Games spent $29 billion on UA in 2023
Casual games see 13% rise in NOI and ad spend
CPI jumped 48% on Android as iOS saw 17% drop
Redefining monetization: Mobile gaming’s hybrid future?
Don’t be fooled by the modest growth in mobile gaming in the last couple of years as some key trends were reshaping the industry landscape: the strengthening of hybrid monetization models, and a rise in Casual games.
On the hybridization front, we saw Mid-Core games – traditionally reliant on in-app purchases – beginning to embrace advertising more openly. In parallel from the other side of the spectrum, Hypercasual games, once the bastion of ad-based revenue, started flirting with in-app purchases.
Overall, the adoption of hybrid models surged by 20% across the industry, in what we’re calling a “two-sided trend”. This dual approach has redrawn the boundaries between Hypercasuals and Mid-Cores, creating a more nuanced and adaptable market. This isn’t just a niche trend; it’s a meaningful shift affecting the entire mobile gaming ecosystem.
Meanwhile, Casual games climbed across most categories, contrasted against the mixed performance of Mid-Core and Hypercasual games. This steady increase, both in installs and ad spend, highlights the ongoing appeal and success of Casual games in that evolving market.
As we navigate this evolving landscape, we encounter buzzwords like “Casualization” and “Hybridization.” But do these terms describe gameplay mechanics or monetization strategies? Our analysis focuses primarily on the latter. By understanding these dynamics, we can better prepare for the future of mobile gaming.
* All results are based on fully anonymous and aggregated data. To ensure statistical validity, we follow strict volume thresholds and methodologies and only present data when these conditions are met. When normalized data is presented, the share of each month out of the total for the entire time frame is shown to create a trend.
A two-sided revenue dance
The mobile gaming landscape continued its march toward hybrid revenue models in 2024. The adoption of hybrid models by Hypercasual games jumped from 19% to 26% (+37%) in just nine months. Mid-Core games weren’t far behind, with RPGs increasing from 41% to 51% (+24%), Strategy games from 59% to 66% (+11%), and Shooting games from 66% to 73% (+10%). Overall, the industry’s embrace of this dual approach surged from 36% to 43%. RPGs saw an IAA hike and an IAP dip, while Android Hypercasuals saw IAP decline as IAA rose.
So, what’s driving this change? For Hypercasuals, Apple’s App Tracking Transparency (ATT) has made it tough to turn a profit in this slim margin genre due to reduced data availability. In the privacy era, it’s harder to identify and activate high-value users, or “whales,” which has contributed to a general decline in user acquisition efficiency.
Mid-Cores are also moving towards hybrid models for several reasons. In-app purchases (IAP) growth has stagnated over the past two and a half years, prompting developers to diversify revenue sources. Plus, improved ad formats and practices have made ads less intrusive and more acceptable to players, no longer posing a significant hurdle to retention.
Share of apps monetizing by revenue model
Casual games lead the pack
Let’s set the scene: Non-organic installs (NOI) for Casual games are climbing across most categories. Meanwhile, Hypercasualand Mid-Core NOI is declining, with the former seeing a 5% YoY dip on Android in H1 and a 15% drop on iOS. RPG, Strategy, and Shooting games also faced notable year-over-year declines on both platforms.
Ad spend trends reinforce this. Investment in casual games rose, with cross-platform gains in categories like Match (13% on Android), Action (18% on iOS), Simulation (25% on Android), and Tabletop (29% on iOS). iOS-specific categories like Sports and Puzzle games also saw substantial increases. Conversely, Hypercasual and Mid-Core games saw decreased ad spend, especially on iOS, where Hypercasuals saw a 34% YoY drop, and Mid-Core genres like RPGs plunged 35%.
The lagging performance of Hypercasual games compared with their Casual counterparts suggests a shift toward more engaging and complex casual gaming experiences. This evolving landscape is driven by the rise of a potential new category of hybrid casual games, which blend elements from both Casual and Mid-Core genres. These games strike a “middle ground,” appealing to broader audiences by combining the simplicity of Casual games with the depth of Mid-Core games. Experts suggest this trend points to a fragmentation in game categorization, driven by diverse gameplay and monetization strategies.
