Covid-19’s impact on player behaviour: Lessons for gaming companies

ironSource’s Amir Shaked takes a data-driven approach to help gaming companies adjust their monetization and marketing efforts amidst a global pandemic

We’re living in a new reality that’s unprecedented and unpredictable in how it will affect the global market in both the short and the long term, and that’s true when it comes to the impact on the game industry too. Having said that, the fact that we operate in such a data-saturated space means we’re able to trace some trends in gamer behaviour, enabling us to make educated assumptions about how to manage the sustainability of a game during these uncertain times.

Methodology: We looked at ironSource’s data for the most notably affected countries, including China, Italy, South Korea and the USA. To calculate the change or potential impact of the Covid-19 on each country, we took an average of the weekday KPI before the country went into lock down and compared it with the weekday average of the KPI after the lock down.

When looking at the data, it’s important to differentiate between weekends and weekdays, which would normally see fluctuations (with weekends showing higher KPIs across the board). While both weekends and weekdays rose in our data, for the purpose of this analysis when we refer to data increases we’re talking about weekday increases. Also, it’s important to note that the outbreak of the virus in China coincided with the Chinese New Year, when we would expect a spike in all of the KPIs anyway, so we analyzed the potential impact once the holiday season was over.

Data trend #1: More people are playing games

Unsurprisingly, as people are forced to spend more time indoors and look for ways to pass the time, they are increasingly turning to games. According to Verizon, gaming saw a 75% week-over-week increase in data usage over its networks this March. In ironSource’s data, we saw an increase in DAU across the board, with a 13% increase in the US, a 23% increase in South Korea, 15% increase in Italy and 60% increase in China.

As explained above, the Chinese New Year most likely led to the initial big jump in DAU, but we saw that DAU remained high after the New Year period instead of decreasing as expected.

Data trend #2: more people are engaging with ads in games

We also saw engagement rate — the ratio of how many unique daily active users are engaging with rewarded video — rise in all the countries we looked at. A rise in ER demonstrates that a higher proportion of the people playing games are also engaging with ads during play. This is likely because as people are playing more, they are also more engaged with a given game and therefore more likely to engage with rewarded video ads. In the US it rose by 6%, while in China it rose 15%, in South Korea 6% and 7% in Italy.

Data trend #3: people are not engaging with more ads in games

In contrast to the rise in engagement rate, usage rate — or the number of ads engaged users watch daily — did not go up. This implies that while more people overall are engaging with ads, they aren’t necessarily watching more ads per person.

Data trend #4: people are installing more new games

With more people playing games and engaging with in-game ads (which are predominantly ads for other games), it follows that installs of new games would also increase, which is borne out by the data. This is likely also because people are more actively searching for new games to play during lockdown. We see a huge increase of 25% in IPM (installs per thousand impressions) in the US, an increase of 7% in China, and 11% in Italy.

Data trend #5: eCPM decreased slightly

While game advertisers marketing their games saw very high IPMs, publishers and developers experienced a slight dip in revenue, with eCPMs dropping 7% in the US. This is due to the scaled back spend of brand advertisers, who are starting to reduce marketing budgets in anticipation of a recession.

Analysis & conclusions

In a recession, marketing budgets are often the first thing to get cut, and outside of the game vertical specifically, that’s proving true. Beyond our own data, Singular reports a 38% drop in ad spend by the travel sector, according to eMarketer, whose estimations are based on China’s ad market who was the first to be hit, global ad spending will be up from 2019 but down on the initial predictions for 2020 before the crisis began, and according to Cowen & Co, Facebook and Google will see a $4 billion drop in ad revenue in 2020.

With traditional brand advertisers reducing mobile marketing spend on the one hand, and players looking for new games to fill the time on the other, user acquisition teams at game companies have an opportunity to test and adapt their user acquisition strategy to connect with more high quality users.

Having said this, it’s important to look at both sides of the coin — both monetization and marketing — to ensure that your UA campaigns are ROI positive. If monetization behaviour changes even slightly, this can have a profound impact on your LTV curve and thus on the efficiency and return of your marketing spend. Our analysis shows that changes in ARPU during this time can vary widely across both different genres and games, with some spikes and some drops. Advertisers should keep a careful eye on the data to ensure they’re adjusting for any changes. For an in-depth explanation of this, check out Mobile Dev Memo’s post on managing marketing spend in a recession.

For monetization and product teams it’s arguably even more important to invest time in optimizing the in-game experience to the maximum, and upping the ante with new content releases and investment in live ops. This approach should extend to the ad experience too, with a carefully planned A/B testing strategy applied to everything from the ad unit types and placement to the waterfall setup.

We still don’t know what the long-term impact COVID-19 will have on the global economy and on society itself, but in the short-term at least, this data can provide a guide for managing our new reality.