Global ad spend on gaming app installs reached $26.7 billion in 2022, with Africa accounting for only a small portion of that amount.
A report by AppsFlyer shows that gaming app installs on iOS have declined, while there has been a notable increase on Android devices in South Africa. It says this “could be a sign that the African gambling industry is to come”.
AppsFlyer’s State of Gaming App Marketing for 2023 is an in-depth report on key gaming trends for app developers, marketers and game studios to leverage as they navigate a year of challenging macro trends, including the new age of privacy.
As the post-Covid era unfolds, a digital slowdown or return to pre-Covid conditions is taking place. While the impact is becoming more apparent in metrics like total consumer app installs, the gaming app economy has still shown resilience, with gaming marketers and developers investing nearly $27 billion in ad spend globally in 2022 to attract new users. Overall, Android game app installs increased slightly by 8% compared to 2021, while iOS game app installs declined slightly, down 5%. In terms of advertising investment, the United States remains by far the largest target market for gaming app marketers, followed by Japan, South Korea, Germany and the United Kingdom.
“If 2021 and the first quarter of 2022 were the golden age of gaming, the second half of 2022 and especially 2023 will be a time when marketers, developers and studios will have to overcome challenges to come up with highly focused, efficient strategies to win and win develop and inspire loyal, valuable players,” said Shani Rosenfelder, Director of Market Insights at AppsFlyer.
“Increasing marketing budgets combined with declining consumer spending in some genres means gaming companies are being forced to prioritize profits over sheer size of their player base. However, despite the hurdles, mobile gaming remains a lucrative powerhouse with nearly three billion players worldwide. Marketers will continue to thrive by focusing more on modern measurement capabilities, employing techniques that deliver an engaging experience while respecting user privacy, and continuing to use remarketing and proprietary media channels to offset increases in their cost per install (CPI). .
“In addition, they need to dive deep into Apple’s complex but promising SKAN 4.0 and invest more in campaigns outside of the United States as gaming is truly a global phenomenon.”
In terms of gaming app revenue, the State of Gaming report shows that consumers spent the most on in-app purchases (IAP) in role-playing and social casino games (not real-money games). Purchases in these game categories declined primarily in the second half of 2022, resulting in an overall 7% decline in IAP revenue compared to the first half of the year. The economic downturn appears to have impacted consumer behavior more in the high-IAP role-playing and social casino genres than in other categories, such as match or puzzle games, which rely more on micropayments. In-app advertising (IAA) remained the strongest revenue driver for hyper-casual, match and simulation games, although IAA sales also declined across most genres towards the second half of 2022.
Key takeaways from the 2023 State of Gaming App Marketing:
$26.7 billion total spend on gaming app installs worldwide in 2022. The US has nearly half at $12.2 billion thanks to its high-volume and high-cost media landscape; Japan is by far second with almost USD 2 billion in expenditure.
Global Android game app installs increased slightly in 2022, iOS game app installs showed a slight decline. Total app installs from Android games grew 8% year over year. A -5% YoY decrease in installs on iOS reflects the ongoing challenges iOS app marketers face following Apple’s privacy changes (despite the -13% year-on-year improvement in 2022-2021). In the US, still considered the most important market for game app marketers, 2022 saw a 19% growth in Android app installs and a -1% decrease in iOS installs compared to 2021 gaming apps.
The second half of 2022 in particular has been a battle for in-game purchases with the economic uncertainty in the market. The second half of 2022 compared to the first half of 2022 saw an overall -7% decrease in revenue from in-app purchases (IAP), with iOS down 9% and Android down 4%. Overall, Android gaming apps in-app purchases were down -14% YoY, while iOS was down -1% YoY. This was largely due to a decline in the role-playing and casino games genres, which typically have high rates of in-app purchases, and where the economic downturn seems to have impacted consumer spending.
Categories that saw the biggest growth in 2022 vs. 2021: 48% growth rate for Android casino games, 3x more than Hypercasual in second place and 5x more compared to puzzle and role-playing (RPG) growth rate. Casino games led growth on the ailing iOS side with an impressive 17%.
Cost-per-installs on iOS continue to rise:
Cost-per-installs (CPI), the cost advertisers pay for a single app install when an ad is served in another app, continues to grow on iOS: 88% from Q1 2021 to Q4 2022, an increase of $3.75 each equals install as iOS marketers continue to accept high prices to attract valuable Apple users. Year after year the rates show a jump of 35%.
Marketers Are Increasingly Leveraging Owned Media Channels: As marketers seek to get more value out of their budgets, the use of owned media strategies such as push notifications, in-app messages, and cross-promotion is seeing a sustained rise. This has resulted in a significant year-over-year increase in the number of owned media conversions, with a 16% growth in iOS and a 34% increase in Android.
“As gaming marketers continue to navigate their way through an evolving economic landscape coupled with privacy changes, particularly on iOS, they face new challenges and opportunities in relation to their app marketing efforts,” said Adam Smart, Director of Product, Gaming at AppsFlyer. “Privacy restrictions on iOS limit marketers’ ability to leverage user-level data, which was previously the cornerstone of their ability to connect campaign performance to new user acquisition. But despite a significant increase in media costs and measurement challenges, gaming apps still invest heavily in attracting quality players on iOS and do not shift those resources to Android, even if the approach results in attracting fewer users overall. This gives greater relevance to the use of privacy-friendly technology and data cleanrooms in 2023 and beyond, and will also offer benefits to those able to use accurate and comprehensive data to make timely decisions about where, when and how budgets can be optimally invested ways to attract and retain the most valuable players.”
“With Europe and North America often being a benchmark for African countries, it is safe to say that the gambling industry on the continent is also following the same trend. Overall, the ad spend on installs of gaming apps worldwide reached $26.7 billion in 2022, with a small portion of that coming from Africa, mainly South Africa. Based on AppsFlyer’s recent report on the state of gaming app marketing, we found that gaming app installs have declined on iOS, while there has been a notable increase on Android devices. This is a sign that the African gaming industry is yet to come, and we expect more African countries to contribute to total gaming app install spend in the coming years.
“With the United States accounting for almost half of global gaming ad spend at $12.2 billion, it is important to invest in the country despite intensified competition. But other countries have a growing gaming population and aren’t as competitive when it comes to finding paid installs. Populous countries like South Africa, Indonesia, India and Vietnam are always hungry for new content.”
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State of Gaming App Marketing, 2023 Edition by AppsFlyer is an anonymous aggregate of proprietary global data from 38 billion app installs from 18.6K apps measured with 10K quarterly installs and $13.9 billion in total ad spend measured from January 2021 through December 2022.
The State of Gaming App Marketing is available at:
https://www.appsflyer.com/resources/reports/gaming-app-marketing/