Non-organic install and UA ad spend change by genre (H1 2024 vs. H1 2023)
Consumer spend drops as ad revenue climbs
Consumer spending on in-app purchases (IAP) dropped while in-app advertising (IAA) rose. Overall, IAA increased by 4% in Q2-2024 compared with Q2-2023. Android saw a 12% uptick, while iOS suffered a 10% dip. Year-over-year, there was a 3% total increase, driven by a 7% rise on Android offset by a 4% drop on iOS.
Android’s IAA growth was led by Hypercasual, Puzzle and Simulation games. Hypercasual games saw a 5% rise in Q2-2024 (YoY 10%), while iOS dropped by 21% (YoY -13%). However, IAA decreased in some genres, with Match games declining on both Android (-19%) and iOS (-15%) in Q2-2024.
In contrast, IAP revenues broadly declined, with a 15% overall decrease on Android and a sharper 35% drop on iOS. This decline is led by RPG (Android -19%, iOS -29%), Simulation (Android -57%, iOS -19%) and Casino on iOS (-38%). Despite this, some genres saw boosts in IAP revenue: Match (Android +9%, iOS +25%), Puzzle games on Android (+80%), and Shooting games on iOS (+67%).
Finally, hybrid models have become 30% more prevalent on iOS in terms of the IAA/IAP/hybrid split. This trend was also evident in the Casino genre on iOS, with a 30% increase in the hybrid app mix despite declines in both IAA and IAP.
Revenue trend by genre (normalized)
First week crucial for in-game purchases
The first week tends to be make-or-break for in-game purchases —underscoring once again the importance of early engagement. Conversion will always be a challenge, however, as most mobile gamers are not spenders. Only a select few open their digital wallets, typically less than 5% of users. Genres such as RPG, where in-app purchases are more important, however, tend to boast a higher percentage of paying users.
That’s why timing is key. As mentioned, there’s a lot of movement in the first week. On iOS, the spending spree starts fast.The first purchase drops around the time Day 2 rolls around, accounting for a quarter of all buyers. By Day 3, another 17% join the party. Each day bringing new spenders into the fold—but at a decreasing rate. As the days tick by, purchasing continues to slow. The third purchase usually happens around Day 5, a last hurrah before the initial rush fades.
And for some genres, the drop-off is even more dramatic. Take Casino games, for instance. By Day 2, nearly a third (29%) of their buyers have already placed their bets, making their first purchase.
Share of buyers and time to purchase by genre *
Chasing whales gets tougher amid iOS challenge
Attracting whales — particularly on iOS — has become even more challenging recently. In mobile gaming, “whales” – the 2-5% of big spenders who generate a significant portion of revenue – are crucial, often contributing more than 50% of a game’s income.
But in the last quarter, revenue from whales declined when compared with 2023. This trend is particularly noticeable on iOS, where the share of revenue from whales in North America dropped from 34% in Q1 2023 to 27% in Q1 2024, a 12% decrease. On the flip side, Android has seen stability or even a slight increase, with whale revenue in North America rising from 34% to 35% over the same period.
Regionally, whale behavior varies significantly—although there is typically no difference between developed and developing markets. In Africa, Southeast Asia, and India, the biggest spenders – who make up 2% to 10% of total users – are responsible for a larger share of revenue compared with other regions—up to 38% in Southeast Asia. These markets are particularly lucrative, making them attractive for whale investment. In contrast, Eastern Europe sees only 29% of revenue coming from whales. North America sits in the middle, with whales contributing to 31% of the region’s revenue.
IAP revenue split by user group
iOS installs dip while Android picture brightens
The user growth picture in the first half of 2024 was mixed. Android saw modest growth with a 3% YoY increase in H1 in both total installs and NOI, while iOS faced declines, down 9% overall and 2% in NOI.
iOS’s drop was especially noticeable in certain genres. Hypercasual games took a significant hit, with both overall installs and NOI down by 15%. Interestingly, this decline aligns with Android, where Hypercasual NOI is also down by 5% and overall installs by 9%. Mid-Core genres on iOS also struggled. RPGs were down 36% in installs and 25% in NOI, while Strategy games showed a 15% drop in installs and a steep 48% decrease in NOI.
On the flip side, Android is seeing some bright spots. Casino games surged with overall installs up by 64% and NOI up by 2%. Simulation games also performed well, with NOI up by 22% and installs up by 9%. Shooting games are on the rise too, with a 33% increase in NOI and 27% more installs.
