The Coming Bloodbath (and How to Survive It)
A great piece in VentureBeat (and quoting data from our friends in SuperData) on the current dilemma for games developers: namely that installs now cost more than the revenue they typically deliver. And that the trend is only going one way. It's an observation - or maybe more accurately a complaint - we hear all the time from our customers in the games space, and is often the reason they are talking to us in the first place.
So what to do in that situation? It's almost certainly true that sooner or later cost of acquisition will find a natural level. I just doubt that that level will be in any way palatable for most game and app developers, and on that basis I can't see that waiting it out is a valid strategy. Better instead to choose not to play the acquisition 'game' - unless you absolutely have to.
Games, just like any other app, need users. But you can always source them through organic channels rather than paid-for sources. The better a product you deliver, and the more exceptional a user experience you deliver, the more likely that is to happen. Word-of-mouth only occurs when your users are so enthused they become evangelists. So it is possible, by focusing on delivering great quality, that you can indirectly manage your acquisition costs.
But what you REALLY need to do is work on the other side of the coin. Deliver the maximum lifetime value you possibly can from your users. Too often in the games space we remain wedded to the idea that the 'game' is a monolithic entity, a 'work of art' that either delivers revenue or does not. The idea that we have to WORK to make that happen is an anathema. But that's exactly what you have to do! Developers have to understand that a large (or small) number of people playing a free game are nothing more than an audience for marketing campaigns that drive them to first purchase - and repeated spend.
What form those campaigns take is up to you. But successful developers will deliver personalized experiences and smart, targeted campaigns. They will treat their players as individuals, build long-term relationships as a result, and monetize without damaging retention. Think about it. Are the most successful games those that spend a huge amount on money on a mass of acquisition, or that build over time and retain and convert their user base? We all know the answer to that...
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