Fun Stuff, Industry Forecasts

2013 Reflections – IAP Explodes and More

Happy New Year from the Soomla botStartup life doesn’t leave a lot of time for reflections, you need to keep moving forward at full speed. However, the little time I spent looking back on 2013 yielded some interesting thoughts that I wanted to share with you.

The year when IAP exploded

When we started SOOMLA in the middle of 2012, the In App Purchase model was just starting. Apple announced it earlier and Google just added it. The capability was there, the promise was clear but developers were still hesitating. 2013 Changed all that. If you need to narrow it down to one thing, it will be Candy Crush Saga but that’s not even half the story. Free 2 Play requires leaner and more agile ways of game development, it requires more sophisticated funding models and highly measurable user acquisition channels. Most importantly, it requires conversion optimization tools – the ability to measure, analyze and adapt aspects of the game in real time. In 2012 only a few top publishers had these tools. In 2013 they become available through 3rd parties especially for Tier 2 publishers. In 2014 we will see more tools focused on the mid tail and long tail market.

The year when iPhone started following Android

In many ways, 2013 was the year when Android took over the market. It’s true that more Android devices existed before and the number of app installs also surpassed Apple’s in 2012. However, it wasn’t an apples to apples comparison (couldn’t resist this one). Android is really an aggregation of many providers, some of the devices sold internationally are crappy Android 2.3 phones and App Store revenues were still on Apples side. In 2013 we saw a lot of that changing:

  • Android accounted for 81% of shipped devices compared to 13% by Apple
  • App installs generated from Android were 75% of the market vs. Apple’s 18%
  • Apple is still leading in App Store revenues but Android had better growth rates and the gap is shrinking
  • In 2013 Apple released the iPad Mini and iOS 7 – both are following Android devices in form and functionality

SOOMLA Breaks Through with an Open Source Project

For SOOMLA, 2013 was the year where SOOMLA turned from an open source project into a company. The In-App Purchase Store space to which SOOMLA moved first received validation from the industry and has become anecessary building block in mobile games. Our small open source project which had 25 downloads in the first month is now being used by thousands of developers all over the world and more than 10M devices has SOOMLA inside.

In short, 2013 was really great and we are expecting 2014 will be even better.

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Industry Forecasts

The Future of Mobile Game Advertising – 7 Predictions

Let’s start with the elephant in the room – predicting the future is a funky business.

Don’t trust anyone that tells you he knows what the future looks like. With that said, you can treat the rest of this post as it is meant to be – a fun attempt to guess some of the trends and maybe spike some interesting ideas and discussions.
seven predictions about changes in mobile games and ways to monetize them within the Soomla platform for game developers.

Video Ads Will Remain Strong

Betting on an existing trend seems like a an easy one but history does show the Gaming Industry can be rocky one so there is really no guarantee for any trend to continue. That said, there are quite a few reasons, why video is a very good format for mobile games:
  • Easy access to creative materials – they’re called video games for a reason
  • Highly effective format that delivers an immersive experience
  • Native fit inside other games and other types of affordable inventory

Lower Banners Will Go Away

It is just a bad format all over. Low quality clicks for advertisers, annoying for users and low revenue for publishers.

The ‘Click’ action Will Change from Tap to Swipe

This one is more of a wishful thinking than an actual prediction. There are just too many parties involved to make such a change that obviously impacts CTR, CPCs and CPMs. However, here are some reasons why this change makes sense:
  • Small screen sizes combined with big fingers makes the tapping less accurate than a mouse click on a PC
  • High ratio of accidental clicks drives click quality down
  • The context switching between apps takes longer so the accidental clicks are more annoying for the users
  • Swiping is a fun experience
  • A user that swipes an ad is much more likely to convert later on
  • As the mobile ad industry matures there is more room for specific formats that are purpose built as opposed to ones that originated from PC/Web

