The rise of hyper-casual gaming: Mobile Spree Berlin 2019
Hyper-casual games have seen unprecedented growth over the past year. Some estimate that the market for hyper-casual games is between $2 billion to $2.5 billion. Evaluations like these create curiosity, and since everyone wants to figure hyper-casual out, at Spree we featured three mobile gaming experts to put us on the right track.
Adjust’s Paul Singh was joined by Vincent Hart de Keating, Co-Founder and Managing Director of Homa Games, Jonathan Winters, Head of User Acquisition at Miniclip and Thiago Monteiro, Director of Growth at Peak, to discuss hyper-casual gaming and the implications of this new format. Below we have the key talking points from the panel, as well as the full video and transcript of the discussion.
More than a label: Hyper-casual games appeal to an audience that actively does not want to be thought of as “gamers.” “Most people don't like to be referred to as gamers,” says Thiago, “and hyper-casual allows people to delve into this awesome world of games without being labeled as a gamer.” These snackable, bitesize pieces of content allow players to idle away a few minutes while waiting for a coffee, and have wide appeal because they’re so casual.
Go, go, go!: For developers, hyper-casual games’ attraction lies in the ability to make them quickly, see what sticks, then scale marketing once they’ve found a hit. “They definitely go with this kind of mass production, fast production mentality,” says Jonathan. “If you're one of the top players, you're talking about multiple titles at the same time.” Developers can iterate on each other, and produce mass-marketed titles with broad appeal but a short play time.
Changing the tune: Marketers for hyper-casual games have flipped the narrative. “Hyper-casuals are reliant on very low CPIs. Of course, they have the knowledge of creative work but as soon as an audience gets too expensive, they need to step out,'' says Thiago. In fact, hyper-casuals now need to break even by the seventh day — “that's a completely different approach to a core title which may allow half a year of a break-even time frame,'' says Jonathan.
The full transcript
Paul: I’m Paul from Adjust, and I’m a Product Research Manager. To kick things off, how many of you are familiar with Flappy Bird? I expected more. So Flappy Bird was this phenomenon that happened years ago that really -- a lot of people say that hyper-casual is exploded onto the gaming scene — Flappy bird was the fuse for that explosion. And just to get a better idea of this, to introduce the topic more, I'm going to pass it over to my panelists. So you guys, why don't you just introduce yourself a little bit, tell us what you do and in a quick sentence or two, what is hyper-casual to you?
Vincent: Hi. So I'm Vincent Hart de Keating. I'm the Co-Founder and Managing Director of Homa Games, a young mobile game publisher, who just celebrated our first anniversary. The way I see hyper-casual games, it's like ‘snack games’ as we call them, games that we can play like for a short amount of time. Two, a process based on testing, like test 100 prototypes, keep one, test 100 versions of this game, keep the best. And then there are 100 creatives every week, analyze the data and you will have a good hyper-casual game.
Jonathan: My name is Jonathan. I'm the Head of UA at Miniclip, a European game developer and publishing company for multiple multiplayer games. We have quite a lot of sport-related games. Our most popular game is 8-ball pool. Hyper-casual games for me it's definitely also the kind of characteristics of a snack kind of game — a quick and easy a way into a gaming, like this instant gameplay with a lot of interesting models around how the user journey is developed and the monetization.
Thiago: Hi, I'm Thiago Monteiro, Director of Growth at Peak. We are a brain training app, a bit far away from the hyper-casual but if you're looking in detail of product is actually built by small games that could be considered hyper-casual overall. What hyper-casual is for me is exactly my peers have said, very snackable sized games, short-term engagement with a smaller amount of fun. We don't ask a lot of the user right away. You just plug and play. You download it, you start playing right away.
Paul: Okay. Awesome. Thanks for that guys. And I think you touched upon this a little bit as well too. Hyper-casual is insanely popular, but what do you think this genre has had and the way it appeals to the new mobile gaming audience in general?
Vincent: So for me, hyper-casual are not addressed to gamers. We had mid-core games, casual games as well. Sometimes addressed to gamers. hyper-casual is for everybody. So it's targeting a wider audience than any other type of game. So that's why it appeals to more people and not just gamers. We're also pushing games that can appeal to the widest audience possible.
