Arbitrage advertising mobile games

Max
3 min readJun 13, 2020

Most essays on mobile games today focus on the rise of hardcore games like Call of Duty Mobile or PUBG Mobile. But there is another big trend, which is usually underreported: Hyper-Casual games are published on a large scale by specialized publishers.

But let’s start at the beginning. Hyper-Casual games are as old as gaming itself and they are among the greatest hits in the history of mobile gaming. They usually have extremely simple mechanisms, a high failure rate and they are highly addictive. Take Flappy Bird, the viral game hit from 2014, for example. At its core, the game is simple, as the aim is to avoid hitting the pipes just by tapping the screen. Then the failure rate is incredibly high, the rounds often last only a few seconds. But still, the game is incredibly addictive.

Due to the high popularity of hyper-casual games and the comparatively easy development, independent developers face a big problem if they want to release their game in 2020. Organic search is basically dead and a daily increasing amount of games is competing for a top-ranking, to get at least some organic downloads.

In this hostile environment for independent game developers, a new business model for publishing free-to-play mobile games emerged:

Arbitrage advertising mobile games

Arbitrage advertising, in particular, isn’t new. Some websites were having banner ads on other pages, leading people to their page, which contains even more ads to make more money through the visitor than it costs to acquire him in the first place.

Monetizing free-to-play games through advertisements isn’t new either. Free-to-play games are usually monetized through one or both of the two ways:
1. In-Game purchases
2. Advertisements

But what has changed now is that the publishers have found a way to consistently release money-making games. Independent game developers know that the chance of getting a hit through organic reach is rather low. Most also do not have the capital or skills required to successfully run a marketing campaign while ensuring that the game is well monetized. The solution is publishers such as Lion Studios or Vodoo.io, who provide capital and knowledge to game developers.

In this relationship, an independent game developer will develop a game upfront. These mobile games are usually hyper-casual games that are very satisfying and addictive. Then the developer enters into a partnership with a publisher who will release the game under his own brand. Put simply, the publisher is basically an online marketing agency that focuses on advertising and monetizing mobile games. At the time of release and shortly thereafter, the publisher will spend a lot of money on advertising, with the goal of achieving a high ranking in the App Store to increase organic reach. The advertising will typically consist of short video clips of the game on various social media channels. In addition, publishers can use their game portfolio to promote their latest game directly in the games, resulting in cost-effective marketing. If the game proves successful, the publisher will continue to spend money on social media advertising.

To make money, publishers usually use aggressive advertising. Whether between the rounds or to collect a few extra points, an advertisement can be seen everywhere. It even goes so far that I got a constant message on the screen saying: “You are limiting our ability to maintain the game. If you want to fix this issue, please tap here.” after I turned off the analysis settings. But since the games are really addictive and these publishers are releasing games on a large scale, the model seems to work. They are able to earn more money during a user’s lifetime from the ads placed in the game than they spend on the user’s purchase in the first place. In addition, they also allow hardcore users to spend money on in-game purchases.

In the end, both parties win. The game developer massively increases his chances of success and the publisher adds a new game to his portfolio to generate revenue and increase attention for the launch of the next game.

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