What’s interesting is that the trends we’ve seen in Q1 often picked up speed in Q2. The patterns we noticed early in the year have become even more pronounced as time goes on, warranting close observation to see how they evolve or break—in either direction.
Install trends by genre (normalized)
iOS Bingo games & Sudoku are growing
Looking more closely into the gaming subgenres, as defined by Data.ai’s Game IQ, reveal an added layer of nuance in NOI trends across iOS and Android platforms.
Among the various Hypercasual subgenres on iOS, Racing, Sports and Merge games saw the most impressive year-over-year growth in NOI, capturing user interest and driving significant installs. But Io and Simulation games struggled, indicating a shift in player preferences. Casino Games and Bingo in the Casino category enjoyed robust NOI growth, but RPG and Strategy games presented a mixed picture, with no single subgenre emerging as a clear leader. The Tabletop category offers a clearer narrative though, as Coloring games saw a notable surge in NOI, attracting users with their engaging and creative gameplay.
On the Android front, Puzzle games were the clear winners in the Hypercasual category, driving substantial NOI growth. But Merge, Io and Music games struggled to spark user interest. Within the Puzzle genre, Sudoku stood out as a star performer, enjoying a significant increase in installs. In the RPG category, Action RPGs crushed the competition, leading in NOI, while Strategy games faced a decline. Simulation games also did well, with Driving games taking the pole position in terms of NOI growth.
Year-over-year % change in non-organic installs by sub-genre *
iOS NOI falls in Asia as Android thrives globally
Broadly speaking, it’s been a good year for global markets. The overall picture showed stable NOI with continued growth in the largest markets across both platforms. While iOS encountered challenges in a few regions, Android demonstrated robust performance across all major economies.
The US, by far the world’s largest iOS market, showed modest YoY growth at 1%. European markets performed even better, with the UK and Germany posting increases of 9% and 14% respectively. However, some Asian markets experienced headwinds with South Korea suffering a substantial 39% decrease in installs, while Australia and Japan faced declines of 15% and 11%, respectively. On a brighter note, Mexico, a closely monitored market, achieved a 21% increase.
Android, in contrast, displayed positive trends across all major markets. The Philippines led with a 26% increase, followed by Japan at 16% and Indonesia at 13%. India remained steady with a 2% rise. The UK and USA also showed growth, increasing by 18% and 5% respectively. Notably, none of the main Android markets exhibited noteworthy declines.
Year-over-year % change in non-organic installs by country *
Match games lead ad spend as iOS cost per install dips
Mobile gaming attracted a total of $29 billion in app install ad spend in 2023. The US continued to dominate gaming ad spend—by a large margin. The world’s largest mobile market pulled in $6.6 billion on iOS and $5.5 billion on Android in 2023, outpacing the next 10 markets combined. Japan followed in Asia with $1.8 billion on iOS and $1.2 billion on Android, with South Korea coming in third.
The largest European markets—the UK, Germany and France—brought up the rear. When we look at genres, the highest volume of installs were driven by Match games (which require players to match similar elements) and Mid-Core categories such as Strategy and RPGs.
One key trend in 2023 was the shift in media costs between global Android and iOS platforms. Media costs on iOS fell, while Android’s costs inflated. This trend was especially notable in categories like Hypercasual, Simulation, Match and Puzzle.
This drop in iOS media costs can be traced back to late 2022, a period marked by a price spike due to inefficient ad targeting brought on by Apple’s App Tracking Transparency (ATT) system, which led to a significant drop in user-level data. With fewer potential users (or “targets”) available, supply and demand pushed media prices higher. But the recent decrease shows that large media networks have adapted to these conditions and become more efficient in their targeting.
App install ad spend in 2023 (USD) *
Global cost per install trend by genre (USD)
Android cost per install by genre and country in July 2024 (USD) *
Context key to unlocking winning creative combos
So, what types of creatives perform the best? It turns out that user-generated content (UGC) is the secret sauce for retention across various ad networks, demand-side platforms (DSP) and social channels. This is especially true for Mid-Core, Casual and Hyper-Casual game categories, with the exception of Casino games. The magic of UGC lies in the trust it builds. Users are more likely to install and engage with an app when they see content created by real people they can relate to.
