GDC is in San Francisco this week, just next to Flurry’s headquarters. By the size of the crowds, we (very scientifically) estimate that attendance should easily surpass last year’s record of 22,500. Having tracked the growth of mobile games for several years, we weren’t surprised to see more than 30 sessions during the week focused on smartphone and tablet gaming.
Here’s the big picture, based on our estimates: There are now over 1 billion active smartphones and tablets using apps around the world every month. And of all the apps consumers use, games command more than 40% of all time spent. Looking at revenue, games also dominate. Today, for example, 22 of the top 25 grossing apps in the U.S. iTunes App Store apps are games. Gamers spend money, and game makers are in love.
In this installment of research, Flurry studies how age, gender and engagement vary across key game types. Understand this, and a game developer can design a more engaging game that appeals to the right audience. In short, they can build a better business. In this study, we included more than 200 of the most successful free iOS games, with a total audience of more than 465 million month active users. For a better comparison, we organized these games by their game type (aka game mechanic) instead of traditional, less granular genres. Let’s start by looking at how different kinds of games appeal to gamers by age and gender.
The chart above plots game types by age and gender. From left to right, we show what percent of the game audience is female, with the far right equaling 100% female. The opposite is true for males. For example, 0% female equals 100% male. From bottom to top, we show the average age of the game type’s user base, between 20 to 50 years old. Putting it together, games in the upper right quadrant are preferred by older females. Games in the lower right are preferred by younger females. Games in the lower left are preferred by younger men, and so on.
Young Men and Their Competition
Inspecting the chart, the tightest cluster appears in the lower left; specifically, game types such as Shooters, Racing, and Action RPG skew younger and more male. Card-battle and Strategy games also skew toward younger males. The only genre that skews toward males over 35 is Casino/Poker, with pure poker games skewing even more male than the game type as a whole. This appears to leave a big gap in the market for developers who can create games that appeal to middle-aged and older men.
While men tend to gravitate toward competitive games, women gravitate toward games that are less competitive and tend to be played in a more enduring way. These include Management/Simulation games where players can build out an environment, Social Turn-Based games in which they can play over time with friends, and Match3/Bubble Shooters and Brain/Quiz games, to which users can frequently return when they have a few spare minutes. Slots and Solitaire are both solo-play game types that skew toward females who are over 40, suggesting that they serve as long-term time-fillers.
From a marketing perspective, mobile game publishers can also leverage this knowledge to design targeted campaigns appropriate for the kind of audience to which a game appeals. Flurry’s ad network, AppCircle, allows publishers to target specific demographics for efficient spending.
From Courting to Betrothed
We find that mobile gamers tend to prefer playing a few kinds of games and demonstrate highly predictable play patterns. In other words, they form relationships with their games. Savvy publishers understand these dynamics and use them to inform acquisition strategy, gameplay design, and both in-app purchase and ad-based monetization tactics.
In the chart below, we map game types by usage and retention. On the y-axis we show the number of times per week consumers play different game types. On the x-axis we show how long different games retain their user (i.e., Flurry defines Rolling Retention as the percentage of users that return to the game 30 days after first use, or any day after that). To see how usage and gender work together, we’ve also colored-coded game types by whether they are more male, female or neutral in appeal. Let’s take a look.
The chart above reveals that different strategies should be employed for different kinds of games. It also shows, loosely, that women are more committed while men are more fickle. Sound familiar in life? Hmmm. For the gaming industry, the universal take away is that to optimize engagement, retention, and monetization, developers must tailor their mechanics and messaging to match their ideal target audience. Let’s take a tour of the quadrants.
“Players” try a lot of different games, play for only a short time and tend to be found in highly competitive games (e.g., “Player vs. Player style games). While fickle, they tend to have a high willingness-to-pay in order to progress faster in a game or increase their ability to compete at a high level versus other players. Attracting the right users through targeted acquisition can pay off, as those that stay will pay. Notably, Card-Battle games have very low retention but off-the-charts monetization, extracting enormous revenue from the small number of users that stick. One implication is that these games need to be highly polished at launch with updates ready to go, as gamers will discard games quickly and move on if the game fails to resonate. From a design standpoint, these games should offer immediate opportunities for users to advance by purchasing upgrades and boosts. For the users that might not spend, a lucrative option is to offer in-game currency for watching video ads.
