Is mobile dead? It appears to be a silly question given all the hype–but it seems like the majors have it sewn up. Take a look at the top grossing apps. The vast majority of them are now published by large companies or independent developers that played their cards right early. Trying to get in the top grossing app list has become a challenge as monolithic “startups” blow millions of dollars from VC war-chests on acquiring users. This has driven up user acquisition costs to the point where even games that monetize well are having their profitability threatened.
The days of the free lunch may be soon over. Mobile can’t grow forever. Eventually smartphone user growth will flatten much like it has on social networks. The rising tide that floats all boats may stop rising.
Given these circumstances, is being a well-funded publisher the only way to go? Even with the use of Russian bot nets, daily free app promotional networks, and PR barrages it’s getting harder for the majors to score a slot in the top grossing apps. This broad and shallow strategy is expensive to execute. Now that the mobile market is large, mainstream, and mature it’s time to start monetizing lucrative niche audiences–narrow and deep.
I’ve encountered several mobile gaming startups employing this strategy to go after a number of different gamer sub-categories.
Whether you are “hardcore” or “mid-core”, the “core gaming” business model targets highly engaged gamers. These are the type of consumers that would have purchased an XBOX 360 in 2006, but for whom the tablet or mobile device is the platform of choice. This demographic is still (for now) largely young and male.
On the PC, World of Tanks earns over $10 million annually and League of Legends brings in over $60 million a year monetizing hardcore gamers with f2p economies. Although there are lessons to be learned from these titles, it’s important to apply hardcore game designs to the way core gamers wish to consume content on mobile.
Kixeye and Kabam proved the core gaming model on Facebook, earning over 10X what Zynga does per user. Both are making moves into mobile. Playing defense, Zynga is fighting back with their own core games push. Apparently unable to find a copy of The Innovator’s Dilemma, many legacy game publishers have surrendered, allowing barbarians to invade and steal their customers.
GAMES FOR WOMEN
I’ve been approached by several startups over the past few months looking to monetize female gamers with persistent social mobile games. Not to mention there have been a few high profile announcements in this space have hit the blogs lately. “Games for Girls” was an industry mantra over 10 years ago which resulted in an array of gimmicky games laden with rainbows and pink ponies. As they say, “This time, it’s different.”
Last year, there was a lot of hype about how FarmVille killed the soap opera. If that’s true, then it’s time to merge mobile social games with soap operas to re-engage that demographic. After all, soap operas were originally designed to sell soap to housewives. Now, design them to sell virtual goods. A few startups have appeared in this space, but the only social soap opera game so far doesn’t stray too far from the isometric Skinner Box form of your average Facebook game.
Games are not one-size-fits-all. In free2play games, women monetize differently than men. However, women can be just as engaged and lucrative as the aforementioned core gamer. Games that engage and monetize women can be a powerful niche market if you take it seriously and not approach it as an insulting gimmick.
Social Gambling has been the hot buzzword of 2012. The ongoing success of Zynga Poker, anticipated changes in federal online gambling laws, and the recent $500 million acquisition of Double Down by IGT have created a frenzy in mobile and social gambling startups.
The fact is, most social games are thinly veiled slot machines anyway. So it’s no surprise that when a developer drops the pretext and releases a quality slot machine simulator like Slotomania that it is going to rocket to the top of the charts.
When monetizing social games we speak of high paying customers as ‘whales’–A term taken from the gambling business. Vegas has been monetizing gamers much longer than game developers have. Not to mention gambling game designs have had thousands of years to be A/B tested.
Monetizing niche audiences requires not only a great game, but deep analysis of your customer and their tastes. Instead of going after the same pool of casual users, a new generation of mobile gaming start-ups are carving out lucrative targeted audiences. Some are large enough to catch the attention of investors, others are making significant “quiet money” for their savvy entrepreneurs. As Kabam CEO Keven Chou says, “The key isn’t about how many users you have, It’s about how much money you are making.”