AppsFlyer’s State of Gaming App Marketing report indicates that as the post-Covid era unfolds, a digital slowdown – or return to pre-Covid conditions – is occuring in the industry.
The report is an in-depth study of key gaming trends for app developers, marketers, and game studios to utilise as they navigate through a year of challenging macro trends, including the new age of data privacy.
While the effects of the post-Covid digital slowdown are becoming increasingly apparent in metrics like overall app installs by consumers, the gaming app economy still showed resilience with nearly $27-billion invested in ad spend by gaming marketers and developers worldwide in 2022 in order to acquire new users.
Overall, Android game app installs rose slightly – by 8% compared to 2021 – whereas iOS game app installs showed a small decline, with a 5% drop. Based on advertising investment, the US remains the largest target market for gaming app marketers by a significant margin, followed by Japan, South Korea, Germany and the UK.
“If 2021 and the first quarter of 2022 was the golden age of gaming, the second half of 2022 – and especially 2023 – will be a time that marketers, developers and studios will need to overcome challenges to adopt highly-focused, efficient strategies for attracting and inspiring loyal, valuable players,” says Shani Rosenfelder, director of Market Insights at AppsFlyer. “Evolving marketing budgets, coupled with drops in consumer spending across some genres mean game businesses are compelled to prioritise profits over growing the sheer size of their numbers of players.
“Despite the hurdles, however, mobile gaming remains a lucrative powerhouse nearing 3-billion players globally,” Rosenfelder continues. “Marketers will continue to succeed by putting more focus on modern measurement capabilities, utilising techniques that deliver an engaging experience while respecting user privacy, and leveraging remarketing and owned media channels further in order to offset increases in their cost-per-installs (CPI).
“Additionally, they will need to dive deep into the complex yet promising SKAN 4.0 from Apple, and invest more in campaigns outside of the US, as gaming truly is a global phenomenon.”
As for gaming app revenues, the State of Gaming report reveals that consumers spent the most on in-app purchases (IAP) in role playing and social casino (not real money) games. Purchases in these game categories declined mostly in the second half of 2022, leading to an overall drop in IAP revenues by 7% compared to the first half of the year.
The economic downturn appears to have impacted consumer behaviour in high IAP genres of role playing and social casino more than other categories like match or puzzle games which rely more on micropayments. In-app advertising (IAA) remained the strongest driver of revenues for hyper casual, match, and simulation games, though IAA revenues also declined across most genres towards the second half of 2022.
Key Insights from the 2023 State of Gaming App Marketing report include:
* $26,7-billion total gaming app install ad spend worldwide in 2022. The US commands nearly half at $12,2-billion thanks to its high-volume and high-cost media landscape; Japan is a distant second with nearly $2-billion in spend.
* Worldwide, Android game app installs rose slightly in 2022, iOS game app installs showed a small decline. There was an 8% YoY growth in total app installs of Android games. A -5% YoY install drop on iOS reflects the continued challenges iOS app marketers are facing following Apple’s privacy changes (despite the improvement versus the previous 2022-2021 YoY figure of -13%). In the US, still considered the most important market for gaming app marketers, 2022 saw a 19% growth in Android app installs and -1% decline in installs of iOS gaming apps when compared to 2021.
* The second half of 2022, in particular, was a struggle for in-game purchases with the economic uncertainty in the market. There was a -7% overall drop in in-app purchase (IAP) revenue in H2 2022 compared to H1 2022, with iOS down 9% and Android down 4%. Overall, in-app purchases on Android gaming apps were down -14% year-over year (YoY), while iOS was down -1% YoY. This was driven largely by a decline in Role Playing and Casino game genres that typically have high rates of in-app purchases, and where the economic downturn appears to have impacted consumer spend.
* Categories that saw largest growth in 2022 versus 2021: 48% growth rate for Android casino games – 3x more than second-place Hypercasual, and 5x higher compared to the growth rate in puzzle and Role Playing games (RPG). Casino games led growth on the flagging iOS side, clocking an impressive 17%.
* Cost-per-installs on iOS continue to climb: 88% is the increase in CPI on iOS from Q1 2021 to Q4 2022, shooting up $3.75 per install as iOS marketers continue to accept high prices to acquire valuable Apple users. YoY rates show a 35% jump.
* Marketers increasingly leveraging owned media channels: As marketers look to get more value out of their budgets, the use of owned media strategies such as push notifications, in-app messages, and cross promotion is seeing a sustained rise. This has led to a significant YoY increase in the number of owned media conversions, with a 16% growth on iOS and a 34% surge on Android.
“As gaming marketers continue to navigate their way through a shifting economic landscape along with privacy changes, particularly on iOS, they face fresh challenges and opportunities in regards to their app marketing efforts,” says Adam Smart, director of Product, Gaming at AppsFlyer. “Privacy restrictions on iOS limit the ability of marketers to leverage user-level data, which was previously the cornerstone of their ability to connect campaign performance to attracting new users.
“Yet despite a significant rise in media costs and measurement challenges, gaming apps are still investing heavily in capturing high-quality players on iOS and are not shifting those resources to Android even if the approach results in attracting fewer users overall,” says Smart. “This gives greater importance to the use of privacy-enhancing tech and data clean rooms in 2023 and beyond, and will also provide advantages to those able to leverage accurate and comprehensive data for making the timeliest decisions on where, when, and how to optimally invest budgets in ways that attract and retain the most valuable players.”
“With Europe and North America often being a benchmark for African countries, it is safe to say that the gaming industry on the continent also follows the same trend,” continues Smart. “Overall, gaming app installs ad spend reached $26,7-billion globally in 2022, with a small portion of this attributed to Africa, primarily South Africa.
“Based on the report, we have seen that gaming app installs have decreased on iOS, while there has been a notable increase across Android devices. This is a sign of things to come for the African gaming industry and we predict that more African countries will contribute to the overall ad spend on gaming app installs in the coming years.
“With the US comprising almost half of global gaming ad spend at $12,2-billion, investing in the country is important despite the heightened competition,” Smart adds. “But other countries have growing gaming populations and are not as competitive when it comes to hunting for paid installs. High population countries like South Africa, Indonesia, India, and Vietnam are always hungry for new content.”