“Going Steady” game types are found in the lower right quadrant of the chart. Usage is less frequent but retention is very high. While these gamers don’t play as often, they are loyal. This group of games tends to be easy-to-learn and easy-to-return-to even after a lapse in playing. They lend themselves to quick play while in a “wait state” (e.g., waiting in line, taking a bus or perhaps checking out of the meeting or class they’re in). Since these are not particularly immersive or competitive games, they are less likely suited to in-app purchase. However, they can generate significant ad impressions over time, and can be designed to show banner or interstitial ads without being overly disruptive to the experience. For games with larger audiences, publishers are utilizing mediation platforms that enable the use of multiple ad networks in one system, ensuring maximized fill and ad-revenue for each space.
“Committed” comprise of consumers who play games for the long-haul. As such, game makers should think of it like a marriage. Think about appoint mechanics like setting a date (hey, even married people need to keep it fresh). These games should be designed with deep content and not try to sell too hard to their users too quickly. From a monetization perspective, commitment-oriented games have great potential for in-app purchases since users of those games are likely to value such purchases and amortize them over long periods of gameplay. And while only the largest titles have achieved this to-date, this group of games are great candidates for in-app product placement. Additionally, with high impressions counts, it is worth publishers’ investment to implement monetization platforms that make ad spaces available to real-time bidded ad exchanges, ensuring they reach the brands and advertisers that value their audiences.
“Infatuated” consumers have fallen hard and fast for their games, but the candle that burns twice as bright burns half as long. They have crushes, and show binge behavior. During the “crush” window, the developer needs to work hard to extract as much revenue as possible. As such, developers must provide vast amounts of content to the users, consistently, in a short-window. Matching monetization to game type, the competitive nature of Strategy games, and Slots users’ incessant desire for in-game currency, make a solid in-app purchase strategy paramount. Sales, events, and purchase opportunities timed with key moments of emotional investment can drive significant profits for publishers.
There’s a Pebble on the Beach for Everyone
In gaming, there are a vast number of game types that attract distinct audiences. And these different consumer segments display very different usage patterns, which have direct implications on monetization strategies. As in life, where the richest relationships are borne from knowing oneself and his or her partner, game companies must also understand both. Only then can you get the most out of the relationship.
Apps are big business, and the biggest app business is games. In 2012, Flurry estimates revenue earned from apps will approach $10 billion, with games taking over 80% of the pie. The free-to-play business model (aka freemium), where consumers download and play the “core loop” of a game for free, but then pay for virtual goods and currency through micro-transactions, is the most prolific business model in the new era of digital distribution. When it comes to app consumption on iOS and Android smart devices, consumers spend over 40% of all their time using games.
The most successful companies in the new mobile economy, from Electronic Arts to Zynga and Mobage to Supercell, deeply understand consumer behavior differences by game genre. This level of understanding greatly informs a company’s app acquisition, retention and monetization strategies. In this report, Flurry examines the consumer behavior differences by app usage, retention and demographics for the top nine freemium game genres in mobile gaming. For this analysis, Flurry leveraged a sample of more than 300 million consumers using iOS and Android games each month. Please note that, for consistency, we include only free titles.
In the chart below, we lay out a “loyalty matrix” that plots the top nine freemium game categories by how often they’re used compared to how long consumers continue to use them over time. Specifically, we plot the 90-day retention rate of app categories on the x-axis against the frequency of use per week on the y-axis. We lay the “scatterplot” out in a Cartesian coordinate system with four quadrants.
Quadrant I represents a “sweet spot” for developers, whose games are used intensively by a set of highly retained users. Well-designed “appointment” mechanics drive frequency, as users are compelled to maintain and progress in their respective game. Social Turn-based games succeed in building an active, loyal user base by offering popular “evergreen” games played among friends. From a revenue perspective, while there exists significant potential to show advertising impressions to consumers who use so frequently, games in the Slots and Resource Management & Simulation (labeled as “Mgmt/Sim”) genres commonly monetize via in-app purchase. However, companies that maximize revenue in Quadrant I extract revenue from consumers willing to pay via in-app purchase, and then by showing ads to those who do not pay.
Quadrant II is characterized by the most intensive usage over a short customer lifecycle, and is occupied solely by the Strategy genre. This audience is demanding, game lifecycles are short and a game’s live services must be flawlessly executed. Successful Strategy game developers accelerate monetization by driving competition among players (“Player vs. Player”) and by encouraging fast game progress through premium currency spends. With frequency of use so high, users churn through content quickly. To maximize retention, developers must continuously release new content after the game’s initial launch.
