The State of Gaming App Marketing – 2024 Edition

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.