Five Mobile Gaming Trends in Q1 2017

The Think Gaming team analyzed Q1 2017 performance vs. Q1 2016 for the top ten mobile publishers. Here are the key trends in the industry.

Continued domination by the biggest franchises: Established titles continued their dominance at the top of the charts. Supercell still reigns supreme with Clash of Clans and Clash Royale. Machine Zone titles Mobile Strike and Game of War: Fire Age continue to print money and King had a solid quarter thanks to their enduring stable of Match-3 Puzzlers. The gaming business is certainly hits-driven, but the rewards for creating a hit are enormous.

Pokémon GO isn’t going anywhere: Niantic’s Pokémon Go appears to have the staying power to join the ranks of the hits. Early naysayers suggested that the game didn’t have enough depth or variety to stick around, but it’s continued performance at the top of the charts suggests otherwise.

Mini Clip’s quiet growth. Mini Clip has been steadily growing. 8 Ball Pool and Archery King have seen slow, steady growth over the past year, though we’re seeing a bit of an April slow down for those titles.

But where there are winners, there are also losers. Publishers EA and Big Fish suffered the largest year-over-year drops.

EA needs a new hit. EA’s revenue decline was mainly driven by a lack of new hits. Madden NFL Mobile remains EA’s top mobile title but is on the decline, and the replacements haven’t materialized.

Social Casino is shrinking. Big Fish Games is suffering from industry-wide declines in the social casino genre. Big Fish’s top title Big Fish Casino saw a multi-million revenue drop despite growth in new installs. While social casino remains a big category, it appears that growth may be over.

 

Revenue Rank 1Q17 vs. 1Q16
1Q17 1Q16 Revenue Change New Installs Change
Supercell 1 1 -8% -13%
Machine Zone Inc 2 2 31% 19%
King 3 3 38% 5%
Epic War Llc 4 5 214% 40%
Niantic Inc 5 n/a n/a n/a
Electronic Arts 6 4 -42% 4%
Miniclip Com 7 14 124% 128%
Playtika Ltd 8 8 11% 56%
Zynga Inc 9 7 -9% 24%
Big Fish Games Inc 10 6 -37% 10%

Think Gaming will be keeping an eye on these trends and any emerging hits as 2Q 2017 unfolds.

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March 2017: New Game Releases

RollerCoast Tycoon Touch

We’ve fired up the Hit Potential Algorithm to take a look at Atari’s anticipated RollerCoaster Tycoon Touch game.
The game — released on February 23 — received favorable reviews and spent nearly 1 week week as the top Free Game. But three weeks in, it has already dropped to #178 on the charts. When you take a look at the Daily Active User trends, we’re seeing only 10% of the install base actively using the game.

All of this adds up to a low Hit Potential Score.* Our algorithm scored it as a 13 — much lower than the January and other February releases we’ve profiled.

RollerCoaster Tycoon Touch’s numbers are unlikely to support paid acquisition so it will continue to decline on the charts over time. Overall the game will not be the boost to this franchise that Atari was hoping for.

New Paid Game to Watch

The Escapists a new paid game is gathering steam and good reviews. With no in-app purchases, it won’t be a blockbuster but should be a solid money maker for publisher Team17 Software.

Upcoming March releases

We’ll be keeping an eye on these new games over the coming weeks.


Dead Ahead: Zombie Warfare

Release date: March 8, 2017
Publisher: Mobirate Studio Ltd
Genre: Adventure

Power Rangers: Legacy Wars
Anticipated Release Date: Mar 23, 2017
Publisher: nWay
Genre: Fighting

The Bunker
Anticipated Release Date: March 2017
Publisher: Green Man Gaming
Genre: Adventure

Red Barton and the Sky Pirates
Anticipated Release Date: March 2017 (postponed from February)
Publisher: Schism Worldwine
Genre: Action

* As a reminder, we look at the revenue and install trajectory of new launches during their early weeks to identify characteristics of games that will have long term success. Our Hit Potential algorithm scores games from 1 (bust) to 100 (blockbuster).

