Brief Overview of The Hyper Casual Game Industry

Hyper Casual Games

If you play games on your phone, you might have encountered some hyper-casual game ads.





If you don't know what a hyper-casual game is, here is a brief explanation:

"A hyper-casual game is a mobile video game which is easy-to-play, and usually free-to-play; they also feature very minimalistic user interfaces. These games can be quickly played after downloading, usually without any tutorial or instructions."

It is better understood by playing some of the games that belong to the genre. So if you want to understand hyper-casual games better, I recommend you to check out some of them.

The Industry

So how does the hyper-casual game industry work? How does it differ from the other video game industries?

The first thing to note here is that the hyper-casual game industry is relatively new compared to the PC and console game industries. The main reason for that is mobile phones came into our lives much later than PCs and consoles.

The first wide known hyper-casual game is Flappy Bird. It was a simple game with just one mechanic. Still, it succeeded in gaining millions of players and keeping a lot of them.

These are still the main qualities of a good hyper-casual game. Gaining players and keeping them. But how is it achievable? How can one hyper-casual stand out from the thousands of others? And how can people afford to make thousands of them when only a few of them a profit?

Ladies and gentlemen, let me introduce you to the publishers...

The Publishers

So where does the money come to fund the hyper-casual game developers? We know only 1 to 5 percent of hyper-casual game developers make a profit. So how 95 percent of them can continue to develop hyper-casual games? Can they be hobbyists who make hyper-casual games for fun? Maybe. But hobbyist game developers don't usually make hyper-casual games and it is not likely that many people do it for the fun.

The thing is, most of them are funded by big publishers. They get paid to make hyper-casual games so the publisher can have a continuous source for new hyper-casual games. And since hyper-casual games are cheap to make (usually made by 1-3 developers in 1 - 4 weeks), it is no big deal for publishers to fund promising games. But why do publishers fund that many hyper-casual games while only %5 of them are profitable? Because the profitable ones make enough money to fund the others. So it is a cycle. A publisher funds 10 games, and one of them makes a big profit, making more money than it spent. With that money, the publisher funds more games resulting in more successful games and more profit.

This is a critical process. Because mass funding unsuccessful games would result in losing money. Good publishers minimize their expenses by cutting the funds to the unpromising games and maximize their profits by giving more funds to promising games. The important thing here is to decide which games are important and which games are not.

Key Performance Indicator (KPI)

Key performance indicator is a type of performance measurement. KPIs evaluate the success of an organization or of a particular activity in which it engages. What can the KPIs for hyper-casual games be?

Publishers usually market their games by advertising. With the same budget for advertisements, some games can gain more players while others can gain less. So the gained players by the budget can indicate the performance of the game. There is actually a known KPI for that which CPI.

Cost Per Install (CPI):

Let's say we advertise a game with a $100 budget. And let's say showing our game's advertisement to someone costs $0.1. This would mean we can show our game to 1000 (100/0.1) people. Best case scenario: Everyone who saw our advertisement installs the game which means our CPI would be $0.1 (budget/installs=$100/1000). Worst case scenario: No one installs our game which means our CPI would be infinite. What we want is the make our CPI as low as possible so we can gain more players with less money. At least lower than the LTV.

Lifetime Value (LTV):

In mobile gaming, Lifetime Value (LTV) is a prediction of the profit margin a game developer will earn from an average user during the entire time they play their game. So let's say 10 people played our game in a day, and we earned $1 that day. That would mean our daily profit from each player is $0.1 (revenue/player). And to calculate the LTV, we would have to multiply that value by the average time a player played our game. So if an average player plays our game for 5 days that would mean our LTV is $0.5 ((revenue/player)*lifetime=($0.1/10)*5). To calculate the average time a player plays our game, we look at our retention values.

Retention:

What percentage of your users are coming back to your game day after day? We can calculate an average for that using retention. But what is retention? The simplest way to define to measure retention is an app open. Let's say someone installed our game on his/her phone. If he/she opens our game the next day after first opening it, it would mean our day 1 retention rate is %100. If someone else installs and opens our game as well but never opens it again, it would mean our day 1 retention is now %50 because only %50 of the players who installed our game opened it 1 day after the first opened it.

Now we can use this formula to calculate important retention values such as:
  • D1 (Day 1) Retention: Indicates how many players just checked the game out and decided to not play it anymore.
  • D7 (Day 7) Retention: Indicates how many players play the game regularly.
These indicators can be quite helpful to measure how promising a game is. A game with low D1 retention can mean people didn't like the game or didn't get invested in it. So a publisher can decide to kill a game based on its D1 rate. And high D1 retention but low D7 retention can mean people liked the game but get bored quickly. So the publisher can advise the developers to make the game more diverse and add more content. And high retentions for both of those values can mean a game is very promising. We can also use the retention values to calculate the lifetime value (LTV) as well.

Summary

We can say hyper-casual games are mass-produced nowadays. Since they are simple and easy to make, developers can make new games in a few weeks. And a great number of developers are funded by publishers to continuously develop hyper-casual games. Publishers usually focus on promising games with good KPIs and kill the other ones. Since successful games pay for all the expenses they spent on multiple games, they continue to fund new games in hopes of some of them becoming hits. So with the support of publishers, the number of people who develops hyper-casual games is increasing rapidly so does the number of hyper-casual games on the market. Who knows how will the hyper-casual industry be in the upcoming years? I don't. But I know it's not dying out yet.

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