we project will just narrowly surpass game spend um it'll be about $148 billion dollar in apps um or excuse me 145 and about 143 billion in games um so around 288 billion in total annually for 2030 in terms of App Store spend um and there is conversation about web shops uh but we can we can bark that uh basically there's been a couple of different factors I think right now the biggest sectors for non-gaming are video streaming so Disney plus um HBO Max or Max um we still have a lot of Legacy spend in Netflix so Netflix kind of stopped new subscriptions in around 2017 I believe in the app stores and we have this very resilient cohort of people people who subscribed pre 20107 there's going to be a leaky Bucket

over time but pretty resilient amount of dollars still being spent in Netflix alone over the years um and then things like YouTube Right paying to remove ads that's their primary monetization through the App Stores um so that sector is very strong we see that is typically the biggest bucket dating is another huge area subscriptions um as well as in app purchases we're see some indications of triing new methods there um whether subscriptions were too high of a price point um but we are seeing some indications of some some sort of toggling around in that space and then it's entertainment apps driven by Tik Tok really so that's this or I guess we'd probably bucket them in this regard to social so you know twitch had been doing tipping to streamers for a long time but Tik Tok really brought that to the passes and last year alone we saw $4

billion being spent on Tik Tok via the app via purchases um 40 I believe it was 40% of it now I'm getting all my stats mixed up um is by Americans alone so wow I want to say it was as high as 60 but I think it's 40 actually um we also saw that Tik Tok hit over 10 billion in lifetime consumer spend last year and that's the first noname gaming app ever to do it um so that's definitely a kind of a watershed moment and we're seeing Twitter um or X Snapchat um Instagram all starting to dabble in consumer spend in the social space whether it's verifying your handle um or potentially uh in the case of Snapchat they saw $250 million flow through um last year just on subscriptions to access premium or Advanced features so there's a lot happening in the space um Tik Tok I'd

say is that kind of was that gatekeeper change that we saw where people are tipping because you can still watch all this content it's just it's free still but you're just electing to do these tipping system and I do think that there is an area where um if you're spending time in Tik Tok um that is time you might spend not in other streaming apps that was kind of what we saw early with doing in China um which is Tik tok's um app in China and that I could see it spilling easily into the gaming space too where there's that element of how much money you're spending where you're spending your time where you're entertained and I don't think it's you know I think people will still spend in games absolutely um but I do see that that's the big area where we've got more services we're paying for from a subscri description standpoint and then also this big shift in um where I think this

year is where we'll start to see a lot of that take fold with um people paying into social apps and you know to really date ourselves like 15 years ago if you asked me to pay into Facebook we would have been like no absolutely not so I I think that that's this is that big shift I think happening right now uh that will drive some of this change in the future years so it's almost like to summarize this um to create a sort of a flowchart they the apps always had the downloads uh but now in recent years they've been more engaging like with the launch of Tik Tok and the tenders and and you know uh the the device is being so much better so people are spending more time on on Netflix YouTube content is on a whole different level the compared to 5 years ago so there's that increase of Engagement and that means that that people are spending more time in apps and apps are also becoming better at

monetizing that this this audience that is ever more engaged that leads to higher lifetime values and that means that they're taking larger share from the marketing dollars because they now have the LTV to actually advertise and that that leads back to the core Loop of more downloads more engagement more time more monetization higher LTV so that's how the the uh the flywheel as I'm interpreting is working yes and in in that conversation I think the thing that's undeniable is video being King Right video being underpinning a lot of the growth happening across many areas um yeah and that's what supercharged a lot of Tik tok's growth is that live streaming component um especially for spend of course and then the other the other part is always like well we don't see the uh the Ina ad Revenue in games and so it's hard to to say what percentage do the apps make of all the uh the uh the revenue but at the same

