Hypercasual games (HCG), especially hypercasual mobile games, are emerging as a new major gaming genre and have drawn tremendous attention. Indie developers are suggested to shift focus to HCG to have limitless creativity and an overnight success[1]. HCG have robust power to gain profit and are appealing to mainstream investors.
Voodoo is one of the largest HCG companies established 2019 headquartered in Paris, France. Goldman Sachs invested $200 million to Voodoo May 2018.[2] Tencent acquired minority shares based on valuation of $1.4 billion August 2020.[3] Voodoo has 3.7 billion downloads and 300 million MAU. With 250 employees, Voodoo’s annual revenue reached $440 million in 2019.
Taking “2048” as its masterpiece, Ketchapp established in 2014 headquartered in Paris, France. September 2016, Ketchapp was acquired by Ubisoft with $400 million.
Playco established in 2020 headquartered in Tokyo, Japan. Along with cloud gaming trend, Playco provides the technology center, data center and united publishing channel. September 2020, Sequola Capital and Josh Buckley lead the investment of $100 million based on valuation of $1 billion. Playco has 75 employees. The main investors are Sequoia Capital, Josh Buckley, Sozo Ventures, Raymond Tonsing’s Caffeinated Capital, Keisuke Honda’s KSK Angle Fund, Taizo Song’s Mistlestoe Singapore, Digital Garage, and Will Smith’s Dreamers.
KKR acquired AppLovin’s Lion Studios with $2 billion[4], WeQ acquired Booster Studios[5], and PE Blackstone acquired Vungle with $750 million[6].
HCG are easy to play, fun to play in a fragmented time or a prolonged period, can be played forever without an ending, and have great CPI either short-term or long-term. Pandemic for the year of 2020 boosted the mobile HCG, and the market showed a recording hitting 103% global growth of downloads[7].
What are Hypercasual Games?
HCG are games developed with minimalistic designs on F2P basis. It is particularly friendly to novices without the need to learn much and if they like, games can be played repeatedly. With minimal investments, gaming companies can generate decent revenues from their vast and diverse audients. Common types of HCG are balls, coloring books, piano tile games, io games, idle games, clicker game, and play to win prizes[8].
At early stage of mobile games, because the number of gamers are much less than now, ARPU need to be high enough to validate investments. Most game developers put vast resources into complex contents. Using this method, they are focused on making profits from highly active users by IAP.
While mobile users exceed 2.5 billion today, more and more developers changed their view of gaming: they may create, test and publish within a few weeks or even a few days, and receive remarkable income by ads only.
HCG quickly prevailed the whole gaming ecosystem in several years. These simple and light games make it very easy for users to enjoy, especially users can start or stop the game anytime. HCG are free with few requirements, therefore, HCG have attracted large numbers of novices and gamers of all levels. The downloads of many HCG in Apple and Android store ranked top in 2019 from all major countries and regions.
The Success of HCG Makes “Post AppStore” the more Important Publishing Model
The main approach of game publishing for many years is using ad to get the game into the top rank of App Store. However, since CPI increases and many games competes for ranking, such approach becomes less efficient. On the other hand, cell phone manufacturers, major social media platforms, and big telecom companies lack the efficient approach to convert users in gaming industry despite the huge number of users they already have, therefore, they can only give this opportunity to gaming ad company to users and become the main source of App Store users.
HCG can reach all sorts of users, making MAU can quickly reach 100 million. Such user accumulation speed is unimaginable to gaming companies. In addition, many gamers download other games though HCG with high conversion rate. The success of HCG enable major platforms with large user pool the efficient way of direct conversion into gaming: download of other games through HCG is 39.7 per every 1000 users, 8 times of midcore games and 4 times of casual games. According to Ironsource, HCG brings remarkable number of new users to gaming industry among which 20% are novices who have never played game before but are royal players. HCG provide large scale UA solutions and such UA solution is the exact reason why Ketchapp and Voodoo are invested by Ubisoft and Tencent.
