Why Indie Games are Getting Pushed Out and How to Stay Alive
The early days of mobile gaming were great for independent developers; any decent game with a little bit of luck could strike fortune for the small team of passionate developers and artists. However, as the mobile ecosystem continues to mature and billion dollar players set their sights on mobile, indies have found it increasingly difficult to make their games stand out, let alone build profitable businesses. Most who have released apps know distribution is, by far, the biggest problem they’ll face. Long past are the days in which the average studio can hope to organically rise in the charts, let alone get a coveted featured spot in the app store. As a small team of game developers ourselves, we feel it’s critical to understand the trends in mobile gaming and learn how to survive.Â
Trends to Follow
Rising user acquisition costs: Developers with smaller budgets are finding it harder to get the most bang for their buck. According to Fiksu, as of July 2012, the cost to acquire a loyal user—someone who opens an app at least three times—rose 28% in the past year to $1.54.
There are three primary drivers for this increase. First, Japanese gaming giants DeNA and GREE are aggressively building their platform in the US. DeNA reported spending almost $70M on marketing in Q1 and GREE said it is willing to pay $3.50/install through its Chartboost campaign. The increase in demand without the corresponding increase in inventory drives cost up.
Secondly, marketing spend is cyclical. Millions of users get new hardware during the holiday season, making it a prime time for developers to plan their launch strategy. Average user acquisition in Dec 2011 hit $1.81, but dropped down to $1.14 in January. Furthermore, users hold out for new hardware releases, which skew prices further.
Lastly, pressure from huge players like Zynga, Glu Mobile, and EA drives up PPI bids. Rumors have circulated that some of these developers spend upwards of $50K a week on running distribution campaigns for their games at $2-3 an install.
Higher standards from games: Gone are the days where a weekend project with stock art can get 1M downloads. As competition increases and users grow accustomed to generic games, creativity and polish in both art and gameplay are essential. Generally speaking, these increase production cost and time, requiring cash-poor studios to fundraise—an almost impossible task for unproven teams.
Although 2D and casual games are still dominant, a growing fraction of mobile gamers are looking for console or PC level quality. The entrance of Chair Entertainment's Infinity Blade showcased the powerful impact of the Unreal Engine on iOS and instantly raised the bar for mobile titles. Larger studios like Gameloft and Glu, which recently committed to using Unreal, are investing heavily in mid-core and 3D games as mid-core gamers move to mobile. These games tend to require a larger team, development cycle, and budget, which naturally favor the big guys.
App stores discourage discovery:  Although the finer details of how rankings work are kept private, the general rule of thumb is the higher your game’s download rate, the higher its rank in the charts. However, rank drives visibility, so it tends to be a circular system that favors established players. Plus, with iOS 6’s App Store’s new layout, discovery is even more elusive.
According to a May Distimo report, a game developer needs 25,300 daily downloads to make it in the top 25 of the App Store’s free chart, and 22,800 for paid. Even assuming a $.50 PPI, a studio would need over $10K/day for weeks to make it in the top charts, a budget few indies have. Although third party search engines like Chomp do a better job promoting smaller studios, they simply do not drive the traffic.
 As a result of these trends, large gaming companies look for alternative means of marketing. Cross-promotion inventory trading within a publisher’s portfolio is becoming the norm as many large studios strive to become stand-alone platforms. 6waves, Papaya Mobile, and Zynga, for example, funnel users from old and dying games to new ones, thus bypassing the user acquisition costs. These free installs also help the new games rise in the charts and thus lead to more organic growth.
Large publishers have also been buying small studios to quickly reap the advantages of network effects. M&As in mobile gaming have spiked from 7.5% of all gaming deals in 2011 to nearly 30% in the first half of 2012. Zynga and the Japanese giants have been buying up US studios as they force their way into mobile. Although buying your way into an industry at a loss to ensure future market share is a common business strategy, it means that smaller companies will struggle to compete, stay independent, or base their entire strategy on being acquired.
How to Stay Alive
Although making a great game is the most impactful way to improve odds of success, in today’s ecosystem, it’s simply a prerequisite. Good games with backing tend to do better than great games without. For the average developer, it becomes prudent to do everything else that optimizes both survival and success.
Don’t go alone; leverage a publisher’s platform for cross-promotion: If you don’t already have an existing user base to leverage nor a sizable marketing budget, pair up with other publishers or ad platforms. 6waves’ new WaveX exchange allows developers to cross promote games for free. You’d make no money from driving traffic, but you spend no money either. TinyCo’s Tiny Partners Program encourages developers to promote TinyCo’s games, but offer 50-75% of the LTV of any user they convert. Tapjoy, the 800lb gorilla, provides its own marketplace and cross-platform campaigns, reaching 20,000 apps.
Understand your marketing goals: With a limited marketing budget, indies should optimize user acquisition based on each game’s needs. For acquiring loyal users, highly targeted marketing might be more economical than just any PPI campaign. In August of this year, Facebook opened beta to its new mobile ads platform for apps. Publishers could place bids to promote their apps in a user’s mobile feed, with links to the Play Store or App Store. Beta tester Ad Parlor reported consistent click-through rates of 1-2%, and TinyCo claimed 50% higher conversions than other mobile ads. As more statistics come out, Facebook’s mobile ad platform is worth keeping an eye on.
If your goal is to get your game in the top 25 of its respective category, incentivized downloads might be a better way to acquire users for cheap. Although many studios reported only 33-50% of installs actually leading to engaged users, at just $.30 to $.70 each, it is a cheap way to rise in a game category and acquire free organic installs afterwards.
For location-based games, physical marketing through local events and stores is an underutilized but possibly effective marketing channel. Some events and shops have given out exclusive codes for downloadable content in mobile games as incentive.
Review websites are a huge opportunity for visibility. As far as secondary marketing channels go, sites like TouchArcade and IGN are priceless in their ability to drive early-adopting users who are passionate about games.
Internationalize your game: Papaya Mobile can help your app reach millions of users in China and other parts of Asia. Japanese gamers tend to play for longer sessions and have higher ARPU than their American counterparts. There’s no reason to limit your market to just English-speaking countries, and something as simple as translating your market description to another language might help SEO in those countries. To fully localize your game, you’d need more than just language translation, but with the majority of smartphone users outside of the US, you could more than double your addressable user base.Â
New tech can add efficiency and help differentiate: Take advantage of the abundance of  tools, engines, and frameworks for cross-platform development, multiplayer support, asset management (Spriter, Unity Plugins), social integration (Game Center, OpenFeint), 3D rendering, etc. Anything that can cut development time and costs or offer new experiences to users may be worth it.
Measure everything:Â Game development is half science. Use tools to monitor clicks, crashes, session duration, social sharing, etc. Find bottlenecks where users drop off. Is a level too hard? Is the tutorial too long? Simple tweaks can double or triple loyal user conversion, monetization, and virality. Tons of analytic tools exist to help make this a lot easier than it sounds, just do a quick google search.Â
This is, by no means, a thorough description nor complete list of everything you can do to make your game succeed. There is no one size fits all strategy—every team and every game is different. It simply is a reminder that “do whatever it takes” marketing can work as long as you’re cognizant of macro trends when designing your game.Â