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Amplify Beijing: The global opportunity for casual games

by Michelle Ao on Dec 10, 2018

Last month, AppLovin hosted its second Amplify workshop in Bejing at the Éclat Hotel. This event’s theme was exploring the global opportunity for casual games. The event also served as the debut for our research report titled “Casual Game Market Opportunity Report 2018-2019” [the report, which is in Chinese, can be downloaded here].

Amplify Beijing 2018 - Miao You - casual games

Miao You, Senior Director, AppLovin China, kicked off the event with an introduction about AppLovin and it’s key milestones. You then invited Wang Xu, Chief Analyst of Gamma Data, whom we partnered with on the report, to speak about our findings.

Xu began by highlighting the potential of the casual games market in China, which is worth ¥8.67bn (about $1.27bn) with over 400 million players and growing. Overseas, the casual game market has matured in its monetization models, game mechanics, and has seen incredible success for the hyper-casual genre, which shook up the top app charts this year.

Wang Xu CNG Gamma Data - casual games

In terms of monetization, casual games today rely mainly on video ads, whether that’s rewarded video or interstitial video, and playable ads. Gamma Data predicts that opportunities for ad-monetized hyper-casual games in China will grow exponentially in the near future to catch up with the global market.

Ad revenue for casual games in China - Source_Gamma Data

Table 12: 2017-2020 Ad revenue for casual games in China (hundred million yuan). Source: Gamma Data

Developer survey moneitziation models_ Source_Gamma Data

Table 16: Developer survey: What monetization models are you most interested in? 

Playable (22%)

Interstitial video (22%)

In-app purchase (19%)

Native (17%)

Paid subscription (6%)

Paid download (3%)

Interstitial image (3%)

Source: Gamma Data

 

After Xu’s presentation, we opened up the conversation by inviting Lin Zongwei (CEO of Vigame), Cui Mingming (Head of Monetization at iHandy), Liu Wuhua (COO of Beluga Global), and Roger Chen (Business Development for Lion Studios) on stage for the panel. Moderating the panel was Rae Wang, AppLovin’s Senior Manager, Business Development.

Wang: We see that the casual game market will soon become a market worth 7 or 8 billion yuan. The guests joining me on stage today are experts in casual games and the mobile game market. Could you share with us why casual and hyper-casual games have developed so rapidly over the last few years?

Zongwei: Vigame has been producing match-three games for the domestic market for years but we’ve been promoting them internationally over the last year. This year’s surge in the casual and hyper-casual category may be attributed to several points. As mentioned by Xu, one major factor is the rise in video advertisements. Video ads have jumped in quality and feel like part of the game experience, rather than interrupting it. Previous years were dominated by interstitial ads, which players complained about.

Another reason for the rising success of hyper-casual games is because of simple gameplay mechanics. Take Happy Glass for example. It’s a bit like games we played in our childhood. In China, hard-core games have dominated and players are looking for a return to simpler games. There are other reasons, of course, like the growth in smartphone adoption, opening up the market to new players who find hard-core titles difficult to get into.

Mingming: Lin made good points. It’s clear that casual games have been developing rapidly in recent years and there’s some logic behind it. We have analyzed the phenomenon and I think the reason why this category is growing so quickly is that it follows the larger mobile internet trend. This is the trend of people having to be on the go all the time. The long sessions that mid-core and hard-core games require doesn’t make sense for these people.

Secondly, from a gameplay perspective, developers are always trying to find ways to attract users to play. Compared to some mid-core and hard-core games, the frequency and engagement for casual games are higher, allowing users to get more satisfaction from playing these games. Other factors of success are influenced by the largest gaming market and its players. Casual games are simpler than traditional mid-core and hard-core games, making them more accessible. It can cover players and markets that aren’t catered to. Compared to mid-core and hard-core games, casual games require lower hardware specs, opening up the genre to as many people as possible.

Wuhua: I would like to add three more points. First, the global adoption of smartphones is strong, with over 40% of the world using smartphones by 2021. Hyper-casual games are suitable for new mobile users and also opens up mobile gaming to all age ranges.

Second, when a product or category is about to go viral, one important reason behind success is its business model. It’s essential for a product to make a profit and if the business model doesn’t work, the category won’t become a hit. Currently, in overseas markets, there’s a big increase in the monetization methods for hyper-casual games. Many experts have mentioned that monetization via rewarded video has become popular abroad. This proves the robust business model for the hyper-casual genre.

Third, WeChat has been making significant investments in the casual gaming space domestically, thus boosting the entire mobile games industry. Overseas, Facebook has also invested a lot in the casual gaming sector.

Amplify Beijing 2018 stage - casual games

Wang: Whey you start a new project, you must consider your strategies like gameplay and macro or micro levels. In this development process, what strategies have you seen lead to success and which ones fail?