Downloading without going through AppStore is called “Post AppStore,” it is the future direction of gaming industry to reduce the dependence on AppStore. Post AppStore is rapid developing in the recent years. On the other hand, gaming industry is aware of the changes brought by 5G and cloud technology, and the traditional publishing model by AppStore will be greatly impacted. Therefore, the revolution of Post AppStore is important and urgent.
Post AppStore have mostly targeted to Android market. In 2020, the ration of Apple to Android is 13 to 87. Cell phone manufacturers and major social media platforms are the immediate Beneficiaries from such change, so they are the strongest supporters. FB instant game and Samsung instant play are products of this movements.
Using Ad as the Primary Business Model
For HCG, advertising is the most common way to generate money, and some other monetization approaches includes rewarded videos and in-app purchases.[9] It is distinct from any other game genre ever. The reason to use ad as the primary business model is manifold. The prevalence of mobile usage is a powerful driving force for popularity. Within the recent few years, mobile users have reached 2.5 billion, among whom 1/3 of the users are 45 or older and 55% are females. Such demographics have never appeared before in gaming industry.[10] The blooming of mobile games completely changed gaming scenarios for gamers. Game is no longer the focus of attention; however, it becomes an entertainment for fragmented time alongside the routine chores, idle times, bathroom breaks, and other errands. In the meantime, the room for growth is more and more limited with the increased complexity of IAP. Because HCG are highly creative and easy to be understood, downloading IPM from ads are way higher than other game genres. Comparing to midcore games in which every $5 can get IPM of 3, HCG has IPM of 50 from every $0.40.[11] Overall, although HCG are cheap, eCPM is rather competitive, which makes outstanding HCG reach exponential growth with volume increase.
HCG users has high acceptance and conversion rate of ads. HCG users understand ad is part of passing levels and F2P mechanism, therefore, their favorability in experience is much higher than other internet products. HCG’s massive user volume makes big data and AI useful for ad analysis. Such technical advance has never happened in gaming industry before. This is the reason why ads in HCG have quite high target rate. HCG users’ conversion and commercialization still have great potential. Data show that HCG shows 2 ad per minute without negative effect on user retention.[12]
Sustainable Development Potential of HCG
The mechanics to develop a certain hypercasual game is usually a simple one, such as timing mechanic, puzzle mechanic, object fall & rise mechanic, stack mechanic, and growth mechanic. There are still more new mechanics developing to provide more popularity.[13]
HCG with ad being the primary monetization model has great potential for sustainable development. Hypercasual game users watch two times more ads than other gamers, install apps ten times more, and play 4-8 times more of IAP games after watching the ads. HCG gamers, unlike traditional gamers, have little resistance to ads. Among all the ads, 60% sold to super clients, 33% to IAP games, and 7% to brand name games. [14] Such percentage of ad purchase makes HCG sustainable.
HCG revolutionizes the way to acquire new users. HCG acquired almost 100 million new users to gaming industry.[15] Due to the nature of HCG, people who have never played any game get into gaming and started to play HCG, and then they play other genres of games later on. As for in-game inventory, Facebook and Google used to be the only choices for acquire targeted new users in a large scale. HCG now provides a perfectly better choice for other gaming companies, especially publishers.
Gamer demographics triggered the birth of HCG. In addition, low CPI and high conversion rate promote the rapid development of HCG. The current gamer demographics is 3.5 billion mobile users, 2.5 billion mobile gamers, 55% female mobile gamers. HCG have fragmented gaming time more than 85%. It is a dramatic change from the traditional demographics and is the foundation for HCG rapid development. Up to 2020 Q1, HCG has IPM of 31, 3-5 times of SLG or RPG games. Comparing to 2019 Q4, APAC increased 71%, EMEA increased 64%, and US increased 57%, showing the potential of development in this game genre. Benefit from HCG gaming mechanics, ad click-through-rate (CTR) reached 23% and ad install-rate (IR) reached 14%, way higher than ad in other game genres.
