One of the biggest trends in the mobile game industry in the last year has been the explosion of the Hyper Casual genre. The acquisition of Gram Games by Zynga for $250M and Voodoo’s $200M funding round brought these type of games to the center of the stage.
The historical hierarchy in the app ecosystem
When we look back at the evolution of the app eco-system we can see that app monetization has shifted through 3 main phases:
- 2007 – 2012 – Paid apps
- 2013 – 2016 – Free apps with mostly In-App Purchases and some ads
- 2017 – Present – Free apps with mostly Ads and some In-App Purchases
So if we look at the app economy in the past 5 years, free apps ruled the charts, and the grossing chart was dominated by apps who monetize exclusively with IAP while the top downloaded charts included mainly apps who monetize with ads.
When it comes to user acquisition and marketing, however, the only Apps that could afford it were the top grossing apps – the ones monetizing with In-App Purchases. In other words, the following hierarchy existed:
- In the top – users pay money to the grossing apps in return for in-game goods
- In the middle – The grossing apps were paying money to the top downloaded apps in exchange for qualified users
- At the bottom – the top downloaded apps were getting users who organically discovered them via search, chart position and featuring.
Changes by Google, Apple and Facebook set the stage
In the last 18 months we saw a big change in the industry. Some refer to it as the Hyper Casual trend but it’s actually bigger than that. Here is the change in each one of the areas:
- In the top – more users are willing to pay and grossing games improved at monetizing payers
- In the middle – the increase in the top grossing apps along side increased demand from brands for mobile inventory created inflation in price of ads – per impression and per user.
- At the bottom – the top downloaded apps experienced a few changes in how they acquire users:
- Both Apple and Google introduced paid discovery into the app store and are gradually making it harder for apps to get free discovery without paying for it. The most recent example for this was the change in Google’s algorithms that put many indie developers out of business.
- The growth in Instagram ads alongside the introduction of Facebook Audience Network as and Facebook’s recent focus on better user experience improved the chances of apps with wide appeal to receive advertising placements even though the price they can pay for users is a lot lower compared to top grossing apps.
- The change in the top and the middle sections of the pyramids increased user value for the top downloaded apps and created a situation where these apps can afford to acquire users via paid channels
The emergence of Hyper Casual and Arbitrage Games
These changes set the ground for the emergence of Arbitrage Games. Some people call them Hyper Casual Games but actually some arbitrage games are just good old casual games and in general the main difference with this trend is not the game genre but actually the business model. Hyper causal games existed way before 2016 and you can be sure that games with jumping balls were not invented by Ketchapp and Voodoo. That part that is new about these games is the business model – or the fact that hyper casual games even have a business plan. This business plan can be summarized with one word – arbitrage. The idea is simple:
- Acquire a user for X cents through advertisers
- Make sure user sees enough ads to generate Y cents where Y is bigger than X
Usually the number of ads a user needs to see in order to pay for his acquisition cost is about 100 if we are talking about full size interstitial ads that usually contain un-skippable videos and playable ads. This numbers goes to 2,000 ads if we are talking about banner ads. These numbers are based on the following assumptions for US traffic: $1 CPI, $10 interstitial eCPM and $0.5 banner eCPM. In other countries the numbers might be different but the ratios remain.
In most cases it’s not a single ad format but rather a combination such as 500 banner ads and 75 full size ads. If these numbers sound crazy to you, it’s because they are. No game designer goes and designs a game thinking there will be so many ads in it and when companies look at their own games it’s often hard to get comfortable with the amount of ads they have.
The popularity of these games created a growth in the amount of ad inventory which is filled mostly by ad-networks who quickly captialized on this trend and are creating in-tier transactions where on top-downloaded type app is being promoted in an ad that shows in another top-downloaded game.
15 Types of Hyper Casual and Arbitrage games
Below you can find 15 types of games who do well for arbitrage business model. Here they are – divided into 3 main categories.
