🎮 The Hybridcasual Gamble
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We dive into decline of hypercasual games and hybridcasual, an attempt by mobile game developers to adapt to the new normal in the industry.
On the go? Listen to one of our podcasts from this week, we’ve got:
🎧 TWiG #225 - GDC Recap / Unreal Engine for Fortnite / Counterstrike 2
🎧Former Disney and NBCU Execituve Talk the Death of the Games-as-App
Before going deeper, let us define the terms:
Hypercasual games are the bubble gum of the gaming industry. Super tasty. Everyone loves them. They come in all flavors. You chew them for a bit and spit them out until you pop the next one in.
These games are published by publishers like Voodoo and Supersonic Game, who make them internally as well as publish 3rd party games.
Hypercasual is a business model. Take an addicting super simple game with no real progression. Stuff it up with ads of other hypercasual games. Optimize marketability. Reach tens of millions of downloads and outrageous amounts of ad views and voila, you’ve made it!
Sounds easy, right? You just have to make and find addictive games and be a master in performance marketing.
Hybridcasual is also a business model. It’s again taking a super simple addictive core game but actually pairing it with a simplified progression mechanic and some amount of live operations.
As a result, you have a game that players play for months, instead of days. And the progression mechanic result in in-app purchases. The hybridcasual part comes from extremely high marketability and the fact that half or more of the revenue comes from ads. Think of Archero, Survior.io and Mighty Doom.
Hypercasual is dead. Hybridcasual is the future.
The former is the prevailing truth from industry analysts, while the latter is seen as the path forward by an increasing number of hypercasual publishers. Alex Shea, Head of Publishing at one of the world’s most notable companies in the space, Voodoo, recently proclaimed the death of the genre during a talk at Pocket Gamer Connects London.
“If you look at the top 30 new downloaded games in 2022, what you’ll find out is that none of them was a hypercasual game. You only have existing games in the hypercasual space that have been successful in 2022. What you do see though is a mix of existing games and new casual games.”
Alex Shea, Head of Publishing, Voodoo
To highlight Voodoo’s past success, the publisher claims it’s generated more than 6 billion downloads of its titles worldwide and has more than 150 million monthly active users across its portfolio of 200+ games. Shea said hypercasual, as the industry knows it, has gone, and that Voodoo itself has transitioned to hybridcasual and casual (it’s also working on Web3).
The two successes Voodoo touts in the hybridcasual space are Mob Control (66M downloads / $6M IAP) and Collect em All (29M downloads / $6M IAP). The former was initially launched in 2021 as a hypercasual title, but Voodoo put together a team of 10 that included economists, designers, artists and developers focused on progression systems and user retention, not at day 7, but with a longer-term view of day 30 and day 120. The antithesis of hypercasual, but Shea said the results mean that a similar approach will now be deployed across all of Voodoo’s studios and games going forwards.
“Our daily margins on the games have been absolutely massive, the equivalent of launching three hypercasual titles each month,” he said, adding: “In this case, our learning is that the curve keeps on increasing and we don’t know where the end is.”
Alex Shea, Head of Publishing, Voodoo
All Aboard the Hype Train
Shea isn’t alone in expressing these thoughts - just listen to the Deconstructor of Fun podcast! Other hypercasual experts are talking about it too. “This year is certainly going to be difficult for those studios who relied on the old hypercasual success formula,” SayGames CEO Yegor Vaikhanski told MobileGamer.biz. The company is now shifting to ‘hybridcasual’, Meanwhile, just at the start of the year, Homa Games announced it would be doubling down on its hybridcasual division, and Kwalee has just recently also expanded into the space.
The hope is, in a post-ATT landscape, publishers can effectively scoop up huge audiences at scale—as hypercasual has successfully done in the past—but then keep them engaged for the long-term and, most importantly, spending. Targeting a wide audience is arguably one of the chief ways forward for an industry struggling with efficient user acquisition, but the space between hypercasual and casual appears so tiny so as to be just the industry’s latest buzzword to garner hype and investment around new growth.
Habby originally kicked off the hybrid casual business model and after struggling to keep the post-Archero momentum, they’ve found success once again with Survivor.io. Keep in mind that the revenue shown is IAP and that there’s an additional 50% - 65% of net revenue coming from ads.