Jonathan: Yeah, exactly that. And also in its design, the product offering is definitely the quick entertainment. You can play a hyper-casual game in a very short session time. So usually, if you open one of these are hyper-casual games, you get into the game, play quite quickly and the genres that they make use of, a dexterity kind of gains or like, is this one tap gameplay mechanics is very nice and easy to get into. You can literally play a session while you wait for your coffee at a coffee shop, right. And it's a very quick doses of entertainment wherever you go or when you're on the train. And that really appeals to, wider audiences, especially to an audience that has not been engaging with mobile games as much, in regards to these more complex games that offer a lot of in-app purchases or other mechanics and meta gameplay that might be a bit overwhelming for a certain group of people. So that instant one-tap gameplay is easier to access for those.
Thiago: I think I can add maybe three things to it. So it goes in accordance with the idea that we live in a world where attention is diminishing because just the sheer amount of content out there, so small amounts of content and there's always going to be a quite consumable by the users so hyper-casual is really targeting that. Exactly. You're waiting for coffee, you have the time or you're waiting for a sandwich in a shop, you can also have the time, et cetera.
The second one is, and this is actually something that we did research on our own users on at Peak. Most people don't like to be referred to as gamers. And hyper-casual allows people to delve in this awesome world of games without being labeled as a gamer. Because after all, they are spending like five minutes on it. So they're not really involved into their experience so it's less geeky, let's call it.
And the third thing is also the democratization, right? So it's normally ads based revenue so you pay with your eyeballs. There's no a lot of monetary investments for the user on that, just time investment. So they feel they can play on par. People from my country, from Brazil, people can actually access the content easily and feel they can compete with Europeans or Americans because it's all about the time investment is not about how much money you can invest into the game.
Paul: Okay. That's really interesting that you brought that up because earlier today, one of the topics that came up was localization, how do you think hyper-casual games deal with localization if at all?
Thiago: I was actually having a conversation during lunch, completely unrelated to games was — he founded a company that sells beauty products in Saudi Arabia, hopefully somewhere in the audience today, and we're talking about the needs of localizing to very specific dialects on the region to be able to sell to people. So I feel then, I worked for company based in London. Most people do or in Berlin or in Paris, etc. But we feel like, no, we do it in English, it's fine. We go to India and we do it in English. It's fine. They'll understand. So we go to Middle East English, it's fine again.
Vincent: I kind of disagree here. I think like there's a lot to do on the localization, particularly on the creative side. We have seen like crazy results for specific markets. You can have the same creatives in the U.K. and U.S., it's fine, but if you go to Asia, like in Korea, in China particularly, it's completely different. It's very important to bring not only localized text of course, but also local elements. You can add famous influencer on top of the video you use that will speak also in Chinese and explain the game. That makes a huge difference. On the creative side. I think it's very important.
Jonathan: And maybe a segue to the creative side, I have to say when it comes to the rise of hyper-casual and how that kind of vertical within the gaming sector has influenced other gaming companies, the more established gaming companies. Like for example, Miniclip we are not part of the hyper-casual realm. We have sort of our own genres, our own type of games that we offer. But when it comes to creatives I think hyper-casuals have really found a way how to scale up the creative production to a whole new level. And looking at the numbers only so that the quality of ads- I don't know, I'm sure you guys have seen in your Instagram feed or Story or Facebook feed, you've seen some ads that show here boss versus employee or members of staff. These kind of meme style creators. Let's face it, it's something that the hyper-casuals have kind of started, invented by pursuing that goal of getting the lowest CPI possible just because they were so relying on the highest conversion rates. So the whole business model started with the fact that they need to go to these markets, they need to find these creative concepts that allow them to get the highest IPM and that's kind of the key here. IPM, Installs Per Thousand Impressions. You want as many as possible to lower you CPI and only if you get the lowest CPI you can roll out to more and more countries and push the game across your network.
Vincent: To go further on that I think last year, ironSource released a couple of numbers regarding the IPM and they're for casual, the average IPM was around 4 meaning 4 in store for 1,000 impressions versus 40 for hyper-casuals. So that's why we can buy, theoretically buy with the CPI that's 10 times lower and still have the same eCPM for the waterfalls we bid.