User Selection and More In-Ad Interaction

About 2-3 years ago there was an attempt to innovate online video advertising by giving the user a choice between a few video ads. This makes a lot of sense as the user who actually made a conscious choice to watch an ad is more likely to take action later on. In online video, this didn’t catch on but it seems that this approach can be a better fit for mobile game ads.
  • Gaming content is interactive while watching an online video is a passive experience.
  • It’s easy to create a fun selection experience in mobile touch screen
  • Video is today one of the most effective formats for mobile game advertising

Twitter will Become a Big Source for User Acquisition

Many game publishers consider Facebook as the best source of new users. The combination of the in-feed ads, the high ratio of mobile usage, the targeting capabilities and the volumes makes Facebook campaigns the #1 or #2 choice today. Twitter shares very similar advantages but reaches different audiences than FB. Once twitter launches such a platform it will be a big hit.

More Native In-Game Advertising Experiences

While the top grossing titles are actually moving away from advertising as a source of monetization, there is a new breed of publishers who specializes in bringing masses of users and monetize them based on ads. Many of those publishers relay on sequels or a more templated approach to design, development and can invest more in creating better in-game ad experiences that makes the ads feels less intrusive. I’m not talking about product placements, these are very hard to justify. I’m talking about nicer ways to put an interstitial, a video ad or an offer wall and actually making it look like it belongs. Some of the offer wall providers are already offering their offers in a form of a feed that can be integrated creatively.

Offer Walls / Incentivized Ads are Here to Stay

There have been voices against the practice of offering users incentives to watch ads or take different offers. The ‘Scamville’ fiasco comes to mind as well as Apple’s repeated attempts to fight incentivized downloads. At the end of the day, most users likes having this as an option and it is by far the least intrusive form of advertising. After some trial and error it is also clear that while not all advertisers get ROI there are certainly many advertisers that do.
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Industry Forecasts, Research, Resource

In-App Purchase Revenues Projected to Reach $36B According to Latest Report by Gartner

We love hearing good news about the In-App Purchase market growing bigger so we were very excited to hear about the new research from Gartner .
For those of you who aren’t familiar with this type of company, Gartner is a research firm that tries to predict how different markets will preform over the next year. Their projections usually come true and many companies and financial institutes really on their reports for making big decisions.
The last year was a pivotal one in terms of the mobile app market. This year In-App Purchase not only proved to be a viable model but actually proved to be the fastest growing area in the mobile industry. Gartner’s report is the first one to reflect that change so it’s interesting to see what they came up with.
Here are some interesting predictions made by the report:
  • The number of app downloads in 2013 will reach 102 Billion
  • 90% of the downloads will be for free apps.
  • By 2017 Gartner expect the annual app downloads number to reach 268 Billion
  • The expected revenue generated by mobile apps in 2017 is expected to be $77 Billion
  • Out of that total revenue, In-App Purchase revenues are expected to be 48% or $36 Billion
  • The advertising revenues in mobile apps are expected to grow drastically from $1.85 Billions in 2013 to over $10 Billions in 2017
We put the numbers on a chart to illustrate how big the growth in this market is:
App Market Growth
You might also find the detailed revenue numbers useful. Here are the figures projected by Gartner for the next few years:
a table of in app purchase sales and revenue
The report also provides detailed app download forecast in the table below:
Table 1. Mobile App Store Downloads, Worldwide, 2010-2016 (Millions of Downloads)
Free Downloads
Paid-for Downloads
Total Downloads
Free Downloads %
Source: Gartner (September 2013)
As expected, free apps will continue to dominate the market in the next years. If you are considering making a mobile game these days, what the growth in the numbers should tell you is that you still have a very good shot of making it. Markets that are growing quickly present more opportunities for small players and challenges for the bigger ones. The trick is to look for the sections that grow really quickly and try to innovate within them. Let’s see which section is growing at the quickest rates in the chart below.
App Market Growth worlwide, in millions of dollars
The obvious response is that the place to be these days is a free app with In-App Purchases. If you are making an app like that, you are in the right place. SOOMLA has many other resources for free to play design, In-App Purchase coding examples and more. Feel free to explore and let us know what else you need.
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Industry Forecasts, Research, Tips and Advice

Indie Game Developers vs. Gaming Giants – Who’s Winning?