The term was sparked by the Habby-published Archero, a title that has generated hundreds of millions of dollars from in-app spending alone. But is there really an untapped market awash with untapped riches in a genre defined by its business model and the market leader? Is there room for others than Habby?
The Rise and Fall of Hypercasual
The hypercasual space has been round for a relatively short period of time. It’s hardly a genre in the traditional sense, but describes how early publishers were able to design games with very simple, one-touch gameplay mechanics that monetized through a burgeoning in-game ads business in the mid-to-late 2010s. These were then propelled up the charts by a broadly appealing theme and a significant user acquisition budget.
Early adopters such as Ketchapp (acquired by Ubisoft), Voodoo (which received investment from Tencent and Goldman Sachs) and Gram Games (which later developed the much more IAP-focused Merge Dragons and was snapped up by Zynga). The space is now awash with a variety of publishers, including the aforementioned SayGames, Kwalee and Homa, as well as Rollic (also acquired by Zynga), Popcore and Good Job Games.
It’s no surprise to any readers of this newsletter that Apple set off a nuclear warhead into the heart of the mobile games business with IDFA deprecation, under the thin veil of user privacy. While the rulebreaking practice of fingerprinting has helped alleviate some of the pain, the damage has been done. And it’s only a matter of time before Apple poots the kibosh on fingerprinting.
The consequences of all this have been far reaching. It has sparked industry consolidation of hypercasual publishers and ad tech companies within larger corporations (Unity merged with IronSource and Supersonic, Zynga swooped for Rollic and Chartboost, and AppLovin acquired Adjust and MoPub). Eric Seufert explains the concept of content fortresses here.
For the entire mobile games industry, revenue was down for the first time ever in 2022. Yes there’s a pandemic comparison and the global economic downturn, but there is a clear line that can be drawn directly to IDFA deprecation, as shown by this chart from DoF’s Eric Kress during a webinar with Data.ai and presented by both Eric Kress and Google’s Alpagut Clingir during the Istanbul Gaming Summit.
Hypercasual has found things rough too, with its astronomic growth coming to an end in 2022 and a decline in downloads began (though installs were up approximately 8.5% year-over-year).
Publishers in the space that we spoke to, as well as the comments from SayGames and Voodoo above, paint a worrying picture for the future of hypercasual, but at the same time champion a diversified portfolio approach away from the genre. It’s worth stating that in the casual arena, Playtika has just suspended new game launches, such is the hostile landscape (though let’s be honest, when has Playtika shipped new games?).
“While we saw that our new games received positive feedback from our players and achieved strong retention numbers, the marketing environment and increasing CPIs for new games made it challenging for us to scale these games profitably,” said Playtika’s President Craig Abrahams. “Based on the current marketing environment, we made the decision to temporarily suspend our new game development pipeline until the ROI for new games is economically viable.”
The Hybridcasual Gamble
So the market is down and hypercasual is struggling with profitability. How then, do these publishers survive? In comes hybridcasual. Excuse me if you’ve heard this one before, ever since the launch of Archero, despite the genre seemingly vanishing in failure prior to the last six months.
Habby has found success with the formula (and has followed it up with other titles), while SayGames is also making hybridcasual work with titles such as My Little Universe and Dreamdale. Voodoo, meanwhile, thinks it’s onto a winner with Collect em All and Mob Control.
Speaking to Deconstructor of Fun, Kwalee Head of Digital Marketing Ryan Davies describes hybridcasual as having the broad appeal of hypercasual (i.e. low Facebooks CPIs), but with a more solid core loop that aims to keep players coming back for longer. Effectively, he says, it’s taking the learnings from the marketing process over the last four or five years, and trying to apply that to more elaborate titles.
Meanwhile, Homa co-founder Olivier Le Bas defines it as games with slightly more complex mechanics than would typically be included in a hypercasual title, including progression and an in-game economy, while keeping the simplicity and accessibility of hypercasual. In terms of the share between ad revenue and IAPs, he states that Homa’s less-well performing hybridcasual titles generate 15% of their revenue from IAPs, while its top performers like Fight For America can bring in as much as 40%. Ultimately, the consensus among experts we spoke to is that ad revenue is still the key driver for these titles.