If you’re interest in seeing Hit Potential Scoring on more new releases, click here to schedule a demo.

 

January 2017’s Anticipated Game Releases

Last week we rolled out our new Hit Potential algorithm to score new releases on their likelihood of becoming a hit.

What is the Hit Potential score and how is it calculated?

  • We look at the revenue and install trajectory of new launches during their early weeks to identify characteristics of games that will have long term success
  • We score games from 1 (bust) to 100 (blockbuster)

Let’s run last month’s (January 2017) most anticipated releases through the algorithm to gauge their staying power…



Yu-Gi-Oh! Duel Links
 

  • Hit Potential Score: 27
  • Genre: Card Battlers
  • Publisher: Konami  
  • Release Date: Jan 11, 2017

Star Wars: Force Arena

  • Hit Potential Score: 27
  • Genre: Card Battlers
  • Publisher: Netmarble Games Corp.
  • Release Date: Jan 11, 2017

Bubble Witch 3 Saga 

  • Hit Potential Score: 21
  • Genre: Bubble Shooter
  • Publisher: King
  • Release Date: January 11, 2017

Pokémon Duel

  • Hit Potential Score: 20
  • Genre: Card Battlers
  • Publisher: The Pokemon Company
  • Release Date: Jan 24, 2017

Card battlers Yu-Gi-Oh! Duel Links and Star Wars Force Arena were the best of the bunch with scores in the high 20s. Bubble Witch 3 Saga and Pokémon Duel bring up the rear with scores in the low 20s.

Do scores in the 20s mean these are duds? Not exactly. What the scores do mean is given the level of monetization these games have, it will be challenging to use paid user acquisition to profitably drive growth. As a result, these games will likely fade and continue to drop on the charts.

Check out Fire Emblem Heroes Hit Potential. And stay tuned for scores on the rest of February’s top releases.

If you’re interest in seeing Hit Potential Scoring on more new releases, click here to schedule a demo.

Hit or Miss: Fire Emblem Heroes

Nintendo’s Fire Emblem Heroes launched two weeks ago, the company’s most recent attempt at mobile gaming super-stardom. Our assessment: Fire Emblem Heroes is a solid single but won’t be a homerun. Tweet: @GamingOutLoud's early assessment of FireEmblemHeroes: solid single but not a homerun #FireEmblemHeroes #nintendo https://ctt.ec/yohvf+

To conduct the analysis, we used our (brand new) Hit Potential score to rate Fire Emblem Heroes’ launch metrics. Hit Potential scores are derived by looking at the launch patterns of over 1,100 games that launched and made the Top Grossing Game List. We look at how games monetize, how they add new users, and we’ve identified patterns that indicate longer-term success.

Fire Emblem Heroes is right in the middle: it monetizes well enough to support paid user acquisition and avoid flop, but isn’t strong enough to create a blockbuster. We expect it will soon descent to the lower echelons of top grossing games (e.g. 40-60 in the US). If Nintendo pursues paid user acquisition, it may stay there indefinitely.

That’s a nice success that many smaller developers would be thrilled with. But the game will fall well short of Nintendo’s success with Pokémon GO and the industry-leading Clash Royale.

We’ll continue keep an eye on this one as Nintendo just released new characters yesterday. Let’s see if this helps to up the engagement level and/or in-app purchases.

We will be rolling out our Hit Potential scoring to all new releases over the coming week. If you’re interest in learning more, click here to schedule a demo.

The Verdict on Super Mario Run

Nintendo’s Super Mario Run was December’s hottest mobile game release. The high-level stats looked great, reviews were very positive, and the business press has been positively giddy.