As a company who strongly believe in the democratization of mobile game development we are constantly looking for signs that indie developers are winning. Traditionally the video games industry was controlled by giant corporations that didn’t leave room for anyone else. Mobile games changed all that and these days any small studio can make a game and what is most important is that they can make it to the top 25 as well. The next big hit can be yours so don’t stop believing.
Want some more data? First of all you should look at what it means to rank in the top 25? According to research firm Distimo, the top 50 app is being downloaded 23K times per day. We are interested in games (not all apps) so here is the data:
  • 1st place ~ 72K installs/day
  • 10th place ~ 47K installs/day
  • 25th place ~ 20K installs/day
So who made it to the top 25 downloaded games? Some titles are familiar names like: Where is my water 2, Grand theft auto and Candy crush saga but along with them there are 11 games by small developers. The charts can be quite dynamic but we could count 8-15 indie titles in the iOS top 25 of pretty consistently and over 15 in Android. Here is a snapshot from September 18th 2013.

the top 25 most installed mobile games list


Another interesting conclusion one can make by combining these numbers is that the top 200 free games only account for less than 10% of the total downloads. Please check my math:
  • Each top 200 games average 10K installs/day
  • Total game installs for top 200 games is 2M/day
  • In a full year that’s 730M
  • Total game installs/year for iOS is estimated at 8B

The number of 8B game app installs is based on these 3 articles:

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Industry Forecasts, Research

"In App Purchase Store" in Google Search Trends

We were excited to realize that more and more game developers are looking for a off the shelf store-front solution for their mobile game. The search trend on Google for the term In App Purchase Store clearly shows that.

In App Purchase Store trends in a chart provided by google
SOOMLA offers a solution exactly to this problem but solving the problem is not enough. We need mobile game developers to know that In-App Purchase Stores can be easily created using our platform. Help us spread the word by sharing this post.
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Choosing Funding for Your Mobile Game – Publisher vs. Venture Captial

There has been a lot of talk recently about game funding. On one hand, venture capital firms still have bad taste from seeing giants like Zynga struggling to show consistent success in mobile. On the other hand, publishers have had trouble turning their market presence into success for their 3rd party titles. If you look at the top 25 charts, there are no ‘publisher games’ in there.
Does the VC model fit the volatile gaming industry?
Is the publisher model still relevant in the world of digital distribution?
Will we see a new model for funding games?

These are the question that everyone is trying to answer.
What Do Game Developers Say
  • There is still a need for a partner to handle the commercial elements: funding, distribution, expertise and a bundle of tools and services that can accelerate the project and revenue. Out of all these, funding is the most important to developers.
  • Distribution only deals can work only for international markets that have a specific advantage to a local partner. The publishers’ ability to cross promote titles in his successful games is limited and most 3rd party titles end up ‘on the bench’ after a short period of time. At the same time, local markets that require special expertise are easier to tackle with a partner. A good example of that is the Chinese market.
  • The two main flows of standard publisher deals for free 2 play games:
    • The revenue split model kills the ability to acquire users. On every dollar made via IAP, 30 cents goes to Apple/Google and the rest is split between the developer and the publisher. It means that even with an ARPU of $2, buying users at $1/user is not profitable for either side.
    • In deals that have an advance for the developer, that advance is taken from the game revenues in the first few months. In free 2 play games, these months are critical and the developer needs to tweak the game and listen to customer feedback but he can’t focus on that as the deal starves him.
  • Equity deals have their own problems:
    • You give away a part of the company, including all the titles that will come in the future.
    • Venture Capital firms are a better fit when the studio has a special formula for making hit games. However, if your studio is focused on creating unique IP (content IP) there will be misalignment of interests in the long term.
Bottom line, both models have fundamental flaws. There might be a room for new funding methods but until we see new ones the best option might be to stomach it and publish games on your own.
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Industry Forecasts