Thiago: Yeah. But that's not only just because the localization itself and adapting to the culture, but also to the channel where they introduce say, on hyper-casual normally the teams tend to do a really great work of- they understand that the fast-paced culture, so they really try to make it as simple as possible, snappy and fun. If you go to Snapchat and you see a hyper-casual ad, you notice it's completely different from a casual game. So they definitely adapt to that idea.
Jonathan: And I guess it's so easy to understand. If you see an ad for a hyper-casual game, you quickly understand what the game is about because it uses just a simple mechanic and that's a whole product offering of those kinds of games. Therefore, it's a completely different story if you could talk about like strategy games, 4X games that are super complex and have a lot of depth to deliver the product offering in an ad, like in a 10 second Snapchat ad for example, is very, very difficult. While for a hyper-casual game or for a game that uses this kind of simplified mechanic it’s way easier to tell the user, look, this is what you do in this game. Go on, have fun, play it. It's a completely different ballpark.
Paul: Just to switch gears, looking through my app store on my phone, hyper-casual is everywhere. And some would say that the market might even be crowded. What do you think hyper-casual publishers or new hyper-casual publishers could do to stand out?
Vincent: Yeah. And that's a question that we ask ourselves every day, believe me. No. I think with a couple of pillars we can really stand out, better technologies for user acquisition and money institution. So we strongly believe that with strong technologies we can automatize most of the processes and be extremely precise at scale. That's what we do. Then one thing to stand out that we do is that we try to be extremely fair with the developers. We want to bring better deals on the table for them and make sure that in case of success, they really get their share. Most of all, very transparent. They need to know what happens with their game. That's something you can do to stand out.
Jonathan: What I observe as a UA manager across the store and the hyper-casual space is that there's a one big floor with hyper-casual games being the snap games. They're easy to reproduce, to replicate. And what you will find is that especially with the top hyper-casual developers, you see games being copied or replicated in different forms. Maybe have a different theme and have some slight differences here and there. But from what I can observe, they definitely go with this kind of mass production, fast production mentality. So a more traditional mobile games company would think of a game and have a game design document and then may be released this game in a year's time or so depending on what size and what complexity you want to offer. While hyper-casual game, it's really quick, instant. It's all about fast delivery. So I'm producing this game, it can be literally just a week of producing that game, get out there, test it on a test market, quickly assess the conversion rates. Okay. Looks good. Go ahead. Worldwide push. Let's go let’s go let’s go. You do that on a scale so you're not talking about, which is one hyper-casual game, if you're one of the top players, you're talking about multiple titles at the same time.
Paul: Yeah, so they're all about just pushing as much quantity as they can and seeing what sticks then?
Jonathan: Yeah. Especially when it comes to the network effect. Right? So if you play some of the hyper-casual games, what they do is they actually try- because of the short lifetime of the player lifetime, what they do is they want to obviously get the customers into one game but then cross-promote them to other games in their evolving and growing portfolio. So the hyper-casual business heavily relies on this kind of network effect within their own games portfolio.
Thiago: But I think this benefits also casual games. You guys also buy on our apps and we opened the market kind of, we get people who are non-gamers and who is like nice creatives, we get them to play a game. And then for you, it's like, picking it. For Peak we have one app specifically that really brings a lot of traffic for us. And we just recently released a new game based on one of our games called Quixo Logic, really fun. That app is buy inventory only. So we're actually doing a cycle that we send out traffic from Quixo to them and then we buy traffic from them.
Paul: The interesting question here is really, and I don't have an actual answer to that. But the question is these hyper-casual games being the snack-sized games, are they really that gateway for casual or even mid-core companies to access players? We were saying in the beginning, okay, hyper-casual games appeals to a much broader audience, so they getting into these mobile gaming space. Okay. So now if they played a hyper-casual game. Maybe if they got a good taste of what a mobile game is like, maybe we can reach out to them and they will go to a more complex game which is more in the casual slash mid-core realm. I don't know if that conversion really happens or whether hyper-casual gamers stick to hyper-casuals. So they're really just jumping from one hyper-casual game to the next to the next et cetera because they love that snack behavior. So it's very difficult to tell. I don't have this research yet.
