Oct 6, 2023 6 min read

EGD News #191 — The Future Of Mobile Games

Things were very different in 2012. I was working at Supercell back then and saw the rise of mobile free-to-play as a first-hand experience. First, the launch of Hay Day and those staggering KPIs. Then, a few months later, the launch of Clash of Clans. Mindblowing success in a matter of weeks. No one had ever seen anything like that.

In the following year, many others joined the rat race, including King with Candy Crush, and I left Supercell to co-found Next Games, which we made successful by bringing IP-based games to mobile, including The Walking Dead: No Man’s Land.

It felt like a time when no one could do anything wrong as long as they joined the race then and there.

Paul Murphy, a VC at Lightspeed Venture Partners and previously CEO of Dots, a mobile games company, was on my podcast, discussing what has happened since those early days of mobile and what we are facing now.

"What you have right now is a really large, mature ecosystem for mobile gaming. You don’t have a Rising Tide moment that you had when Supercell and King were growing. So even though they happen to be great companies, the reality is there was true scarcity in the market. My last company, Dots, benefited from this. We were at the tail end of that Rising Tide. If we tried to start Dots today… there’s no chance. We never would have broken through in the way that we broke through when we launched in 2013. When you have situations where it’s not a Rising Tide and not a situation where everyone wins, you have to be much more thoughtful about the bets you are placing."

As Paul states, the early 2010s was a unique time: people were buying cell phones left and right, creating a Rising Tide where all the boats were lifted. Among those was my company, Next Games. Anybody who showed up and had some skills could do quite well.

Now, if you think about what’s going on in the 2020s, we have full-on effects of Apple’s privacy policy changes in place. Besides, it’s a highly crowded market; the incumbents have billions of dollars at their exposure to make more effective Live Ops and user acquisition, which sucks everything out of the market with extreme sophistication.

The platform doesn’t have the kick it used to, and Apple is more obsessed with pushing Apple Arcade. Mobile hasn’t seen any big hit games come out in several years. Also, big mergers and acquisitions of mobile gaming companies have been at an all-time low.

If we think about Scopely getting acquired this year by Savvy Games Group, that’s not a new wave of consolidation coming back. It’s a sovereign wealth fund buying a big games company to push their agenda, just like they did with the acquisition of a 10% stake in Nintendo.

That’s one big red ocean. And don’t get me started on the Unity tax. It’s the same as the Apple ATT squeeze: big corporations clawing for profits in a late-stage market.

Investing in mobile games in 2023

As an investor, I’m still seeing mobile pitches every week. This is my mental reaction when I see a mobile game pitch.

What I would want to see is a differentiated product and differentiated go-to-market. In this piece, I’ll try to explain what I mean by this.

1. Leverage AI

Let’s start with AI. I’m a big believer in AI changing game making. That’s already happening right now. You got graphics, story, localization QA, all of that.

Does AI give startups leverage over bigger companies? You can use AI to get leverage over what incumbents are doing. Of course, they’re also applying AI, but the startup has the advantage of moving quicker compared to a bigger company, where they want in-house systems that span across teams. They need different kinds of communications with the teams, how they use AI, etc.

AI also enables the startup to have more people who wear several hats. You can have a programmer who is also doing art outsourcing. The producer leverages AI to do player support, QA, and localization.

Does a startup still hire the classic team of programmers, artists, and designers? I’m hoping to see startups prove that they can cut costs and do more with less. Maybe games can now be done with 50% less of the people?

Does utilizing sophisticated AI give you an advantage in raising investor money? Most likely, yes. But you still need to prove that you can create a differentiated product.

2. Becoming a pro on your user

"Don’t become good at pitching. Become a pro on your users." — Paul Graham (founder of Y Combinator)

The most interesting go-to-market strategy is to become an expert not on startups and pitching but on your customers. In a way, speaking to and knowing your users well goes against the tradition. Usually, game developers start making the game before they know if there is an audience for the game.

The gist: Find your audience first, then make a game for them.

Here’s an example: Scopely, who has a hit game called Monopoly Go, had a team of people working on consumer insights to make this game.

Scopely had the Monopoly IP and wanted to make a mobile game but didn’t know the Monopoly audience. Previously, the company had made games like Walking Dead: Road to Survival, WWE: Champions, Looney Tunes: World of Mayhem, and others. The games could be a hit or miss, depending on the overlap of the game they made and the audience of the IP. Walking Dead was a massive IP in the mid-2010s, and whatever game you made could get a decent overlap, i.e., RPG fans. But it wasn’t always the case; i.e., with WWE and Looney Tunes, it was a miss. Either the audience wasn’t interested in a mid-core experience, or there might not have been an audience.

Scopely got smart. Before working on Monopoly Go, they went out of their way to talk to people who love Monopoly. At the same time, they’d pick a specific game mechanic they’d want to evaluate with actual customers. So they interviewed, playtested, and determined whether the fit was there.

Scopely did their homework on the actual users. Why should startups ever skip this phase? What’s the hurry in pursuing a game without first developing the user insights that could give you considerable leverage?

3. Mobile apps first.

I believe the next mobile hits will be those first imagined as mobile apps, providing utility and then becoming games.

Instead of making games, these “app developers” will make apps for different lifestyles. In France, a company called Luni has focused on making apps for different audiences, like fitness apps.

Recently, they spun off Omada, a fantasy sports betting app, to become its own startup. They are now developing the app to include many aspects that make it a game, including social gameplay.

The approach works: you examine different kinds of activities and lifestyle-related apps and then figure out how you apply gaming elements to those lifestyle apps. If you go back and look at how this has been applied previously, you had companies like CrowdStar who created Covet Fashion and Design Home. All those were imagined through different kinds of lifestyle analysis.

4. Become a coroner

The coroner is the person who examines a body after someone dies. I think that game founders should become these coroners of dead games. Supercell has famously killed dozens of games over the years. They only have five games, which launched to a global audience.

I think the best way to become a better game maker is to understand why some games died. Your answer can’t be that the KPIs weren’t good enough. Find out what didn’t work in the game mechanics and other unfavorable factors. You will learn more from the failure cases than from the success cases. I see many people imitating games like Class Royale to look at the chest system, the metagame, different kinds of card collecting, gameplay mechanics, etc. But then they don’t look at the games that failed, even though they had many similar mechanics.

Come up with your own rules for what can go wrong and not repeat mistakes that other people made.

Here’s a high-level example of creating rules. Many may argue that these rules aren’t accurate, but it’s better than not making any assumptions. Note! You will get better over time.

The mid-core audience will not play a game that is too similar to the market leader, and they would rather invest time in one game (why all the Clash of Clans and Clash Royale clones failed)
The casual audience doesn’t mind that they play several Match3 games, and small iterations and novel gameplay features can make a game stand out for them (Candy Crush, Gardenscapes, Royal Match, all doing well at the same time)

Final words

I’ve previously written about succeeding on mobile. Here are a few pieces that are still worth reading today:

(Photo by Mediamodifier)