Brain teasing games
1 – Word creation games
These are games where you create words based on a limited set of characters and clues related to the word length and sometimes pictures. Typically these games make at least 50% of their revenue from ads. Here are some examples in Google Play
2 – Solitaire
The well known card game became super popular since Microsoft included a free version called Microsoft Solitaire in different Windows versions starting Windows 3.0. In their mobile version these games tend to be completely ad driven with no IAP at all. They also tend to enjoy very long retention and players might come back to it even after months of not playing. Here are some examples of Solitaire Apps
3 – Jigsaw
Jigsaw puzzles existed since the 18th century where they were actually made using a Jigsaw to create the puzzle shapes. In their mobile version they attract users who want to relax while teasing their brain. Typically these games monetize with a mix of ads and in-app purchases but tend to be slightly heavier on the ads side. https://play.google.com/store/search?q=Jigsaw&c=apps
4 – Soduko
This combinatorial puzzle game was made popular in the current version by Japanese puzzle company Nikoli but versions of it actually appeared in French newspapers 100 years before that. Mobile versions of this type of game usually do well with ads partly due to long session times and great retention. The typical monetization mix is over 90% in favor of ads. Here are some examples on the play store.
5 – Trivia games
Trivia games require users to demonstrate their knowledge in a variety of categories and do so under time pressure. The main monetization in these games are ads and they usually do well enough to also invest in user acquisition. Here is one Trivia example.
6 – Word search
Mobile word search games are the digital version of a popular puzzle that existed in printed version for about 50 years. These games tend to monetize mostly with ads and enjoy strong retention which allows high enough ARPU for UA. Here are some examples of mobile word search games:
7 – Mahjong and other tile games
Mahjong is a tile game that was developed in China. It had digital version for PC and in recent years was adapted to mobile as well. These games typically do well with ads and generate over 50% of their revenue with this channel. Here are some mobile Mahjong Examples.
8 – Other Card Games
We covered some popular card games such as Solitaire above but there are more card games and many of them do well with ads. Well enough to allow for arbitrage and paid marketing. Some examples include: Uno, Canasta, 29 and Yaniv (yes – there is a game with my name and no – I didn’t invent it). Here are some examples from the Play store:
9 – Other “Real World” games
You may have noticed a trend that many of the games that do well with ads are real world games. This pattern can be extended into more types of games. Games like monopoly, mazes, number riddles, etc. tend to do well with ads and can fit in the category. Here is Monopoly for Example
Hyper casual games
10 – Games With Balls
This a rather broad category that features a ball as the main hero character and almost no meta game whatsoever. The games are typically hyper casual and can be played with a single finger and typically only one control action – tapping. The retention curve on these games is not very good so the game has to feature many ads as early as possible via multiple formats. In many of these games a big driver is a “save me” feature in return for watching videos. Here are some examples on Google Play.
11 – Coloring Books
This genre received great traction over the last 12 months with the introduction of pixel coloring books. In these apps the user colors by numbers where each tap fills out a single pixel and after filling out hundreds of pixels he can zoom out to the see the full picture. These apps enjoys good retention and long session times. Prior to the pixel painting, there were similar apps where the user would fill out areas.
Here are some examples:
12 – Piano Tile Games
Piano tile games feature a game play that is somewhat similar to popular console game – Guitar Hero. The piano tile mechanic is much more simplified and has less to do with the music of the song. Piano tile games are quite addictive and enjoy nice retention and session times. They tend to generate 95% of their revenue from ads. Here are some piano tile games Examples
13 – Io games
IO games are easy to recognize as they end up with io suffix. The game that started the genre – Agar.io was available on mobile and also via the domain agar.io. Other games in this genre copied the name format in addition to the game mechanics. The games usually have a simple look and users in them chase each other in an eat or be eaten arena. This game type tend to be mostly ad driven. Here are some examples of io games
14 – Idle games
These games could be quite fascinating if you weren’t exposed to this type before. The user earns in-game coins mainly by tapping on the screen or simply by waiting. These games do well specifically with rewarded videos. Here is a list of Top 10 Idle games As well as some other example from Google play:
15 – Play to Win Prizes
This is not exactly a game but rather a combination of 1 rewards app and a portfolio of games. The users are generating revenue for the publisher by watching ads but on the other hand, they can gain real life rewards for playing games. Here are 2 examples:
If you have more examples of game genres that do well with ads and can work with an arbitrage business model we would love to hear about them. Feel free to add in the comments or tweet me at @y_nizan.