But while UGC is the star, it still needs the right supporting cast to shine. In Hyper-Casual games, both real and animated scenes significantly boost retention on social channels and ad networks, though gameplay footage doesn’t have the same impact. The winning combo here is UGC paired with either real or animated scenes.
For Mid-Core games, the best results come from a mix of UGC and gameplay footage, along with real and animated scenes. This blend is effective across social channels and ad networks.
Casual games, however, require a bit more finesse. On ad networks, combining UGC, gameplay and real scenes leads to the highest retention. For DSPs, animated scenes steal the show. And on social channels, the best performance comes from a trio of UGC, gameplay, and animated scenes.
Day 30 retention rate by creative combination *
- What major differences do you see between iOS and Android for your game? How do you explain them, and how are you adjusting to those differences?
-
Over the years we’ve come to expect big differences between iOS and Android. K-factor, to take one key example, has consistently been lower on Android than on iOS for reasons that I suspect are as much to do with attribution as they are related to store page differences.
One big change over the past year or so for us is an increased reliance on Android as the ‘test bed’ for our games during production. While we do expect to see improved metrics on iOS, we find that it’s much easier to reliably acquire users and improve a game in a systematic way on Android. - Hybrid monetization is adopted by an increasing number of apps. How would you explain that phenomenon?
-
From a ‘why are people making this decision’ perspective, I suppose it has a lot to do with potential for incremental revenue. The idea that ads can be slotted in without overly detrimenting IAP users is an appealing prospect.
I also think that improved segmentation capability within the industry has made it easier for publishers to provide different experiences to users who do and don’t pay for IAP – this way you’re essentially able to cater to varying audiences with a lot less work than creating a whole new game/app.
- What are your sentiments about the relative rise of IAA?
-
It’s clear the IAA market has evolved quite a bit in the past year or two. New hyper-casual games aren’t viable anymore, with lower CPMs in the market and network algorithms that prefer safer bets. The IAA games I see launching now are much more fleshed out and generally better experiences for users; providing a lot more ads within a session and presumably giving the networks more sure information to work with.
Having said all of this, I do think it’s important to note that while hybrid-casual is the hot trend right now, it’s notable that the number of successful launches in this area over the past year are actually quite limited. There are maybe ~20 very successful hybrid games out there right now that have scaled over the past two years. - Is the quality of ads really improving? Are they still considered to be a major issue for retention of users?
- I wouldn’t say the quality of ads is improving. Speaking as someone who runs UA too, we’re all using the same methods and tactics to drive up conversion and interest from users – meanwhile, ad networks still employ tactics designed to increase CTRs etc. It only takes watching a few live mobile game ads to see that this is still an issue. I’d go so far as to say that these practices have degraded user interest in ad-driven mobile games over the past years, at least if you’re still running old-school interstitial focused games.
- Which kind of creative work is the best for you?
- Hard to deny that UGC ads have been consistent winners over the past year. You only need to watch a few well-executed creatives to understand why they’re so effective at drawing the attention of potential users – super dynamic, and the old advertising classic of ‘humans like seeing other humans’ holds true.
- What that surprised you in the industry this year?
- The lack of big new games! As part of our publishing and concepting process we regularly conduct analysis on genre conditions. It’s a little sad how often the ‘top games’ in any one genre are 90% launched before 2023. This doesn’t seem sustainable to me.
- What major differences do you see between iOS and Android in your marketing?
-
Navigating the iOS and Android landscapes requires balancing marketing flexibility, privacy concerns, and financial considerations. For companies like ours, the Apple iOS landscape has become rigorous to navigate, especially with the Apple Tracking Transparency’s privacy framework which complicates things further.
However, the Android platform offers a silver lining with more options for scaling our marketing spend. This includes avenues like rewarded incentives, loyalty networks, and preload partnerships. - How has signal loss affected attracting whales? How can this be overcome?
-
The impact of signal loss on the mobile gaming industry has made it more competitive than ever. The devaluation of marketers’ bread-and-butter signals (user-level understanding) has radically impacted in-app purchase (IAP) strategies, forcing marketers to utilize proxy metrics.