HCG users’ rapid growth becomes the unstoppable trend. From December 2019 to March 2020, global HCG users increased 103%. The fastest growing region is China market with 3.5 times growth within 4 months. Similarly, gaming sessions increased 72% globally and 300% in China, 152% in Korea, 137% in Japan.[16]
Unique Opportunities from HCG
HCG dominated download of 2019, representing 78% of the new games, doubled installations from December 2019 to March 2020, a further 72% increase in March.[17] Different from other games, HCG attracts 55% females and have easier and more comfortable user experience.[18]
The uniqueness of HCG are manifolds. HCG are international in nature because there is no specific language or cultural needs for gamers to be able to play games. Based on the monetization strategy, the average CPI is ten times cheaper than other game genres. In addition, HCG are rather small in size, easy to download, with minimum requirements for device memory and internet speed, especially for the developing gaming markets like India. Based on Tenjin published data in 2019[19], the following markets are particular suitable for HCG: Brazil which is the most active hypercasual game market in the world and the total installation is only second to the United States with iOS CPI $0.11 and Android CPI 0.08, Mexico which is the 11th populated country and 71% gamers are mobile gamers because of the limitation in device choices with iOS CPI $0.11 and Android CPI $0.04, Turkey which has much higher ad acceptance than other surrounding countries with iOS CPI $0.10 and Android $0.05, India which will have an increasing gaming population up to 62.8 billion gamers with iOS CPI $0.11 and Android CPI $0.08, and Argentina where 93% of the people would like to accept rewarding video ads with iOS CPI $0.11 and Android CPI $0.03. Moreover, HCG have more opportunities to exit because they may be invested, merged and acquired in both content and operation.
The Future of HCG
The great thing about HCG for developers is the much less requirement for perfection. As long as the games are fun, other aspects such as story, character or graphics are not so important for its success; the workload for developing such games are rather light, mostly can be done within one week with three or less people, which provides fast updates, prompt feedback, and fresh excitement from players.[20]
There are problems for current situation though. HCG have quite short product life cycle. Such short life cycle is demanding to developers. HCG has rather high demands on users. HCG are easy to be copied if they are successful, so it is difficult to be processed to IP or content assets. HCG are largely dependent on ad markets, therefore, be more influenced by economic fluctuation than other game genres.
The pain point in HCG is perfectly shown in Voodoo. As one of the first HCG companies, Voodoo exhibited the charm of HCG but does not have Post AppStore model because it is still relying on buying and acquiring users through AppStore that will compete with other games in AppStore. Voodoo’s CPI is high, and HCG monetization model and AppStore competes with each other causing the failure of big data utilization. Such competition cause it inevitable to bet on successful single games. Voodoo also has the problem of contents. It has inadequate resources of games, not helpful to establish content ecosystem. Because of the limited testing mode and cost, the collaboration with third party studio is restricted. Voodoo has already shown weak development of new ideas and new categories. In the long run, HCG users need deeper and broader content to keep increasing user activity and value. The ceiling of commercialization lays in big data and AI algorithms. However, Voodoo products can do little in AppStore system.
There are three areas needing attention for investors to HCG. Different from other gaming companies, investors need to pay special attention to the professionalism of UA and ad monetization, sensitivity for creativity, and the developing ability to update based on data. As the most profitable genre in gaming industry, HCG will mostly flourish if they can help IAP games establish the curve of purchasing and budgeting strategies, know the ad value in games, and expand the game brand names through high value users or visibility through ads.
The future of HCG is to gather a large number of users to achieve conversion, to long-term cooperate with technology platforms to integrate channels in order to expand the content ecosystem, and to promote commercialization based on big data. In the recent two years when HCG is blooming, we realize that we need to project HCG into the Post AppStore trend and analyze where the core competence lies. Being short and fast without R&D, HCG cause investment risky. Voodoo and Ketchapp are early-stage successful HCG companies, however, they are limited by AppStore system, so their development has already slowed down. Only when HCG target to the integrated value chain of technical service system, help gaming studios to publish and commercialize, improve channels efficiency and provide high quality content, the future will be promising.