But here’s our take from a deeper look at the numbers: Nintendo left a ton of money on the table.  Tweet: According to @GamingOutLoud, Nintendo left a ton of money on the table with Super Mario Run #mobilegames https://ctt.ec/7cj6U+

The headline stats look great. Since its December 15th launch, Think Gaming estimates that Super Mario Run earned roughly $36MM in gross revenue on ~80MM installs since launch. It spent 1 month as the top free iPhone game in the U.S. And, it remains in the top 10 as of February 2, 2017.

But Super Mario Run started with two unique benefits: top tier IP (the Super Mario Franchise) and unprecedented promotion from the App Store. Remember Apple’s September 2016 event? Nintendo’s Super Mario creator Shigeru Miyamoto took the stage to announce Super Mario Run after Tim Cook’s company update? This was followed by the first-ever pre-registration promotion, and the app was featured extensively after launch.

Real success as a top grossing mobile game means a high lifetime value (LTV). That basically breaks down into two questions:

  • Is the game sticky?
  • Does it drive players to open up their pocketbooks?

Super Mario Run only spent 1 week as top grossing game and is currently hovering around #60 on Think Gaming’s charts. Generally, games in the top 50 grossing games make at least $5.00 in 1-year customer lifetime value. Our current estimate of the LTV of a Super Mario Run player is quite low: $1.18.

What went wrong? Retention looks fairly good, so it’s a sticky game. And the conversion rate of 4.5% to the $10 paid offering is in line with other well monetizing games. The big problem? Nintendo capped their revenue per user with a single $10 in-app purchase. Games like Pokémon Go, Game of War, and Clash Royale make much more money from their super fans (aka their whales).

Compare Super Mario Run performance to this summer’s hit Pokémon GO. During the 7 weeks immediately following launch, Pokémon GO earned $100MM in revenue and had 45MM installs with 9.4MM Daily Active Users. One of the most successful mobile launches ever. And it has proven to have staying power.

Just since Super Mario Run launched (December 15 to February 2), Pokémon GO earned nearly $30MM in revenue — 1.5x what Super Mario Run has earned. And this isn’t just the case of having a larger base of players from which to earn. The LTV of a Pokémon GO player is dramatically higher.

From Think Gaming’s perspective Super Mario Run is not the hit Nintendo wanted or needed. If we were in Nintendo’s shoes, we’d evaluate whether the Action genre was the correct genre to pursue with IP as valuable as the Super Mario franchise. The Action genre accounts for 12.4% of U.S. iPhone game installs BUT only 3.6% of revenue. This simply isn’t the type of game that drives tremendous in-app purchases.

We’re keeping a close eye on Nintendo’s new iPhone release Fire Emblem Heroes to see how well it performs and whether it can be a meaningful driver of in-app purchases.

 

Interested in learning more about Think Gaming? SCHEDULE A DEMO.

 

New Game Releases: Winners & Losers

We’re excited to start a new series looking at how each month’s most anticipated new releases perform. We’ll tell you who the big winners and losers are.

Do January 2017’s most anticipated releases have staying power? Later this month we’ll be doing a deep dive on these games:

Pokémon Duel

  • Genre: Card Battlers
  • Publisher: The Pokemon Company
  • Release Date: Jan 24, 2017

Yu-Gi-Oh! Duel Links 

  • Genre: Card Battlers
  • Publisher: Konami  
  • Release Date: Jan 11, 2017

Bubble Witch 3 Saga 

  • Genre: Bubble Shooter
  • Publisher: King
  • Release Date: January 11, 2017

Star Wars: Force Arena

  • Genre: Card Battlers
  • Publisher: Netmarble Games Corp.
  • Release Date: Jan 11, 2017

As February 2017 begins, we’re keeping an eye on these upcoming titles:

Fire Emblem Heroes (Android and iOS)

  • Genre: RPG, Strategy
  • Publisher: Nintendo
  • Release Date: Feb 2, 2017

Red Barton and the Sky Pirates (iOS)

  • Genre: Action
  • Publisher: Schism Worldwide
  • Release Date: February 14, 2017 (Updated: PUSHED BACK UNTIL MARCH)

Forma.8 (iOS)

  • Genre: Action
  • Publisher: MixedBag
  • Release Date: February 2017

Stay tuned for our upcoming deep dive on Super Mario Run – December 2016’s most anticipated new game.

