Digital goods measurement firm SuperData has the latest news on mobile game marketing costs, and the outlook isn’t pretty for this holiday. “Brace yourself for the mobile user acquisition bloodbath this holiday season,” says Joost van Dreunen, Ph.D., Superdata’s CEO. “Marketing spend is largely outpacing consumer spend. And for 99 percent of mobile game companies, that’s a problem.”
SuperData’s tracking forecasts the total mobile game market in the US to exceed $3 billion this year, up from $2.4 billion in 2012. Last year acquisition costs rose 22 percent, and this year while those costs tracked user spending for the first half of the year since the summer they’ve diverged. SuperData predicts that the CPI (cost per install) will get worse over the next two months. “This holiday season, expect $7 to $8 CPIs,” said van Dreunen.
The CPI increase makes it very difficult to turn a profit with the average revenue expected from users for a typical game. “Let’s say that you’ve just acquired a cohort of 100 brand new users at an average CPI of $2.25 USD,” van Dreunen posted as an example. “The average conversion rate (from a non-spending to a spending user) in October was 4.68 percent. Each of these players spends $21.45 (average revenue per paying user for mobile in the US). That gives you (4.68x$21.45 =) $100.39 in monthly earnings. With $225 in cost, you’ll need to make sure you keep those users engaged for at least two months before you start making a profit. And two months is an eon in mobile game time.”
Read more of SuperData’s analysis here.