Billing better games: What App Store subscriptions mean for devs

Billing better games: What App Store subscriptions mean for devs

By Joost van Dreunen, SuperData

July 11th 2016 at 11:07AM

Joost van Dreunen reflects on the impact of Apple’s plans to allow developers to introduce a paid subscription model to their games on the App Store

When Apple recently announced its intention to allow app developers the use of a subscription model, it pushed mobile gaming further toward maturity.

Despite a heavy emphasis on free-to-play as the primary mode of monetisation, the ecosystem is shifting. So far, publishers have predominantly emphasised user acquisition as the key component in their business strategy. Game companies taut slogans like ‘Connect the world through games’, or ‘Make fun and simple games for everyone’, which underscore their focus on addressing the broadest market possible.

But while we may think of mobile gaming as a flimsy experience that lives in the crevices of our daily routines, and consequently demands an ongoing effort to fill the top of the funnel, millions of people are very loyal to their favorite games and play them regularly. 

So it would make sense for mobile game companies to explore in more detail what it would be like to instead focus on user retention. Mind you, churn is the key metric for any other media organisation. It offers a much better read on the health of your offering, and acknowledges that the value of a consistent customer is proven whereas that of a new one is not.

To put that into perspective, following several years of double-digit growth, the mobile games market is starting to lose steam. Last year the worldwide mobile games market grew from $24 billion to $30 billion, or about 25 per cent. For this year, that number is nine per cent, reaching $33 billion.

The mobile market is, predictably, saturating. This shifts the focus of mobile devs toward improving their player experience and extending the customer lifecycle. Moreover, as they continue to consolidate and increase their spending on marketing, in both digital and traditional channels, the barriers to entry are getting higher.

"Making a monthly commitment offsets the risk of publishing by alleviating creators’ dependence on a narrow group of super-spenders."

Beyond a strategic move, it also provides some new opportunities. Subscription revenue, for one, provides a steady cash flow. This allows an organisation to allocate more resources to content development, and build a longer-term creative vision that is not under as much pressure to deliver a positive, short-term result. 

Furthermore, publishers can explore the possibility of bundling. We’ve seen this in other areas of the games industry where creators offer a broad selection of games as a packaged deal. 

Contrary to the model first popularised by Zynga on Facebook, the mobile market now has an alternative and will be less reliant on the combination of aggressive free-to-play monetisation and cross-promotion of its games.

Critics will argue that subscriptions lock people into recurrent spending, creating a slippery slope of monthly fees. But is it really so difficult to imagine that a consumer who really likes a particular game would want to have access to their content without having to look for it every month? Many other industries encourage and reward customer loyalty. Making a monthly commitment is incredibly valuable, and offsets a lot of the risk of publishing by alleviating creators’ dependence on a narrow group of super-spenders.

So far the mobile games market has been in pursuit of the largest addressable audience, only to find itself converting a tiny percentage of its overall users. This makes sense in the context of games-as-a-service, but also presents somewhat of an increasingly costly arms race. What follows is a constant emphasis on the rationalisation of the games business.

By allowing for a more diverse set of revenue streams, Apple is changing the games and types of experience that can sustainably exist on its platform. I’d subscribe to that.