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App Annie Mobile Games Study: Short-Term Hype is No Guarantee for Long-Term Returns
“No one remembers second place” is an old adage that rings particularly true for the mobile gaming market. The attention-grabbing headlines go to Rovio’s “Angry Birds” or Halfbrick’s “Fruit Ninja” but, for mobile game developers and publishers, it can be demotivating to never see your smart, engaging game “in lights”.
In order to shed some light on what really “wins” in mobile gaming, App Annie conducted a study of the U.S. Apple iPhone App Store using market estimates taken from their premium product App Annie Intelligence. The study compared gaming apps in terms of popularity and revenue rankings in the short-term versus the long-term1. Our analysis found that while many iPhone games fly under the radar, never appearing in the Top 25 Grossing rankings of iPhone Games, those that hold a consistent position over a longer time actually outperform the quickly rising stars in terms of revenue. Contrary to popular wisdom, ranking dominance and media buzz are not the only keys to game success. The winning strategy lies in creating solid games that people love to play over and over again and that stay popular over a long period of time, instead of going out in a flash.
Defining “long-term” and “short-term” success
For total U.S. revenue generated within 12 months after launching, “long-term” games outperformed “short-term” games by more than 32 percent on average. In respect to the individual apps that made the most money, the best performing “long-term” game made 83 percent more than the best “short-term” game.
Long-term games in the Apple iPhone App Store are classified as games that spent 12 months or more in the Top 26-125 Grossing ranking by revenue. Likewise, a short-term game denotes one that spent three months or less in the Top 25 Grossing ranking. For comparison, an equal amount of the 14 highest grossing apps were analyzed under long and short-term. The purpose of the study was to understand if a game that never made it into the Top 25 but was consistently in the second tier of rankings had an equal or better chance of outperforming those that made it into the Top 25 for a short time. This mutually exclusive comparison removes the ability for a game to be counted twice in each category. The sampling for our analysis included 14 apps in each category. For long-term, games included “Cartoon Wars 2 Heroes”, “The Sims 3,” “Cut the Rope “and “Gun Bros.” For short-term, games included “Global War,” “Need for Speed Hot Pursuit,” “Spider-Man Total Mayhem” and “Stick Stunt Biker.”
Hype isn’t everything
For many outside the gaming industry, it’s easy to think making a hit game is really just a lot of luck. While a hit game does take an element of luck, more can be attributed to game mechanics and an acute understanding of what app consumers want. Playing games is a psychological activity akin to gambling. Although players don’t know it, playing a game for one more round is like pulling the handle on a slot machine. The more you play, the better your chances of winning, and for mobile game developers and publishers looking to make real money, the goal is to keep players playing and spending. The mobile game app market is becoming quickly saturated, and the competition for user attention is heating up. A recent report from mobiThinking found that 1 in 4 mobile apps downloaded are used once and then deleted. This is a painful reality for many developers that invest time and money to create an app. That’s why it’s important to make apps that have longevity – to keep users coming back rather than play for a few weeks only to throw it away like an unloved toy. Such short-term, hyped-up games are like fireworks that explode with downloads, gain all the attention but then fizzle and fade away into thin air.
Freemium games do better than paid games
Price points also play a significant role in the long and short-term success of mobile games. It is important to note that Top Grossing rankings include both paid and free games. For the top ranking long-term and short-term games, 8 of the 14 were free. Long-term games had an average selling price of $3.99 and short-term games had an average of $4.08. Within long-term games, the most expensive game was priced at an average of $9.99 versus $6.99 for short-term. Since more than half of the games do not require payment to download, the no-barrier-to-play strategy gives freemium games a higher chance of revenue success, which is instead generated by in-app purchases.
Action games are good for a quick buck
According to the study, the type of game also played a determining factor in the success the app experiences. For instance, the long-term category was dominated by strategy games. However, action games are the best bet to turn a quick buck as it dominates those classified as short-term games. These findings are not surprising since strategy games take longer to complete whereas action games can be played on and off. Interestingly across both long and short-term, simulation games account for the second largest share.
With games that hold a constant position in the second tier ranking outperforming the quickly rising stars of the gaming app world in terms of average revenue, developers and publishers should craft a strategy to align this with immediate and long-term business goals. These insights don’t necessarily mean that all developers should be in it for the long haul, as making an application involves a great deal of investment. A less established shop may prioritize making many quick games that will be short-lived but drive buzz. Others, perhaps more established with more capital and time to invest, will emphasize building a game around a community that lends itself to longevity. In any case, ranking in the Top 25 need not be the final judgment in evaluating the success of your next mobile gaming app.
1All data is based on iPhone Game Grossing Estimates from App Annie Intelligence.
Click here to access the PDF version of this report.
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Note: I wrote this post, originally for App Annie’s blog