Pay to Play

Mobile games are big business. But what’s the price of taking part?

There are probably plenty of people who don’t play games on their phones and haven’t since Snake on their Nokia a decade ago. Unlike then, today’s phones don’t typically ship with games built in — instead they come with access to 750,000 games in the App Store (about ¼ of all apps are games) or over 1 million in Google’s aptly named Play Store.

Mobile games account for over $40 billion in annual revenue — the equivalent of global box office sales for the year — rather staggering for a category that didn’t exist just 10 years ago. Games account for between 80% and 90% of the gross revenue generated by the two leading app stores. In the US, people spent an average of 33 minutes per day playing games on their mobile devices in 2016 and in terms of downloads, worldwide mobile game installs on both stores totaled close to 8.8 billion in just the last quarter.

Blockbuster titles like Angry Birds, Candy Crush and Clash of Clans have turned into sequel and merchandise-driven properties to rival a Hollywood franchise (or in fact they have sometimes become a Hollywood franchise: Angry Birds The Movie grossed over $350m). Rovio, maker of Angry Birds, is pitching an IPO with a valuation hovering around $1 billion, while Supercell, makers of Clash Royale, is valued at over $10 billion.

Paying

“Download now for free” is the most common refrain of the mobile games advertising industry. I’m amazed at how well it works. As consumers, you’d think we’d have learned by now that there’s little in capitalist life that comes for free. It’s either going to be ad-funded or eventually ask us for money.

With the cost to produce a top-quality title running to in excess of $2 million — and that’s before you factor in marketing/customer acquisition costs which typically dwarf the development spend — somebody has to pay. And while some try to survive on finding the balance between intrusive ads and driving people away, most rely on in-app purchases — buying extra content, playing time or in-game currency.

As you watch primetime TV adverts with Arnold Schwarzenegger (Mobile Strike) and Mariah Carey (Game of War), consider what other type of free product has prime time adverts with big name stars? Mobile Strike is said to have spent $5m on its Super Bowl slot. Beneath the fun-filled exterior of even casual games is a wealth of tactics to extract more money from you — if you’re one of the few people who are willing to part with money. Only about 4% of gamers make an in-app purchase, yet 92% of games on Android are free to download. Hit games can attract a high-spending group of players — Game of War saw an average spend of $550 per player, comparing very favourably with most games which average about $88. But for every hit, there are thousands of games from publishers, big and small, that fail.

It costs an average of $4.07 to acquire a user and $50.69 to convert a player into a first-time purchaser according to a Liftoff report. Getting attention in the crowded market for games isn’t easy. With literally hundreds of new games released each day, ad-funded games walk the tight-rope of being reliant on advertising revenues from promoting their rivals to sustain their business, offering an easy to target, ready-made and fickle audience.

Protection?

“Gaming”, when it refers to gambling, is regulated but what about the cash-driven world of in- app purchases in casual games? In Las Vegas, authorities check the slot machines but in your smartphone there’s no such oversight. There are no integrity checks on the games available for download from the app stores. They can feature fake leaderboards, fake reviews and various sharp practices to line the pockets of unscrupulous publishers.

I’ve had several experiences where promised in-game rewards (such as “free gold” for watching an advert) weren’t delivered. You have little recourse and it seems disproportionate to complain to customer service for a missing virtual item or even an item with a real cost of a few cents. I’ve also noticed some games where they (either intentionally or simply through poor programming) hope you don’t realise when timers don’t work very accurately. One football game I tried that was based on a countdown timer frequently didn’t resume from the correct amount when you hit “Retry” — offering less time than it should, making it more likely I’d pay to extend so I could progress to the next level. An email to the developer asking if it was a known bug went unanswered and several updates to the game since have not addressed the issue, leading me to think fixing it is not a high priority for them. But I did still find the game enjoyable, which is the point of a game, isn’t it?

It’s only a game

Mobile games have come a long way from Snake. Instead of one inch monochrome displays and numeric keypads, we now have 5” touchscreens, with graphic capabilities far in excess of home games consoles of just a few years ago. Renowned gaming hardware maker Razer thinks the market is big enough to have launched its own $700 gamer’s phone.

Games are one of the numerous areas where today’s smartphones excel. An endless variety of entertainment, much of it free, is at our fingertips. There is an amazing range of games to cater for every taste, but next time you’re killing some time in your favourite game, remember that behind every fun game lies a serious business.

My Favourite 5

If you need a break after reading this, here are my top 5 fun games — some free, some paid for and some with in-app purchases — caveat emptor!

  • Monument Valley
  • Alto’s Adventure
  • Mini Metro
  • Aqueducts
  • Lumino City