Quadrant III also attracts a fickle gaming audience, but adds the challenge of having fewer opportunities per week to monetize the user. The well-documented success of the Card-Battle genre in Asia, and now Western markets, is even more impressive when considering the short time frame developers have to drive transactions. Targeted user acquisition is critical to avoid paying for large batches of users that will drop off quickly due to the “hardcore” nature of the content and game mechanics.
Quadrant IV features easy-to-play and highly repeatable games that can remain on a user’s “play list” for years. These evergreen titles may lack the depth required to generate sizeable in-app purchases, but do generate substantial advertising impressions over time. In addition to driving strong ad revenue, the large audience size of these games can be used to cross-promote a developer’s more narrowly focused, but better monetizing titles.
As the mobile app economy grows, the sophistication of its related advertising services will reach those found on the Internet today. Leveraging big data, the ability to target users based on demographics and personas, and then track the effectiveness of such targeting is just starting to take hold (Flurry has invested in this direction with its own services like Flurry AppCircle, an ad network, and Flurry Ad Analytics, an ad effectiveness solution). As developers and app marketing providers become more savvy, they can better acquire the kinds of users that will reliably play and pay in their apps. Below, using the same sample set of games, we look at the Age and Gender of users by genre.
A quick review shows that Quadrant I is largely comprised of middle-aged females that play games we know to have attractive retention and usage metrics.
Quadrant II shows that males are not extending into the same 40+ average age-range as female players. Casino / Poker games tend to attract older males the best.
Quadrant III is undoubtedly the hottest sector of the mobile gaming market, with young, male “core” gamers pausing their console gameplay sessions to increasingly play mobile games. These young men are difficult to corral, but can monetize at a rate that justifies the cost and effort of acquisition.
Quadrant IV shows younger females adopting games that feature more involved gameplay than those played by the middle-aged female crowd. While the youngest users enjoy the quick solo experience of the Endless genre, the late twenties / early thirties crowd are diving deeper into game mechanics and making it a social experience.
As mobile gaming rapidly matures, it is becoming increasingly difficult for new and small developers to succeed. The game quality bar has risen dramatically, user acquisition costs continue to climb and organic installs via app store discovery and featuring are harder to come by. One great equalizer for developers is the ability to collect and harness the power of data. In fact, game developers tend to be the “power users” of analytics, using sophisticated metrics to track user progress, tune gameplay and maximize monetization (a large part of Flurry Analytics' use base is game developers). In an industry that has historically been considered more artistic and subjective, connected devices and the ability to rapidly iterate on already shipped titles has ushered in an age of science and measurement. In short, data has enabled the “gamification” of the mobile industry.
The app revolution has changed the way software is distributed and used among consumers. With a perfect storm of digital distribution, free content and powerful touch screen devices, the success of mobile apps has disrupted industries from telecommunications and games to music and news. To date, no category of apps has been more successful than Games, directly disrupting the traditional gaming industry. Flurry recently wrote about the impact iOS and Android game popularity has had on Sony and Nintendo. And with low barriers to entry for armies of entrepreneurial developers, indie game developers continue to thrive on iOS and Android.
Something Disruptive This Way Comes
Consider for a moment Facebook’s speedy billion-dollar acquisition of Instagram, a service that succeeds by delivering Facebook’s core value proposition of photo sharing, but only on mobile. When one understands that consumers now spend more time in mobile apps than they do online, Instagram’s value begins to make sense. With over 500 million iOS and Android devices in the market, mobile apps are the new battleground for consumer engagement. If Facebook feels compelled to snap up Instagram in this way, perhaps this is an indication of how relevant social networking has become in mobile apps, or simply how relevant mobile has become overall. In this report, Flurry focuses on the rise of the Social Networking category in mobile apps. Let’s start by looking at where consumers spend their time by application category.
In the chart above, Flurry compares the time consumers spend across different application categories when using smartphones. Starting on the left, we look at the average number of minutes a consumer spent each day, over the course of Q1 2011, across different app categories. For this period, we calculated that consumers spent 25 minutes (37%) of their app-using time in Games. They additionally spent 15 minutes (22%) of their time in Social Networking apps. News and Entertainment were the next most popular categories, garnering an average of 11 (16%) and 10 (15%) minutes per day, respectively. All other categories combined made up the final 7 minutes (10%) of time. During Q1 2011, Flurry tracked approximately 30 billion application sessions worldwide.