Vincent: At the user level. I don't know. We should ask people from App Annie probably. But at the industry level, we should see it a bit like the TV show Friends. I guess everybody knows it. At the time it was really like snack, bad quality, just quantity and they tested everything. They even tested the jokes with the audience. So they test, and if a joke works they keep it for the show. I saw the description of the characters before the show began, three lines for Monica. That's it, really snack, really fast, efficient.
Jonathan: I wouldn't compare with Friends as I hit dangerous territory. But I see what you mean, there’s definitely something there. And let's face it, this whole mobile gaming space has been dominated by a lot of different companies, especially with Candy Crush being still the, pretty much one of the top games, even games like Subway Surfers, which is a very casual game is still getting a lot of downloads and attention. What we shouldn't forget as well is that loyalty to games is also very different over time. I feel like that five years ago or beyond five years ago, the end user on your smartphone, you are still pretty much exploring apps. I'm not just talking mobile games but exploring apps in general. And I feel like with all the technology that allows you to migrate to your new device by keeping all your data and all your apps, you're kind of sticking to your own portfolio, you know exactly- if you get a new phone tomorrow, you know exactly which apps you want and you need to break through that noise as UA manager somehow and introduce new apps into that portfolio. And I feel like in that case, hyper-casuals have found a way to grab that attention by aiming for that top spot in the download charts, making sure they are still getting that kind of explorer attention, the one who goes on the app store and downloads the game. And that brings me to one more point with the app store because it is definitely something that you observe on the app store. If you go to the store charts and you look at the gaming charts, the majority of the top 10 games are hyper-casuals, and this is because they need to be there to gain that organic attention but the stores have changed so much over the years that a lot of the mid-core or casual game companies or especially hardcore companies, they kind of stepped back and said, you know I'm not actually so keen on the top five spot anymore. I understand that for me it's more about the ROI. For me, it's about getting a nice user growth that is profitable at the same time.
Paul: Because hyper-casual is dominating the charts, unless you are an established IP like Minecraft or Pokemon Go, as a mid-core developer who does not have this big IP, how do you sort of not get buried by hyper-casual? How do you try to get back into the race?
Thiago: Hyper-casuals are very reliant on very low CPIs. Of course, they have the knowledge of creative work, but as soon as an audience gets too expensive, they need to step out. As simple as that. That's normally core and mid-core games you'll see a higher lifetime value. So it allows them to muscle up. They found the right pockets of audiences that's the important part. So they're able to spend more money to acquire those precisely. So you shouldn't expect to once again hit the top charts but you should expect to be very aggressive on the acquisition on the right users.
Paul: So a bit more evergreen?
Paul: We've had hyper-casual and we've spoken a bit about mid-core. Services like Apple Arcade Plus and Google Stadia are poised to bring Triple A gaming to smart devices. They want to do it this year. This evening Stadia is going to unveil their pricing structure even. If this service takes off, if it becomes successful, what sort of impact can we expect on the mobile market?
Jonathan: Well, let's see. Where's the crystal ball? The problem is it's hard to tell at this point. So cloud gaming is not a new thing first of all. Cloud gaming has been around for many years and in general cloud gaming has had always the technical limitations, the latency issue, et cetera. And so if you play a Triple A title on your small device, you will still have also interface issues like from the product design. It's a tricky one and we definitely observed it with a lot of interest. We want to see whether 5G will be able to solve a lot of this latency issues. But we are still cautious and really the only example where I can see how PC console gaming has had a really good stronghold also on mobile is actually Fortnite or Pub G. Fortnite and Pub G are two great examples who managed to really bridge home console gaming/PC gaming also to smart devices but in a very unique way and with all the hype around the Battle Royale. There's very specific to those games. I don't know if Stadia can solve that. And Apple Arcade again is more about bringing forward the single player experiences that is more in the arts, the Games as art which is nice. But we don't know if it's going to be as popular as we all think could be.
Vincent: Yeah, we’ll have to see if this ecosystem will have an impact only when the developer starts using it. But then let's not forget that the gaming companies have also very flexible and what we can see today as the potential threat might actually be an opportunity tomorrow. Look like Miniclip, they started on browsers and now they're really strong on mobile. Why not like the current gaming companies, mobile gaming companies could adapt to also benefit from this.