time we know that many of the apps are now including uh inapp ads uh whether it is the the Hulu or even the the you know the Spotify they all have ads in them not to mention the YouTubes or or the Tik toks or Instagrams like they are making billions upon billions from from ads so so I think the uh the inapp ad conversation is interesting but I don't think it's it's that relevant neither the uh the web store part but but looking only at inapp purchases like what is the percentage When comparing the inapp purchase made in games compared to inapp purchase made in apps what is it today and when when does it reach 50/50 because back in the days like a few years ago it was 25 to 75 so what's what's the stat today yes today it's sitting at around 63% of spend going into games um so 37% in apps when we the end of 2024 we forecast it'll already tip over to

around 59.3 to 40.7 so we're already kind of starting that shift um and then by 2030 we expect to see apps takeover at 50.3% so just marginally more than games uh but that's where that shift really comes into play so it'll be a slow shift over these next seven years including this year um but the seeds are sewn we're already seeing a bit of you know almost a three percentage Point drop uh jump for apps taking over that market share from 2023 and what we predict for 2024 and and there there are multiple different of course we're projecting now five years ahead and there's multiple things that can affect uh one is that in the graphs that data ai's report had was was the disposable income compared to inot purchases made and it seemed like the uh the downturn of disposable income did not affect app payments at all so

app payments continued to to you know increase at the same time when the disposable income went down the same audience spent less on on games so the the uh the the sort of a macroeconomic situation is now tied to the uh the discretionary how do you call it discretionary dollars that are that are being spent on on games but they're non-discretionary meaning like non-negotiable whether you're going to spend on Netflix or Tinder or whatever you consider as the sort of a utility app that will continue no matter what is is that a correct interpretation of the graphs that's what we're that's what historically we've seen for the last couple I mean I guess from 2017 through 2023 we look at how this correlates um yes and I think what the shift that it says to me is mobile has taken over that share of wallet so we're like managing more of our lights Services through our phones which naturally kind of dub Tails into just paying through your subscriptions there um I think that's a

key aspect to it and the stickiness that you have when you do subscriptions through the app stores but that kind of taking over share of wallet um being a key part of the conversation we're just it is your sort of Life admin tool so it makes sense that you're managing things like your Disney Plus subscription or other things there um and a point that I think is important to make is we tend to see you know you'll pay your um in previous years you know you'd see people will pay their cable bills still right like even in tough times you'll still pay that cable bill and so that's where that streaming kind of plays into that is perhaps we don't have a stream a cable bill in the traditional sense but we have one service or a couple of services um that we've sort of rebundle into our version of a cable bill that we continue to pay super interesting and that was totally different situation in the uh in the last economic downturn like 2008

2009 when games were actually up and and growing during that time when when disposable income went down because they offered um unrivaled value compared to other sours of entertainment but back then we did not have streaming services we didn't really have YouTubes or anything you know remotely the same like you could go to AMC and watch a movie or you could buy a game and play that for a long time and of course you know the games W on that entertainment world but in today in today's world like it's so easy to access infinite entertainment with social media platforms or you know even with uh which are essentially ugc platforms uh compared to paying for games so I think you know kind of it kind of makes sense but I do think that's an important point because like I think one of the things we saw for instance in when we saw big pullback in 2022 of spend um one of the sectors that saw a huge decline was um like our creative simulation which would be essentially Roblox where

people however people still there was a huge surge in time still being spent in Roblox and Roblox alone accounts for the largest share of time being spent on a mobile game um or on mobile games in general so what we saw is like a pullback in that spend because you can play Roblox without having to buy you know usually like consumable items or like cosmetic items in the game so it kind of to your point of what you're were saying in 20 in the previous economic downturn you could still play for hours in Roblox um this time you just might not spend any money but you didn't have to um you could just keep playing damn so Lexi kind of looking into the future uh not even that that far away in 2025 um what's going to happen in terms of marketing gaming and apps like what do you what do you see you've been following the market for 9 years like not following you've been paid to follow the market for 9 years that's a whole

