How hyper-casual gaming became big business

Wednesday, March 13, 2019
By: Vincent Pagnard-Jourdan

Casual and hyper-casual gaming is hot right now — these types of apps are consistently at the top of the app stores. As we’ve discussed previously, there are several key features that make MoPub the monetization platform of choice for these types of gaming apps. Here we’ll take a look at the evolution of the in-app advertising economy and how it’s shaping the gaming ecosystem.

When apps started to become popular, gaming developers had two options for monetization: They could either sell their game for less than a dollar, or give it away for free and show ads to their users. In order to drive adoption of their games, a lot of app developers who originally charged a download fee decided to make their apps free and monetise them through in-app purchases (IAP). In the meantime, rewarded video emerged as a popular new ad format, which gave app developers relying on IAP the opportunity to finally monetize their non-paying users.

Over the past 10 years, many mobile app developers that relied exclusively on ads had been sporadically dominating the charts with one-hit wonders before returning to anonymity. These past two years though, more and more developers relying on ads found their way to the top of the charts, and companies like Voodoo managed to solidly anchor their position at the top.

the evolution of mobile gaming business models

So what happened over these past years to enable gaming publishers to dominate the charts?

First, and simply put, doing things on mobile became easier. As a result, more people started spending more time on mobile, and a new army of casual players came into being; in other words, the market had matured. In the meantime, the different app stores got flooded with games. 
As a result, discovery very quickly became a challenge. To cope with that challenge, companies like Apple, Google, Facebook, and Twitter — to name just a few — developed easy-to-use and accessible solutions to drive app installs at scale. This eventually translated to more ad dollars flowing and being spent on mobile, which organically increased CPMs and therefore app developers’ revenue — which then allowed those app developers relying on ads monetization to re-invest their earnings to acquire more users to play their games. And here, the value advertising growth model was born.

value advertising growth model

This is serious business: in 2018, global app consumer spend grew 20% year-over-year to surpass $76 billion globally, according to AppAnnie — which is 74% of all consumer spending in the app stores. The sheer amount of money that can be made by gaming app developers, both from IAP and in-app advertising, has been a primary factor in driving growth in the gaming vertical. Depending on the gameplay experience (hardcore, core, casual, or hyper-casual), in-app ads can make up the bulk of the developer’s revenue; for hyper-casual and casual games, ad monetization contributes 60-70% of average total app revenue, according to Appsflyer. The ad monetization trend shows no sign of fading, as AppAnnie reports that 60% more apps are expected to monetize through using ads in 2019.

As a long-time monetization partner for top gaming publishers around the world, it’s MoPub’s goal to make the lives of gaming developers easier to help fund their creativity. Improving publishers’ operational efficiency is one of the three core value propositions we built our platform upon. Because the gaming space — particularly the hyper-casual and casual sector, which is powered by in-app advertising — is growing so fast, game developers are working to launch apps more quickly than ever. They need simplicity and speed when it comes to building games, and an efficient way to add ad monetization into these games. They also need access to data that allows them to make informed decisions at the user level that can support acquisition efforts.

MoPub understands these needs and is making significant investments to help game developers monetize more easily and efficiently. We’re proud to have gaming in our DNA and look forward to being able to offer even better support and solutions for our gaming publisher clients. Keep an eye on our blog for exciting announcements coming soon! 

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