The Resurgence of Card Battlers


2017 looks to be the year of the Card Battler. Since January of 2016, we’ve seen share of revenue for the Card Battler category grow from 1% share among Top Grossing Games in the US to almost 16% share a year later. Tweet: Is 2017 the year of the Card Battler? https://ctt.ec/fc6MI+

After early success, the genre had been in steady decline. First generation card battlers Rage of Bahamut, Marvel: War of Heroes, and Blood Brothers were among the first mobile gaming mega-hits, but were eclipsed as base-building titles like Clash of Clans and Game of War captured a more mainstream audience.

Card Battler US iPhone Revenue Share of US iPhone Top Grossing Revenue Share of US iPhone Mobile Game Installs
January 2013 $9.4MM 4.6% 2.4%
January 2014 $7.7MM 3.9% 1.7%
January 2015 $7.7MM 2.2% 1.3%
January 2016 $3.1MM 1.0% 1.4%
January 2017 $61.8MM 15.8% 3.6%

Source: Think Gaming

Supercell’s launch of Clash Royale in March 2016 created the first mega-hit for the category in years. Hearthstone laid the foundation, bringing a simplified style to broaden the appeal to a wider audience. Clash Royale combined a casual, frenetic match style with a huge audience of paying users from Clash of Clans to create a rocket ship.

Even excluding Clash Royale, category revenue has increased by 80% since since last January. Think Gaming’s player lifetime value (LTV) estimates have increased across the category.   

And the trend continues. Last weeks’s hottest new top grossing games were card battlers: Yu-Gi-Oh! Duel Links and Star Wars: Force Arena. Both are seeing strong early results.  

Stay tuned – in our next blog post we’ll explore how the new generation of Card Battlers combines the best parts of the original hits with best practices discovered in the interim. 

Interested in learning more about Think Gaming? SCHEDULE A DEMO.

 

Talking the business of mobile apps

The business of mobile games and apps is changing fast, so we’re always looking for smart folks who are on top of smart trends. If you’re interested in publishing mobile apps, you’ll want to check out App Business Podcast.

Think Gaming co-founder Tim Ogilvie recently talked with ABP about game publishing, how to know whether your game is ready for external investment, and some ideas on how to place some smart development bets in the mobile gaming space.

Listen to the episode here!

 

 

How can I fund my mobile game after it’s launched?

In our last post, we outlined the two types of deals generally available for pre-launch games: equity financing and publisher deals. In this post, we talk about two additional deal types that become available once your game is complete and ready for launch.

Distribution deals:

A distribution deal is when a publisher takes a game that is complete, (or very close) and provides marketing and distribution support.  They will provide all of the post-launch services from a traditional publishing deal, but didn’t make a commitment on the funding required to build the game. This allows them to see a game that’s fully built and assess it’s chances for success.

Distribution deals usually revolve around the marketing commitment that the publisher will provide. While PR and advice are important, it’s often impossible to distinguish publisher’s quality in these areas before launch. In our experience, the critical factors in a distribution deal come down to:

  1. App store relationships: In the US, this is a question of whether the game will be featured by Apple or Google, in which relationships play a big role. Internationally, payment relationships with the various app stores becomes critical.
  2. Owned-distribution: Some publishers have unique distribution that they can offer. Tango, for example, touts its ability to distribute games to users of the Tango messenger app. For the right type of app, this can be a major distribution plus, eliminating the marketing costs in #3 that play a huge role in today’s gaming environment.
  3. Marketing commitment: Almost all of the top grossing games are supported by massive marketing budgets, so the publisher’s marketing commitment will play a critical role in the success of your game. Publishers will typically evaluate whether the expected lifetime value of the game exceeds the cost of acquiring a new player through marketing. This is one reason that Scouting Reports are helpful to both developers and publishers, as they can provide insight into whether the game can be marketed successfully.