different level of intensity so so what's going to happen what's gonna happen next year what do you think I I really think for um from a marketing standpoint I do think we're going to have more emphasis on anything that builds lasting relationships so that's where I think those communities come into play um user generated content with that we've just been watching this authent authenticity sort of story arc move um we saw with Tik Tok being a huge Pioneer of that we have you know we've seen over the years that as Instagram has incorporated sort of those Tik Tock ification features where they are more authentic like live streaming or like video first content being a big one we've seen the average time per user go up um it does not reach Tik Tok uh but it has gone up significantly and I think that that's going to be an important place um this rise authenticity and leveraging your different strategic

communities um as sort of marketing channels for you so not just your ads your Performance Marketing but but leveraging that feel I see as well um in the gaming space I am bullish that character driven and storyline driven elements of games are a huge part of the ecosystem I think there's a movement towards more core gaming on the whole especially with Gen Z I think there's more appetite that's more of a native uh flow and I think that um there's more of an appetite for titles that are coming out of APAC as well I know I've spoken about that but we do see things like there's been some discussion we've had around you know did eggy party sort of localize enough into for the Western Market or just enough that like it was fine and you know maybe five years ago it wouldn't have gained that traction um but I think that that element of appetite for like content that's coming

out of other places um and is especially a little bit more customized for the audience in in Asia doing well is a big one I think outside of games we see that with temu and shien where the user experience and the entire design of those retail apps is very different and they broke in in a big way in Western markets um you know TAMU had more active users weekly active users than Walmart at certain points in the year last year so to me these sectors are important shifts so I think by 2025 um there'll be this more of a global global appetite potentially even in some of the sectors that were traditionally held by homegrown apps um so I think that that's a big space to watch I know a lot of Publishers are very bullish on like kind of the Going Global Market strategy so I think that that's gaining meaningful traction and gaming and shopping and we'll see more of that even things like real shorts um

so I guess that's another topic for another time but that's another indication of that as well of sort of this other breakthrough sector coming through and and doing well in the US market um gamification of apps being big you know paying to unlock for future episodes things like that um I do think social for 2025 will be a very interesting space so you can start to think about will people be able to pay and how much will be asked to pay to remove ads from Facebook like will that happen maybe what about chronological feed versus an algorithm driven feed um I think these are all monetization cards on the table and that there'll be some really interesting things by 2025 um coming out there yeah I think in terms of monetization trend if I can add only one it' be interesting to see how apps will be able to unlock spend for heavy users because at the moment it's

more like you can be a free user or you can get to a subscription tier now we have more subscription tiers but that is still a cap monetization as we know from games it's only when you uncap that monetization you get to exponential growth and so whoever is that hyper super user on YouTube or Tik Tok or so forth like what does the 2% spend uh on on that platform how much really like tipping is essentially uncapped spending already and we can see that leading to$ 10 billion in revenues so uh we'll be we'll be most likely seeing tipping on Instagram and YouTube that's my prediction and um yeah we already see it onagram oh really yeah yeah you can already start tipping met meta's Playbook is is whatever is happening in China they seem to be just copying all those apps on uh on all their all the whether it's Instagram or Whatsapp or whatnot they just pick a

pick an Asian Asian version of the of the app and that's your feature road map let's go but it makes sense that I mean it makes all the sense why we invent the wheel so um so yeah I I think that's going to be pretty huge as as you know dualingo and others will start following suit and and coming up with uh with UNCA spending so that's where I see the trajectory of apps over taking games being much faster I like it I think that's a really good point it is that kind of getting those whales in a sense of the non-gaming space yeah so all the PMs and marketers listening um apps might be your next place where you want to check out for for for uh for your career advancement they just uh they they've hired a lot of gaming people and I know they're working on on on these aspects um Lexi thank you so much for coming uh you you have such a wealth of insights and and you can talk about the market um until the sun go goes down as it did behind you so

literally goes down so L literally literally wealth of knowledge always a pleasure uh really great predictions and um and and folks reach out to Lexi if she has time she'll respond but most importantly uh check out the two reports so data AI 2030 mobile app market forecast and Central Towers state of mobile gaming report links Below in the description um there you have it thank you so much for listening and thank you Lexi so have a great day