It’s no longer a case of cherry-picking users, but more like purchasing a box of fruits and hoping it contains the specific ones you favor. One must innovate to navigate this increasingly competitive landscape. - How do you explain the rise of hybrid monetization?
-
The advent of hybrid monetization is reflective of the current shift in market dynamics. Pressured by a decrease in consumer spending on video games and an overall contraction in the ad market, game developers are seeking alternative sources of revenue.
To keep the wheels turning, businesses traditionally focusing on in-app ads (IAAs) are exploring in-app purchases (IAPs). This shift is indicative of both adaptability and a dire need for income diversification in turbulent times. - What are your sentiments about the rise of IAA?
- It’s a bitter-sweet feeling for me with the surge in in-app advertising. While it provides game developers with more monetization opportunities, the increase in ad placements can potentially harm the user experience. An over-saturation of ads might detrimentally affect overall user health and engagement. The challenge for developers is to strike the right balance between driving revenue and ensuring a seamless, engaging user experience.
- How are you using AI in your marketing?
- Artificial Intelligence has greatly helped our product marketing efforts, particularly in the ASO text generation for localization, to the point that we now rarely use traditional localization agencies.
- Which kind of creative works best nowadays?
- The efficacy of marketing creatives has a striking influence on the user’s journey from viewer to player. In online card games, we’ve found that gameplay videos still strike the best balance between an attractive marketing creative, and one that conveys the most accurate information on a game so those who interact with the ad have the right intent.
- What surprised you in the industry this year?
- Despite the saturation, I’m surprised by the steady increase in competitors, within the card games space. This further underlines the fiercely competitive nature of the industry. The influx of competition serves as a crucial reminder to continually evolve and differentiate our offerings to maintain a competitive edge.
- Which trends do you think will dominate going forward this year and into 2025?
-
I see a paradigm shift in the digital marketing landscape. The user acquisition market has become so saturated and competitive that conventional avenues may no longer suffice.
In order to thrive, fresh growth strategies such as collaborations with influencers, direct branding partnerships, and even deals with Original Equipment Manufacturers (OEMs) could become vital. These alternatives could offer valuable opportunities to bypass the traditional growth tactics.
- Hybrid monetization is adopted by an increasing number of apps. How would you explain that phenomenon?
-
Game companies are always going to try new monetization methods to find the best balance of monetization and player sentiment. Where monetization strategies can strive to give players value and a “reason for being,” they have a chance of succeeding in the long run.
Subscriptions started the trend, but IAA and specifically rewarded videos, have become popular because players can choose to engage or not and get value from that decision. - Is the quality of ads really improving? Are they still considered to be a major issue for retention of users?
-
Quality is a relative term. On one hand, we’ve never had more “fake” ads, or ads that have nothing to do with the actual game. In many cases, companies are creating cringe, click-bait ads that push boundaries that many companies wouldn’t touch.
On the other hand, the quality of playable ads, and their success show that there are great opportunities to entice players. Sadly, many of these ads are also “fake”, but if games can find ways to combine the success of these playables inside the game, we should hope to see better retention. Almost half of the top mid-core games now include mini-games used in UA inside the game in some manner. - Which kind of creative work is the best for you?
- The answer is always, “whatever the players are responding to”. I’ve seen success across almost every UA creative idea. I’ve seen success with partnering with fans/creators to create bespoke creative. “Choice ads” that present players with 2 horrible options really engage players in the ad and then the game’s story. Starting with eye-catching graphics and not your company logo (which no one cares about).
- What surprised you in the industry this year?
- The rise of companies that are able to leverage AI to help refine and create new creative. This is an area of marketing that AI can help dramatically, and new players are popping up to help every day.
The shifts in monetization strategies towards the use of IAA and IAP suggest this path should be considered due to its success.
With CPI down on iOS, now’s a good time to adjust or even increase your media spend. Lower media costs, driven by better ad targeting efficiency, present an opportunity to maximize reach and ROI.
Android has posted positive results across several key performance indicators. With installs and NOI rising across major markets, it's important to maintain or boost your ad spend on Android to capitalize on this growth.
While UGC can boost retention, understanding and using the right mix of creative elements is essential for maximizing ad effectiveness.
The share of whale spenders varies by region and can range from 2% to 10% of total users. Define what percentage constitutes a whale for your strategy and adjust your budget accordingly to target these high-value users effectively.