Chen: On the screen behind us you can see a couple of slides that show the game we released last week. Flip Trickster was launched after it won the first place price in our Ultimate Game Changers Contest in July. After a period of optimization, we managed to launch the game and get it to #1 in the App Store.

It’s important to find what works for you and to avoid emulating games that are hot in the market. For example, bouncing ball games have dominated the hyper-casual game market for the last two years. By the time you realize a trend is happening, it may have already passed. It’s important to do something different, whether that’s reflected in the gameplay or art style.

Wuhau: We can’t separate ourselves from an industry or platform when talking about which products will be a hit. You have to be deep in it. We observed that crossword games aren’t as popular as they are in Russia and the US. You need to dive deep into the category to do well. To put it short, the core of hyper-casual games is that the ARPU (average revenue per user) is relatively low but the cost of acquiring users is low so you can make it up via scale.

Zongwei: I think players abroad prefer diversified gameplay. This means giving players choice and evaluating what your competitors are doing. Match-three games, for example, may not be viable for small to medium-sized teams because they are expensive to develop. Match-three games all involve 500 levels or more and will take about half a year to produce. There are some game categories that are almost absent from China but the marketplace is huge.

Wang: If a developer is considering building a casual game, what should he or she look out for? Can you share any victories or setbacks you’ve experienced?

Zongwei: We went global relatively late. Our focus has always been the domestic market. But the truth is that the Chinese and global market is quite similar. As I mentioned earlier, the use of video advertising is approaching the global market in terms of user acquisition and monetization. I suggest developers invest in creating their own video ads and make them stand out to your target audience.

Each product has its own target audience and you should be very clear what age group you’re targeting. Is your product male or female oriented? While hyper-casual games appeal to both genders, the messaging in video ads can appeal to different groups. This requires doing some research and testing.

Mingming: I don’t dare say we’re as experienced in games as iHandy but we agree with what Lin said. When we define a direction and market segment to go after, like casual games, we define the core gameplay and selling points. For example, we look at what differentiates our gameplay and features. When building a casual game, you need to consider the entire picture of how the game fits into your business. For example, is it viable? How does it monetize? What about event tracking? How do rewarded video ads fit into the game? How do you balance the ad experience? These are problems you need to address before building a game.

Additionally, when we make games, we also consider diversity and geographical differences. For example, different countries and regions will have different preferences for interface and game styles. We find the optimum path to follow by diversifying and constantly iterating and optimizing.

Chen: I’ll share our experience here. We look at both products and markets to look at whether a product has enough users in the market. We also look at age and gender. We hope that our products can attract both men and women to have the largest audience possible. Arena of Valor, for example, has gained an audience ranging from primary school students to 50 to 60-year-old aunts. This means we choose gameplay and art styles that appeal to a wide audience and all of this is done in the early stage of game development. If you want to know whether your game is simple enough, you should make a 15-second video ad. These video ads will help you acquire users assuming you’ve properly balanced where and when ads show up in your game. This has worked well for us.

Wang: Do you have experience with ad monetization? How do you know what advertising format is suitable for your game? How do you choose an advertising platform to work with?

Chen: We adopt the same strategy to deal with advertising and monetization. As Miao said previously, Lion Studios is a small team but what we can do is focus our resources on partners who can produce the most value. For advertising, we concentrate our spend on large platforms. Because of our limited resources, we try to automate what we can. For example, we mix machine learning and some manual work to use a small number of platforms for advertising and monetization.

As for ad placement, some people choose to run communities and have influencers help market their game. We don’t do that because we found that influencers only promote your game sporadically and for a very short time.

Mingming: I have two perspectives on this. The first is that for ad buying, your target needs to be clear and engaged. With this in mind, we can understand the popularity of playable and video ads in mobile gaming. The reason they work is that these creatives show a user exactly what the game is about before they decide to download. This allows your game to perform better in terms of revenue.

Secondly, for selecting partners, we’re more than willing to work with the heads of traffic at ad networks. Google and Facebook are obviously included, but when looking for other partners, look at platform rankings and other authoritative sources like Beluga Global. We offer comprehensive evaluations and found AppLovin to rank very high.

Zongwei: Everyone’s thoughts about ad buying are very similar. As for buying from foreign advertising platforms, you should look at the largest platforms like Google and Facebook. Working with foreign platforms don’t require building various relationships as it does in China.

As for monetization, hyper-casual games must be careful with monetization. You can load up your game with ads to increase monetization but your users will eventually leave. You must find a balance and constantly test and optimize. Testing can be time-consuming but picking a variable or two a day to test can help you increase your revenue more quickly.

This post was originally published on AppLovin China.

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