But is this really a scalable future? And are these titles truly a replacement for lost hypercasual revenue? Data.ai estimates for revenue would appear to show a struggle for the hypercasual market at large to significantly increase player spending. Though there is some sign of potential, it’s hardly a stratospheric start for this new future. There’s also the question: where are the advertisers going to come from? According to industry experts, eCPM (the main KPI of ad revenue) is down up to 30% from February 2023 alone.
Le Bas admits that the hypercasual games market has become more “complicated” post-ATT, with the cost of acquiring players rising, in turn making it more difficult to generate revenue from games.
But he disagrees with the assessment that hypercasual is dead. In fact, he claims Homa continues to grow as a company. But hybridcasual is a potential further growth opportunity to diversify its portfolio, particularly following what he says are successes with titles like Fight For America.
Le Bas explains that hypercasual titles can have a lifespan of three years, making most of their money in the first year. For hybridcasual, however, Homa is eyeing up titles with a projected lifespan of five to eight years, with their revenue potentially peaking in the second or third year.
“We see bigger growth for hybrid than hypercasual, but we still see growth in hypercasual on our side.”
Kwalee’s Head of Digital Marketing Ryan Davies
Davies admits that while the nature of taking less bets with hybridcasual titles has a degree of risk, he thinks hypercasual publishers are well placed to make a go at the genre.
“I think that a hypercasual publisher really knows how to do that high volume approach, compared to many other publishers out there who would be taking much more safe bets in a much more regulated way. Whereas we and other hypercasual companies are much more willing, even still with hybrid, to take lots and lots of bets at once.”
Kwalee Head of Digital Marketing Ryan Davies
ByteBrew Christopher Lefebvre, Chief Strategy Officer of game analytics platform ByteBrew and previously Senior Director of Publishing at Lion Studios, thinks hypercasual publishers could have built on their hottest titles more successfully for the long-term, but instead became too focused on the (lucrative) model of churning out hit after hit, albeit for good reason.
Fundamentally with the changes in UA, what that really means is that CPIs have gone up, so LTVs have to go up with it. That's why people are moving to hybridcasual. It's not really a gamble. Is it a gamble to try to make more money? No. Absolutely not. You might not succeed, but it's something that should have happened even when CPIs were low.
How much more money would developers have made if they had these layers of engagement and mechanics for monetization in these games that were getting sub-25 cent CPIs? Market conditions have changed, this isn't the case anymore, but a lot of developers have turned down CPIs that they'd kill for today.
Christopher Lefebvre, Chief Strategy Officer, ByteBrew
The hybridcasual gamble defines a mobile games industry that’s desperately searching for ways to generate new hits in a market that’s hostile to their success. We will likely continue to see hybrid monetisation models and light meta systems cherry picked from other genres being built on addictively fun cores.
Question is, who will be the winners of hybridcasual. You may think that it’s the hypercasual publishers like Voodoo, that will dominate. After all, they just need to add bit progression mechanics and some live operations to their proven hit-making and super-scaling machines.
But we actually believe that hypercasual publishers will struggle to pivot from their current business model as its much bigger leap that one can perceive. Instead, we believe that it’s the native hybridcasul developers, such as Habby and Lightheart Entertainment that will emerge as the winner.
Written by Craig Chapple, a games industry analyst, and a part-time journalist
🎙️ Deconstructor of Fun Podcast
🎧 TWiG #225 - GDC Recap / Unreal Engine for Fortnite / Counterstrike 2
Eric, Ethan, Laura and Phil are back from GDC and are eager to share all that they learned during the week long celebration of all things game development. They talk the biggest news of the show, including Unreal Engine for Fortnite + Creator Economy 2.0, the surprise announcement of Counterstrike 2, CCP's massive raise for a AAA Web3 game and more. And most surprisingly, vests! Kress hates vests y'all! Mind your drip or else face Kress's wrath :)
🎧In Conversation: Chris Heatherly on the Death of the games-as-app era
Joining Ethan in conversation this week is long time games industry executive Chris Heatherly to discuss Chris's recent essay on LinkedIn about the death of the games-as-app era and the ascent of games-as-service. Chris argues that, fueled by "metaverse" hobbies such as Fortnite, Roblox and Minecraft, we are entering an era of reduced content creation cost where the next land rush in the industry is going to be creating hit games within other experiences, as opposed to standalone apps. In this thought provoking and wide ranging conversation, Chris avoids the hype and talks specifics about what this games-as-content transition means, and why we should all be installing Unreal Engine for Fortnite.
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