Thiago: So I think just as Jonathan mentioned, if they're able to solve the issues and provide a good quality, I'll use my crystal ball to say the market is finding a large- just like Netflix, increase the amount of series and films that we watch overall. Spotify increases the amount of music people listen to. I feel if someone appears that actually can deliver on the promises, then the market's going to enlarge to everyone. So at best it's a good thing. That's my point of view.
Paul: What's the main difference you think between launching a hyper-casual game and launching a more mid core to core title from inception to getting it into charts.
Vincent: Six months? It's one of the differences. As you mentioned, time is a very important factor, I think it's really fast to launch hyper-casual, usually from the initial idea to the main release we have a month to a month-and-a-half, with many iterations in between.
Jonathan: Yeah, it's also interesting when you look at user acquisition channels, right? So acquisition channels in general become more intelligent over time. So we had this session about Google Ads earlier today- we know about our Facebook's capabilities of targeting users towards specific in-app events, on booking, purchases, or even tutorial completed. And these channels kind of grew with this trend, especially coming from the core titles, casual to hardcore titles, right? But what the hyper-casuals did, in fact, they went the other way around. They said, no, no, no. Actually, I just know what is my advertising LTV and I know what kind of CPI I need to hit in order to break even. And I had spoken to a hyper-casual developer and he taught me that they have to reach a CPI so that they break even on day 7 after the install. So they're literally talking about a seven-day window to break even on a user-level basis. So that's completely different approach than a core title which may allow, half a year, let's say of a break-even time timeframe. So in that sense, the way you deal with channels is completely different. And it kind of goes back to what we said earlier about the installs per 1,000 impressions. With 40 installs per 1,000 impressions, you are definitely up there in the waterfall. You get the exposure, you get the low CPI and you’re maybe therefore able to break even fairly quickly with your advertising served in your game.
Thiago: Yeah, I can't compare really with hyper-casual to be fair but we recently released, I mentioned Quixo, it's more on the casual area. And we also released Rise, which is a sleep product. So it has guided meditations, completely different worlds. And the tactics on the UA side of course change completely. Where on Quixo we had to do a lot of CPIs stress tests and see if we can scale up and if the CPI and maintains and we have very low CPIs. For Rise, we are talking about CPIs above five dollars sometimes, and that's fine. Because at the end of the day the lifetime value is 12 months. So it's a completely different approach.
Paul: Excellent. Thanks guys. We're almost out of time. If we're back here one year from today, what do you think is going to be the, or not what you think, what do you expect, what do you hope the big trending gaming will be that we talk about one year from today?
Vincent: Gaming, it's hard to say. I think China has already started to explode but I think in a year it will be of use for everyone. But I think for, like user acquisition, I know we mentioned it before, but today we still have like two very strong players like Facebook and Google and I think with the attempts of other social media platform to go more into advertising, I think they would have tried to challenge this duopoly and this would be a big topic.
Jonathan: I think that in the gaming space, we will see more variations of how we play on our devices. One thing to note is for example, Snapchat games. So that is now a new thing, we need only to see how well this will be doing over the long term, but it allows more platforms new ways for people to actually enjoy games. So maybe in a year's time we have a more diverse landscape of mobile gaming.
Thiago: I think that one year from now we'll all be complaining that CPIs are too high. I've been thinking about this for some time. With 5G coming out, we're going to have larger products starting to bid on the inventory that before was kind of locked out for them - so they only a bid on Wifi. Also you're going to see that core games and hardcore games are going to start adding mixed revenue models into it or even different apps for them. Peak now has ads, so we're going to increase the inventory, but the increasing inventory is going to be smaller or slower than the increase in competition on the audiences. So I feel that we all be going complain that, oh, where are my five cents installs nowadays?
Jonathan: And the core games will still be around. I think that it's not like that. The high rise of hyper-casuals means the fall of other genres. I still believe that there are enough plays out there still enjoying the core games, hardcore games, multiple genres.
Vincent: If you look at the top charts, we should look at the yearly numbers. In there we see that the core games are there.