Researching market saturation for mobile F2P games

Aleksandr Bezobrazov
Jul 31 · 7 min read

Boring theory behind market saturation term

What is market saturation?

According to the Cambridge Business English Dictionary market saturation is “a situation in which no more of a product or service can be sold because there are no more possible customers”. The term could be connected with the theory of natural limits and other “boring stuff” that you know about during University years and forget about later on. Hitting a bit closer to home, namely the game industry, we can find references of the market saturation in the articles about “Video game crash of 1983” — a large-scale recession between 1983 and 1985.

While learning from history is all good and well, this article takes a more pragmatic approach: if we want to develop a product for the market — it would be a sensible thing to learn more about the market and its size, the levels of consumption and competition. If we need to operate in any given market — we would like to monitor it closely to know when it has reached a saturation phase to act accordingly.

How could market saturation look at mobile F2P market?

So, what does market saturation looks like “In Real Life”? The mobile games are growing for several years now — be that revenues of the companies or the aggregate number of downloads. The growth is predicted to continue. Most of the reports concentrate on the “market” overall. But no company holds entire market — everyone competes in the chosen niches.

For this niches — be that genre or audience — the market dynamics could differ from the whole mobile games industry.

If we were to take Tier-1 country, like the United States — sooner or later we would reach the stage where no more audience could be found — the MAU/WAU/DAU for some market segment would stop growing. That in turn would increase competition for the attention of the limited audience — companies would invest in the retention activities and would try to engage the users more. Sooner or later the market would reach a stage when players are not ready to spend more time within the games. The competition for the users is also going to grow, CPI would follow and reach the revenue-defined limits.

With that in mind we could assess the lifecycle stage of a market/niche using a number of metrics including active user base, revenue, volume of downloads, time spent in the apps and derivative metrics like ARPMAU/ARPDAU.


Market for tycoon/crafting F2P games in US

For the purposes on an article I would define the market as an “IAP market for the free-to-play restaurant simulation games for android platform (Google Play) in the United States”. Such a definition would help me to illustrate techniques and approaches one could use to research the market, estimate its lifecycle stage and make a data-driven decision about entering the market at all.

The genre of restaurant simulation games is often defined as either Tycoon/Crafting, or Time Management. The niches within these genres range from farm simulation games to city builders, from cooking games to niche tycoons. The primary monetization model is usually through in-app purchases with additional layer of advertising monetization.

Top restaurant simulation games in US for June 2019

Market Intelligence service AppAnnie estimates the US market for mobile games in almost $427M in June 2019. TOP 100 grossing games made around $290M in revenues, which accounts for 67.9% of the market. TOP 500 games account for 91.8% of the market and grossed more than $392M.

The first bit of useful information is that there are no restaurant simulation games in TOP-100 grossing titles: tycoon/crafting and time management genres generate only 2.28% of the TOP-100 revenue and that comes from only two games. Within the TOP-500 games these genres have 2.76% of revenue coming from 22 games and totaling at $10.8 M/month.

There are 7 restaurant simulation games that made it to TOP-500 grossing apps in US for June 2019 on Google Play:

Estimated Revenue by game. Google Play, US, June 2019

Top restaurant simulation games in US for January 2016 — June 2019

Since January 2016 only 23 games in restaurant simulation made it into the TOP-500 at least once:

Restaurant simulation games by months in TOP-500 (US, Google Play) since January 2016

These apps (let’s call it TopCooks) would be our sample to assess the market. It is definitely not ultimate list of the titles and in real life scenario it would serve you better to broaden the number of the games you assess.

We could also note that the leaders are roughly the same bunch of apps, there are only two new apps within genre that seem to be “on the rise”: Cooking Diary from MyTona and Diner DASH Adventures from Glu. Without these games we could say that the market is split between 3 to 5 apps. There is also an unstable group of contenders that rise and fall as the time goes by. The trend looks like Cooking Diary is definitely the rising star, while with Diner DASH Adventures is too early to make long term predictions.


Assessing Market Saturation

MAU, Downloads, Revenue

First thing we want to do is assess the “active users” base for the genre, dynamics of revenue and downloads.

MAU dynamics. Restaurant Simulation games in TOP-500 (US, Google Play). January 2016 — June 2019

Monthly Active Users (MAU) for TopCooks has reached a sort of plateau at around 1.1M monthly active users. Of note should be a discrepancy in the data — the chart shows aggregated MAU of 23 titles. While it is convenient for charting purposes, in reality there is no guarantee that the users are not playing two or more games at any given month. So, it would be prudent to assume that the MAU for the genre is even lower.

Downloads dynamics. Restaurant Simulation games in TOP-500 (US, Google Play). January 2016 — June 2019

Aggregate downloads for TopCooks are not rising for the last two years at best. The spikes are attributed to Restaurant Dash in July 2016 and Cooking Craze in July 2017. Total amount of new installs for the market could be expected to average between 800K-1000K installs/month.

IAP Revenue dynamics. Restaurant Simulation games in TOP-500 (US, Google Play). January 2016 — June 2019

The first positive thing we see for the market segment defined by TopCooks is a steady rise in revenue for the last two years. Combined with previous data we could assume that either there is an increase in buying power of an average player, or the games have better monetization now than they had two years ago.

ARPMAU and Total Time

ARPMAU dynamics. Restaurant Simulation games in TOP-500 (US, Google Play). January 2016 — June 2019

The ARPMAU chart supports the second revenue hypothesis. If we were to deep dive into revenue charts, it would have become obvious that the growth in no small part is due to Cooking Craze (launched in 2017) and Cooking Diary (launched in 2018). These two apps are now leading in the market, while previous leaders like Cooking Fever are — mostly — intact. With than in mind we could assume that the growth came at the expense of a smaller games, which could hint at the “consolidation” of the market so to speak.

Total time dynamics. Restaurant Simulation games in TOP-500 (US, Google Play). January 2016 — June 2019

One of the most interesting engagement metrics — even more interesting in my opinion than active users — that you could find in Market Intelligence tool is a “Total time”. It is an estimation of the cumulative time users played a game (or used an app) in minutes. We could see that aggregate number of minutes for the market is around 282M minutes/month this year. If minutes were currency, one could argue that the market has reached its saturation in this regard: it seems that users are not ready to spend more time on a regular basis within games of genre.


Conclusion

Summing up information above we could conclude that the market for restaurant simulator games in US (Google Play):

  • Is not growing in terms of active user base or number on downloads (e.g. installs on new devices)
  • Has a steadily increasing revenue from the stable user base
  • Has possibly reached saturation in time players are ready to spend in the apps of the genre.

There is also a possibility of a market “consolidation” as it seems that the revenue growth in TopCooks group (see definition above) comes at the expense of the smaller apps.

As we see from the launch of Diner DASH Adventures and Cooking Diary — it is still possible to launch a commercially successful game in the market. In terms of the Revenue — the market is not saturated. Though one has to take into account the lack of active user base or total time spent growth — it is an early indicator of a severe increase in competition which — in turn — would impact CPI, ROI and the feasibility of market entry in the future.

Aleksandr Bezobrazov

Written by

Marketing Director. Mobile Games. https://linkedin.com/in/bezobrazov/

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