We're seeing a recovery in terms of monetisation - Tom Cui from Sensor Tower

I'm now joined by Tom from Sensor Tower. How are you doing today? I'm doing good. How are you doing, James? I am well. I'm well. We're on the second day. Usually it's a bit of a quiet start. It's busier than expected, but did you do any parties last night? Were there gatherings? No, this is day one for me. So yesterday I came in, hung out with the team, had some external meetings, and this is day one of PGC for me. So you're the freshest person in the room. I wouldn't say fresh. I I flew in from the States, so I'm a bit jet lagged, but yeah. Okay. All right, then. Fantastic. Well, I've spoken to Sensor Tower before. If people haven't encountered you before, what's the basics of what your service is all about? So most people know us for our product Sensor Tower, which provides mobile app analytics. So we give visibility into the entire market. We look at market trends, app performance, and game behavior, and user behavior. But what people don't know us for is our other products. So we have Pathmatics, which is digital advertising. Last year we actually

launched an audience product, which looks at user personas across the digital ecosystem. And today Sensor Tower is a amalgamation of all types of digital intelligence products, all put into a single suite. Right. Yes, cuz historically it has been kind of the the analytics, the broad sweep of what's going on in the industry. People would come to you or maybe one or two other services. We'll start there if it's okay, cuz we've had this bit of a dip the last couple of years within the industry. The the gaming hit its first proper kind of lull. And people are optimistic it's going to pick up a little bit. Um but obviously with all the information that you guys have to hand, how has that been reflected in the data? Have you seen a kind of dip in certain user behaviors and certain spending areas and things like that? So we have, but it also depends on depends on what metric you're looking at. So the most common one is downloads, and yes, we have seen a dip in downloads, especially in the last couple of years, primarily because when you when the industry exited the pandemic era, most

people were going about outside, enjoying the sun, not really downloading as many apps anymore. But where we've seen an uptick is almost in every other metric. So revenue, for example, we've seen year-over-year growth in 2024. Time spent in games, we we've actually seen an uptick. And then I believe last year it was a record year in terms of number of games that hit the 1 billion in-app purchase run rate mark. We haven't seen 11 games ever hit that 1 billion mark, and last year we did it for the first time. Prior to that, it was 2021 and 2022 that saw a high number of apps hit that mark. And so I'm actually from my from my point of view at Sensor Tower, we're actually seeing a recovery in terms of monetization, but yes, a slowdown in terms of downloads. Right, I see. So is it about if it's fewer people downloading the games, but perhaps those who are invested in the games are more quote unquote like high value, if you like. They're spending more money. Pretty much. That's that's the way to think about it. And and game publishers have figured out a way to just extend

the lifetime of their game and come up with more interesting monetization mechanics. For example, when I entered mobile 10 years ago, Candy Crush was the talk of the town. And 10 years later, Candy Crush is still in the top grossing charts, as as well as Supercell games and, you know, Zynga games. And so it just seems like these games have figured out a formula to make their games evergreen and just come up with new monetization mechanics to keep the in-app purchase going. Everything has to be live service in this world. Correct. Live services is a is a big buzzword. What about those monetization models? Cuz as you say, 10 years ago we were coming in, free to play was a nascent new thing that appeared. Then it became lots of in-app purchases. Now we're seeing a kind of hybrid, seeing a lot of success within the industry. Do the Do the statistics reflect that? I believe so. So just to caveat, Sensor Tower, we look at everything within the app store. So we capture in-app purchases, but we don't actually look at in-app advertising spend. So that is not what somewhere we have visibility, but it is, you know, just working with the entire gaming

ecosystem, the hybrid monetization model has come out pretty strong. And we suspect that that could be somewhere between 30, 40% of the entire revenue of a game that we're not capturing, but it's certainly a growing trend. We've been talking about with other with other folks here, the European marketplace laws that got passed. The idea of kind of smashing down the monopoly that Google Play and the App Store has in the Western world. There there are lots of app stores globally, but in the West it tends to be those two major things. Allowing for other app stores to pop up, but also we're seeing the emergence of things like web stores, where developers are allowing consumers to come straight to them and cut out the middleman. For a company like yourselves, which is based around gathering data metrics from within apps, how does that affect you? Like does it does that potentially negate data gathering points for you, or does it not make a difference as long as you've got apps installed you can capture? So there's always ways to capture this data. You know, there's companies out there that look at email receipts. Obviously the third-party web stores powered by Xsolla and these types of