On the right, we conduct the same analysis for Q1 2012. Compared to the same quarter in 2011, time spent per consumer each day increased from 68 to 77 minutes. Additionally, the distribution of time spent per category shifted. Games usage dropped by 4% down to 24 minutes per day, while Social Networking increased by 60% up to 24 minutes per day. Games and Social Networking categories each controlled 31% of consumers’ time. News, Entertainment and Other categories commanded 12 (15%), 10 (13%) and 7 (9%) minutes, respectively. Flurry tracked approximately 110 billion application sessions during Q1 2012.
The most significant trend is that, for the first time in the history of applications (Flurry began tracking application usage in 2008), another app category is rivaling Games. We take the rise in Social Networking apps as a signal of maturation for the platform. As game demand may be hitting its saturation point, consumers are also discovering other apps, namely Social Networking. The year-over-year growth in Social Networking has been staggering. Not only has time spent increased by 60%, but also within a growing amount of total time spent in smartphone apps among consumers, from 68 to 77 minutes, or a growth rate of 13%.
Money Pools Where Audiences Aggregate
Through its mobile app traffic acquisition network, Flurry AppCircle, the company can also see how apps with growing audiences earn revenue through advertising. When app developers amass larger audiences, among the chief ways to monetize their businesses is by showing ads to their consumers. In the chart below, we show revenue earned by publishers in the Flurry AppCircle ad network for each of the last three months. Flurry AppCircle reaches over 300 million unique devices per month, making it one of the industry’s largest ad networks by reach. The columns in the chart grow from month-to-month at the same proportion as AppCircle publisher revenue growth. From just February to April of this year, Flurry AppCircle publisher revenue has grown by 23%. Please note that we forecast the remaining few days of April for the chart below.
From inspection, ad revenue in apps is driven primarily by Games and Social Networking categories. In other words, audiences using these apps a combination of the largest and most receptive to ads. For February, March and April, Games apps earned 35%, 35% and 36% of total ad revenue in the AppCircle network. Over the same three months, Social Networking climbed from 24% in February to 25% in March, and then to 37% in April. This is the first time in Flurry’s history that any category has surpassed Games in ad revenue generated (Flurry launched AppCircle summer 2010).
SoLoMo Not So Loco?
Over the last couple of years, the term “SoLoMo” was coined to describe the convergence of social experiences on mobile devices that leverage some element of proximity (i.e., location) to the experience. While a Silicon Valley term in origin, it speaks to the new consumer experiences possible when dreaming up any combination of these three factors. Phones are powerful, connected and always with consumers. And they are considered personal devices that easily enable sharing of personal content and information through apps. Build a clever app that leverages these aspects in a compelling way, and you could have the next Pinterest or Instagram.
As business ventures, the ability for Social Networking apps to engage consumers in a meaningful way is driving a wave of investment and bullish valuations. Social networks like Pinterest, Path and Skout are raising major venture capital rounds. This month, Andreessen Horowitz invested $22 million into Skout, and Greylock and Redpoint helped plow $30 million into Path. Pinterest, which has a strong mobile component, has become the third most popular social network behind Facebook and Twitter, and ahead of LinkedIn, Tagged and Google+. With so much innovation, coupled with high engagement among consumers, this appears to be only the beginning.
Games Don’t “Like” Social Networking Apps
The rise of Social Networking apps also signals the end of the era of gaming dominance within mobile apps. While the free-to-play business model performs extremely well, enabled by in-app-purchases, it does so primarily for simulation games, a sub-genre of the total games category. As long as the total iOS and Android installed base grows, all categories will continue to grow naturally. However, as we reach saturation for mobile gaming on a per user basis (one consumer can play only so many free-to-play games), the Games category could start behaving more like a “zero sum game” from here on out, meaning that game companies would have to fight over a finite group of consumers in order to grow their businesses. For one app to grow, it would have to take from its competitors. Even with an influx of new consumers into the market, the expected would-be casual gamers will be increasingly wooed away from games by compelling Social Networking and other apps. Going forward, the Games category will have to look to innovate on mobile to maintain its dominance and growth.
A Note about Methodology
For the comparison of minutes spent in this blog post, it’s important to clarify that these figures exclude tablet usage, and focus on smartphones only. While Flurry calculates that consumers spend an average of 94 minutes per day using mobile apps, that figure is a reflection of total usage spread over both smartphones and tablets. When we isolate just smartphone usage, as we’ve done in this analysis, the number of minutes spent on apps is lower.