Unity 4.1 Supports Air Play – Brings Dual Screen Games Closer

I don’t know about you but every time I hear about the possibility of using my iPhone or android device as a game controller for a game that plays on TV, I get really excited. The concept is not new. In fact, I’m quite sure that you already thought about it yourself even before it had a name. It’s just so intuitive.

designing a game for the big screen requires more work compared to designing for a phone.

One might ask himself how is it possible that we don’t see many games like that given the huge potential. Well, there are still a few challenges that make it a bit harder then it seems initially. Just to pick a few, designing a game for the big screen requires more work compared to designing for a phone. The chances of a given house hold to have both a smartphone and a SmartTV is not that big at the moment. In addition, the development tools are not there yet especially given the cross platform requirement.

This is why I got really excited when I saw Unity is making a big move in the right direction with the new 4.1 version. Unity is in the perfect position to move this market forward. They are the leader in cross platform game development so game developers can use a single platform to develop a game that will be compatible with a large number of TV sets and devices. While Unity is already one of the quickest ways to design great games for mobile, the new feature extends the same capabilities into games that use an iPhone or iPad as a controller.

The market for TV games is far bigger compared to mobile games or iPad games but until recently the barriers to enter the market were very high. Google and Apple are reducing the entry barriers on the hardware side and If unity will keep this line and commit to this market, the opportunities for quick game developers could be significant.

Another question that will be interesting to see is the monetization model. Given the dominance of In-App Purchase in recent years for both social, online and mobile games, it’s safe to assume that it will stay dominant in this market as well. How does an In-App Purchase store looks like on two screens? That is still something developers will have to figure out.

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Industry Forecasts

Amazon’s Global Coin – Smart Move or Doomed to Fail

Amazon recently announced the launch of a global coin allowing game developers for the kindle fire to recognize it as a form of payment for in app purchases. This is not a new idea, far from it. One might remember that Facebook discontinued a similar service by the name of Facebook credits or Playspan’s credits before that. On the other hand, when have you seen Amazon launching a service and fails? That hardly happens.


While history might suggest Amazon is likely to fail, the reality is that amazon has all the tools to make this work. More then anything else, a meta credit system like the one amazon is launching is about bringing new money into the game. Imagine a scenario in which a grandmother wants to give a present to her grand kid. This is very hard to achieve with any sort of in app payment that requires the both of them to take action at the same time and decide in advance where they are going to spend the gift. The global coin solution acts in this situation very much like a gift card that can be used in various stores. This is one area where amazon brings specific expertise.

In addition the commerce giant has proven success in marketing digital products and specifically gift cards. One can imagine a how amazon can fit this product in their usual sales tools. For example, a kid could add the Amazon coins to his amazon wishlist. Another example would be recommending the Amazon coin as a complementing item to a kindle fire purchase. Last example but maybe the most interesting one is Amazon’s ability to use the global coin as a reward mechanism for loyal customers who buy consumer electronics or other type of products at the amazon store and will be more likely to buy at due to the reward. This practice in already in place by offer wall providers such as TapJoy but there is no doubt that Amazon could do a much better job with this being on both the mobile device side as well as the retail side of the equation.

These are all tools that amazon have proven success with and have refined over the years. From this reason, what might look like a gamble at first sight might actually be a very well thought of strategic move which can pay high dividends to the company.

From the developers perspective  services like this one are blessed as they improve monetization. So on that front as well, you can notice a series of tools amazon have launched to help game developers get more from the amazon platform. Amazon needs to work harder compared to Google an Apple to attract developers attention and the their strategy is creating a more complete eco-system and tools.

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