References
[1] Kayleigh Partleton, PGC Digital: Why indie devs should go hypercasual. https://www.pocketgamer.biz/news/75008/pgc-digital-why-indie-devs-should-go-hypercasual/
[2] Haydn Taylor. Voodoo secures $200m Goldman Sachs investment. https://www.gamesindustry.biz/articles/2018-05-29-voodoo-games-secures-usd200m-goldman-sachs-investment
[3] Rita Liao. Tencent takes minority stake in French casual games maker Voodoo. https://techcrunch.com/2020/08/17/tencent-takes-minority-stake-in-french-casual-games-maker-voodoo/
[4] Joshua Franklin. KKR agrees to buy stake in AppLovin at $2 billion valuation. https://www.reuters.com/article/us-applovin-m-a-kkr/kkr-agrees-to-buy-stake-in-applovin-at-2-billion-valuation-idUSKBN1K62W5
[5] Ameya Dusane. WeQ Acquires Booster Studios, Launches WeQSTUDIOS. https://www.martechadvisor.com/news/interactive-marketing/weq-acquires-booster-studios-launches-weqstudios/
[6] Allison Schiff. Why Is Vungle Worth $750 Million? https://adexchanger.com/mobile/why-is-vungle-worth-750-million/
[7] Nikita Seleznev. Quick Guide To Hyper-Casual Games: Definition, Types, Mechanics and Monetization. https://www.gamasutra.com/blogs/NikitaSeleznev/20201109/373390/Quick_Guide_To_HyperCasual_Games_Definition_Types_Mechanics_and_Monetization.php
[8] Nikita Seleznev. Quick Guide To Hyper-Casual Games: Definition, Types, Mechanics and Monetization. https://www.gamasutra.com/blogs/NikitaSeleznev/20201109/373390/Quick_Guide_To_HyperCasual_Games_Definition_Types_Mechanics_and_Monetization.php
[9] Nikita Seleznev. Quick Guide To Hyper-Casual Games: Definition, Types, Mechanics and Monetization. https://www.gamasutra.com/blogs/NikitaSeleznev/20201109/373390/Quick_Guide_To_HyperCasual_Games_Definition_Types_Mechanics_and_Monetization.php
[10] Omer Kaplan. The truth about hypercasual games. https://venturebeat.com/2019/03/24/the-truth-about-hypercasual-games/
[11] Omer Kaplan. The truth about hypercasual games. https://venturebeat.com/2019/03/24/the-truth-about-hypercasual-games/
[12] Andrea Knezovic. Market Research on User Acquisition for Hyper-Casual Games. https://medium.com/udonis/market-research-on-user-acquisition-for-hyper-casual-games-854d8eafe78a
[13] Nikita Seleznev. Quick Guide To Hyper-Casual Games: Definition, Types, Mechanics and Monetization. https://www.gamasutra.com/blogs/NikitaSeleznev/20201109/373390/Quick_Guide_To_HyperCasual_Games_Definition_Types_Mechanics_and_Monetization.php
[14] Omer Kaplan. The truth about hypercasual games. https://venturebeat.com/2019/03/24/the-truth-about-hypercasual-games/
[15] Tom Kinniburgh. 100 Million Downloads: How Hypercasual Mobile Games Are Rewriting the Game Design Rulebook. https://mobilefreetoplay.com/path-100-million-downloads-hypercasual-mobile-games-rewriting-game-design-rulebook/
[16] Dean Takahashi. Adjust and Unity: Hypercasual mobile games grew 72% in March. https://venturebeat.com/2020/06/09/adjust-and-unity-hypercasual-mobile-games-grew-72-in-march/
[17] Adjust. Charting the rise of hyper casual gaming. https://www.gamasutra.com/view/news/366908/Charting_the_rise_of_hyper_casual_gaming.php
[18] Is the mobile gaming market ready for hypercasual 2.0? https://www.pocketgamer.biz/asia/comment-and-opinion/72663/mobvista-hypercasual-ready-to-evolve/
[19] Sunny Cha, Tenjin. Top 5 countries for soft-launching hyper-casual games. https://venturebeat.com/2019/01/12/top-5-best-countries-for-soft-launching-hyper-casual-games/
[20] Kayleigh Partleton, PGC Digital: Why indie devs should go hypercasual. https://www.pocketgamer.biz/news/75008/pgc-digital-why-indie-devs-should-go-hypercasual/
Image credit: hypercasualgames.org