At Gamefest 2018, Craig Chapple from PocketGamer.biz moderated a panel with guest speakers Sally Lu from JamCity, Alexandre Tan from Gameloft, Jeff Gurian from Kongregate, and Brian Truman from GSN Games. Together, they discussed various topics such as user acquisition,..
What are Hyper-Casual Games & How do you Monetize them?
Since the App store surfaced 10 years ago, we have seen mid-core, casual, and (debatably) hard-core games take off in the mobile space, yet today a fourth category is dominating the app charts – hyper-casual. Over the past year, hyper-casual games have seen unprecedented growth, and with Goldman Sachs’ recent 200M investment in hyper-casual powerhouse Voodoo , their momentum is only getting stronger.
So what exactly makes these games so successful? And where do we see hyper-casual going? Here’s our complete guide on the fast ascendance of hyper-casual games, and a look at how best to monetize them.
What are Hyper-Casual Games?
As the name suggests, hyper-casual games are lightweight games with simple mechanics that offer instant gameplay. Literally “tap to play.”
Because of their fundamental ‘simplicity,’ hyper-casual games are not only instantly playable but infinitely replayable, making them highly addictive and engaging. Think – how many hours have you spent playing Sky Ball this week? (be honest).
The combination of simple mechanics with minimalistic UI provides a very accessible and incredibly engaging user experience, so no tutorial is necessary. Even more so than casual games, players can instantly jump into gameplay and get hooked on their goal.
The Ascendance of Hyper-Casual Games: where did they come from?
Hyper-casual games aren’t exactly “new”, especially in the sense that they are, in some ways, a revival of 70s arcade games. However, as we can see from the charts pictured below, they only recently grew into the sensation they are today, grabbing 10 out of the top 15 spots in the top downloaded charts, versus a year ago when they held a ‘mere’ 3 spots on the top charts.
The ascendance of hyper-casual games can be credited to a number of things, from the way these games are able to fill an emerging gap in the gaming space, to advancements in ad monetization.
“As casual games implement deeper, mid-core features they become more engaging, but also more complicated. This, in turn, opens up a segment for hyper-casual games to dominate – games that are easy to start and fun to play,” said Deconstructor of Fun founder and Rovio’s Director of Product Management, Mishka Katkoff in his interview with ironSource LevelUp. “Hyper-casual games were pioneered back with Ketchapp years ago, but this year has seen a resurgence with companies like Voodoo, Gram, BitMango, and Cheetah all seeing massive growth within the last year.”
IAP Revenue vs. Scale Across Game Genres
Although hyper-casual games are dominating the download charts, games like Playgendary’s Flip the Gun still can’t compete with Clash of Clans for highest grossing games – and nor do they need to. While these mid core and casual games make the bulk of their revenue from IAPs, hyper-casual games mainly monetize through ads, a business model which is sustainable for them due to the huge scale they see in terms of downloads. “Companies like Voodoo (100 million installs in 2017) are a great example of this. While the in-app revenue of their games is relatively low, the scale is great, and through video ads and cross-promotional work, the companies are able to operate a massive volume of business,” said Katkoff.
With such great scale, developers creating multiple hyper-casual titles don’t necessarily need to rely on revenue from IAPs, and for this reason some hyper-casual games don’t even bother to include them.
How to Monetize Hyper-Casual Games
As we’ve pointed out, due to their relatively unsophisticated in-app economies, hyper-casual games rely on ads as their primary form of monetization, so picking the correct ad format is hyper important. Beyond evaluating specific ad units, developers should consider factors like session length and number of sessions per day when designing their ad implementation.
Both elements present opportunities to serve more impressions to users, which in turn drives more revenue. Some top hyper-casual titles with great monetization strategies include Playgendary’s Flip the Gun, Serkan Özyılmaz’s Rise Up, and Voodoo’s Helix Jump.
When it comes to monetizing users, in many ways rewarded video is the most rewarding ad format (see what we did there?). In addition to generating more revenue for developers, incorporating rewarded video also increases retention and session length (unlike interstitial and banner ads, which can in some cases have the opposite effect).
While it may be more challenging to incorporate rewarded video in hyper-casual games lacking strong virtual economies, it’s well worth your while to think about creative ways to incorporate the ad format. Developers looking to incorporate more rewarded video can try adding different layers to their games, or providing various valuable rewards such as gems, extra time, extra lives, etc. in order to drive more engagement. A 40% plus engagement rate, and 4 impressions per user per day are good goals to aim for.
[For a more in-depth look at which metrics are important for your in-app ad monetization strategy, you can check out our presentation on that very topic on Slideshare.]
Banners & Interstitials
Even when developers have optimized their rewarded video strategy, they may still see that more than half of their users don’t engage with the ad unit (and even fewer make purchases in the virtual store). This makes interstitials and banner ads a hyper-casual game developers best friend, helping them successfully monetize all their users.
For interstitials there are two main factors to look at. The first is the number of ads shown per second, and the second is the type of interstitial – static, video, playable. It’s also critical to decide if the ad will have a skip button, and if so after how many seconds will it appear? While taking a more aggressive approach – (more impressions per session, including playable and video ads, a ‘skip ad’ button that pops up only after 5 seconds) – will generate higher ARPDAU , it may also simultaneously hurt retention and session length and alienate your users – so approach with caution.
Ultimately it’s all about finding the ‘sweet spot’ that balances user experience and monetization to maximize LTV and ARPU. The best way to find the setup that generates the highest LTV is by A/B testing. For a benchmark, we recommend aiming for 3 impressions per session.
For developers looking to implement an even more sophisticated monetization strategy, it’s also worthwhile looking at building tailored ad implementations for different segments. For example, for users that engage with rewarded video and make purchases in the store, taking a softer – i.e. less aggressive – approach to ads shown makes more sense, since these are high-engagement, likely also high-retention users. For users that generate zero revenue through IAPs or rewarded ads, taking a more aggressive approach can work in order to yield more revenue.
User Level Data
While in hyper-casual games, the vast majority of revenue comes from ads, getting a look at user-level data on ad revenue is just as important as getting it for IAP-focused games. The more important a revenue stream ad monetization becomes, the more important this information will be for both user acquisition and overall monetization activities. In a way, ads are actually very similar to IAPs, in the sense that just as you have ‘whales’ who spend a lot in-app, you can also have ‘ad whales’ – i.e. users who generate significant revenue from engaging heavily with ads. As such, it’s important for app developers to adjust their implementation and strategies based on user-level data on ad engagement and revenue. For example, ironSource’s user ad revenue tool enables developers to see which user segments are not engaging with rewarded video at all, and can therefore be shown more interstitial and banner ads.
Will hyper-casual games mature?
As Katkoff points out, “hyper casual and ad monetization are proving to go hand in hand” – changing the landscape of the monetization game. With so many hyper-casual titles popping up every week, developers may have to begin implementing deeper features in order to stand out from their competition, and it will be interesting to see how they do so within the category’s natural parameters. Hyper-Casual games have opened up a realm of new possibilities in the market and it will be exciting to track the category’s progress over the next year.