Getting Users Is Historically Cheap. Getting Them To Pay Is Historically Hard

Getting Users Is Historically Cheap. Getting Them To Pay Is Historically Hard

Updated September 18 to fix an error comparing iOS and Android monetization

There’s good news and bad news in the mobile games business.

The good news is that acquiring new users for your mobile game is extremely cheap right now, down to a “historical low of $1.47” per user, averaged globally over iOS and Android. The bad news is that getting your new users to actually buy anything in your game is really hard: game publishers’ cost to activate those new users with an in-app purchase is up 24% to $43.88, the highest it’s been since 2018.

The data is from a new mobile gaming apps report from Liftoff based on over 300 million installs, and 6.5 million in-app purchases.

The study also shows that launching your game on Android could be much better than launching your game on iOS, if cost is an issue.

Why?

“Android is taking the lead, striding ahead of iOS for the second consecutive year,” mobile app marketing platform Liftoff says. “With 4x lower cost-per-install than iOS users ($.89 to $3.91) and a 2.8% lower 7-day return-on-ad-spend, the platform’s commitment to gaming is clearly paying off.”

In other words, you get new players in your game much cheaper on Android. And yet, they have a similar return on ad spend on a percentage basis compared to iOS users.

That means that you’re spending less money to acquire new users. With very similar return on ad spend on both iOS and Android — around 37% in each case — you’re making good money there with minimal investment. You still make more on iOS users, because your return on investment is the same percentage, but your initial cost to acquire them is almost four time more than on iOS.

That might mean that new games from publishers without huge resources might be better off starting on Android and perfecting their monetization mechanics before moving over to iOS, where they’ll need four times as much investment to grow/

At least, if they don’t go viral and get a huge number of organic users.

Historically, Android users tend not to monetize as well as iOS users. iPhones have typically been more expensive than the average Android device, although you can certainly buy high-end Android phones. They’ve therefore typically been sold to higher-net-worth individuals who have historically tended to monetize well for app developers. That’s one reason it’s been much more expensive to acquire new users on iOS.

The continual problem for game publishers, however, is not player acquisition.

Rather, it’s player retention.

“In spite of their willingness to try out new games, getting users to engage on a deeper level is another story,” Liftoff says. “Cost to activate with an in-app purchase (IAP) is up 24%, to $43.88, its highest level since 2018. Install-to-IAP conversion rates are down 46%, a likely result of the recession and lower discretionary income.”

In other words, in order to acquire one user who spends money on gems or power-ups or new avatar skins or any other premium paid feature in your game is now a staggering $44. Given that you’ve acquired about 50 users on Android at $0.89 each in order to find that one paying player, it’s clear that only about 2% of people in games actually spend money in game economies.

Other highlights in Liftoff’s report:

  • Midcore games have the lower cost per install, and the highest return on ad spend (39.5% after a month)
  • North American game players are the most loyal on the planet, with the highest retention rates
  • Only 3.3% of people who install a game register for an account
  • 32% of people are still using a new game after the very first day after an app install
  • 3.1% of people are still using that game after 30 days (a number which corresponds surprisingly well to the percentage who register for an account in the game!)

Generally, Liftoff’s data say, gaming is a good gig for making money.

Most game publishers get a 2X return on ad spend within just a few weeks of getting new users. The best bang for the buck is in the European Union, where you can acquire new game players for less than in North America and still collect 2.4 percentage points more return on ad spend.

“Mobile gaming is more popular than ever, and as players shelter-in-place, mobile will continue to be a key source of entertainment,” Mark Ellis, CEO and co-founder of Liftoff, said in a statement. “Mobile marketers should examine their engagement strategies to ensure they cater to new players, compelling them to stick around and go beyond just install.”

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