Marketing financing

Marking financing deals, or royalty-based financing deals, are designed for post-launch games that are looking to grow quickly through paid marketing. This growth tends to be expensive, because the cost to acquire a new player is high, and getting near the top of the top grossing games chart requires millions of players. Marketing financing provides funding that is designed to help the company fund this growth without diluting themselves via equity or committing to a publishing deal.

Marketing financing deals typically see the funding partner paying for acquisition marketing. They are then entitled to all revenue until they have been paid back for their marketing outlay. After that has been recouped, the parties split revenue. Typically developers receive a higher percentage of the revenue than in a publishing deal, and the developer remains responsible for marketing, launch, customer service, et al.

This can be highly attractive growth financing, but is only available to launched games that can profitably acquire new users. Scouting Reports can be very helpful in determining whether your game qualifies and we can connect you to appropriate partners.

How can I fund my pre-launch mobile game?

We talk to lots of mobile game developers who want to grow their games. More often that not, these developers need some combination of money and expertise to help take their game to the next level. But it’s not always clear what type of deals available and on what terms.

We also talk to lots of people that want to finance great games, so we get a good sense for what types of deals are common. In this post, we’ll lay out the types of deals that we see and the type of developer / game that’s a good fit. We’ll start with two posts: this post is for games that haven’t yet launched and need money to complete the game. A second post focuses on games that are largely complete and need money to help them grow.

There are generally two types of deals available for pre-launch games:

Publishing deals:

In the “traditional” definition of a publishing deal, the publisher provides funding that allows the developer to complete their game (“completion funding”) and the testing and tuning to ensure the the freemium strategy is successful. Payments are typically doled out after the completion of specific milestones, like the completion of a playable demo, soft-launch of the product for testing and tuning, or major market launches. The publisher will launch and market the game, often with a commitment on the marketing budget they will commit. Sometimes they will provide operational support for customer service and community, and other times they will help to localize the game for large international markets. The game developer will be paid a revenue share for additional receipts, after the completion funding and marketing spend have been recouped.

Equity financing

Equity financing involves selling a portion of the business (typically 15-35%) to venture capitalists or angel investors, in return for $300k – $2 million, though terms will vary wildly. Many VCs and investors shy away from games, due to a feeling that it’s a hits-driven business. So focus on investors that are known to invest in games or strategic investors.

Kristian Segerstrale from Initial Capital has a good summary of the funding options available to build games, focused on “standard” publishing deals versus equity financing. It’s worth noting that while this is a good summary of a standard publishing deal, there are lots of newer publishers in the ecosystem who aren’t requiring sequel rights, or forcing developers to give up IP. That said, if you can get a great equity investor to help you build your game, it may well be worth the dilution.

How much activity is there?

There isn’t a ton of money available pre-launch, for a few reasons:

  1. It costs a lot of money to bring out a new mobile game. Count on $500k before any marketing spend to develop a game that can challenge the top grossing charts. This raises the bar on success and makes it easier to say no.
  2. Many publishers prefer to wait for a finished product that has at least completed a playable demo, removing some of the risk that the finished product won’t match the pretty vision they were sold. They’ve also found that the freemium market is unpredictable, making games that look great in concept phase unprofitable in the market.

Increasing your chances of getting a deal

So how do you get either an equity or publishing deal? Build a great team.

Yes, you’ll need great art, distinctive game play, and a fun game. But the biggest success factor for either a publishing deal or equity financing is a great team that has built a freemium game in the past. This drastically increases the chances that the funder will get a finished product that is likely to succeed, and is generally required to get a deal done.

Want to connect with top tier publishers and investors? A great first step is to create a great-looking profile page at Think Gaming, outlining your team, concept, art style, and game play videos.