platforms have become very popular. But again, what we've seen is revenue and monetization continues to go up in Apple Store and Google Play Store. I believe that you know, distribution is still key in figuring out how to get strong distribution across the channels. That's an area that's tough to compete with. Even if you try to have your own third-party website, you know, we've seen Epic Store try that, and I would argue that they've had some level of success outside of Fortnite, but not at the level of a Apple and Google yet. Steam certainly has taken off, but you know, at the end of the day, as long as Apple and Google have these great devices that you and I use every single day at people's homes, once they control the distribution, it's very hard to replicate that. And so from our view, we've seen the trends kind of have a balanced approach. Revenue in app stores are going up. Revenue in web stores are going up. There's data that's available for both, but we don't see web stores overtaking Apple and Google's market share completely. Got you. So you mentioned at the top of the interview the new products that you've been rolling out,

the kind of smashers. Tell me a bit more about those. Yeah, so you know, we've been expanding outside of mobile as most game publishers have. Cross platform was a buzzword a few years back, and you know, game engines like Unity, big platforms like Microsoft, they've always been touting these cross platform capabilities. And so we acquired a company called Pathmatics in 2021 that taps into desktop, OTT, as well as web advertising. We also are launching our own website analytics to look at website foot traffic, page views. And we're looking at partners to help us provide insight into PC, Steam, PlayStation, Xbox data. And so our vision for the future is just this one-stop shop for all things digital. And for the gaming companies out here, that's where their business is going today. You know, Apple and Google will continue to be important, but they have the web stores, they're launching on console devices, and they're certainly thinking about PC. When your business is data, how important is it to anticipate either new laws or new regulations that

are coming to curb them? So, you know, we have the crackdown on Apple, where people stopped, you know, basically as much data was not available as used to be. And I get the impression that certain app stores are moving in that direction as well. That less of a day less data may be available in future years. Is there things you can do to kind of curb that, to see that coming on the horizon, and then work out, well, if you lose this area or this particular metric, we can capitalize by doubling down on another one or extracting data elsewhere? How do you ameliorate the problem of like shrinking data points? Absolutely. I think you you have to diversify your streams of data first and foremost. And then you have to be at the forefront of privacy and compliance. And that's something that we take very seriously. And so if you look you know, back even 5 years when iOS came out with the privacy policies and no one could really, you know, track a user behavior anymore and, you know, attribution this.

For us, we've always taken a stance that we do not want to collect personal data. And so we don't want to touch GDPR, CCPA, all those privacy approach. We built a panel of first-party assets. It's our own apps that we launched into the marketplace. We take very strict standards in making sure that there's user consent and the users are fully aware of what is collected and what is not collected. And that has kept us, you know, that's safeguarded our panel approach for for many many years. On top of that, we've diversified. And so we don't have just one type of app or one type of platform where we collect data. We partner with some third parties. We have Chrome extensions. We have devices in people's homes that listen to ads. And we also have our own digital well-being apps across different types of categories. And so that's our approach, diversification and being at the forefront of privacy. Got you. You've come to the event today. From your perspective, and you said you've been to CES as well earlier on in the year. So you've you're clearly into the event scene. What from your perspective is the reason to come to these kind of physical events? Why not just do it all on Zoom?

Oh man, this is a this is a hot topic in in my mind. I was having a conversation with some of industry colleagues, and I I do feel that the pandemic years, even though it's it's well past us now, has created a generation of Zoom warriors, where we don't have these in-person interactions as often anymore. And you know, I have a sales background, and 10 years ago in sales, you would fly everywhere. That was the job, you know, you you had to meet your customers in person. If you didn't work in tech, you probably could only meet your customers in person. You didn't have this concept of virtual calls that often. And then, you know, Zoom came out and and Microsoft Teams and all these virtual channels to communicate, and the pandemic happened, and people stopped going in person. You lose that touch, you know, internal collaboration becomes less effective, external communication becomes less effective. You can't really even read and understand what your customers truly want from you. And so for me, it's very important to come to these events, meet our customers in person, and get live feedback, but also have productive conversations on what we

want to build for the future.