Gaming Apps Spend $29B on User Acquisition in 2023, 40% to U.S.
AppsFlyer, a leading mobile app ad data platform, has released its annual report on the mobile gaming market, providing insights into trends in monetization, differences between iOS and Android, and user acquisition strategies. Uniquely, the report draws from anonymized and aggregated data from 15,000 gaming apps, each with at least 3,000 non-organic installs per month, offering a data-driven perspective rather than relying on estimates.
The report highlights the modest growth seen in the mobile gaming market over recent years and offers benchmarks for app developers, marketers, and game studios. Adam Smart, Director of Product, Gaming at AppsFlyer, notes that the industry is undergoing a significant transformation: “The shift we observe in this report not only blurs the lines in how gaming apps generate revenue but also creates a market that thrives on nuance and adaptability. This transformation represents a substantial recalibration impacting the entire mobile gaming sector.”
For marketers, diversifying strategies is key. With Cost Per Install (CPI) on iOS declining, now is an opportune time to capitalize on the lower media costs. Meanwhile, Android is showing positive results across various metrics, including installs and non-organic installs, indicating that future growth will hinge on diversification.
The U.S. remains the most competitive market for user acquisition, with app developers spending $12.2 billion last year to attract new users—over 40% of the $29 billion global user acquisition (UA) ad spend. In contrast, Japan and South Korea, the next most sought-after markets, accounted for $3 billion and $1.5 billion, respectively. Remarkably, the U.S. alone accounted for more UA spend than the other top 10 markets combined.
In terms of gaming genres, developers invested heavily in acquiring new players for match games, which accounted for $8.65 billion—approximately 30% of global mobile UA spend. Other genres that saw significant investment include strategy ($4.57 billion), RPG ($3.84 billion), casino ($2.72 billion), and simulation ($2.03 billion). Collectively, these top five genres represent roughly 25% of all UA spending.
Casual games experienced a 13% increase in non-organic installs (NOIs) and ad spend compared to previous years. Similarly, simulation and action titles showed significant growth in these metrics, while RPGs and strategy games, despite being high spenders, saw declines.
The differences between iOS and Android platforms continue to influence user acquisition strategies. In 2023, ad placement costs fell by 17% on iOS but rose by 48% on Android. However, CPI remains significantly higher on iOS, averaging $6.80 compared to $1.35 on Android. In Q2 2023, CPIs were $5.46 on iOS and $2.17 on Android, reflecting increased efficiency for developers targeting iOS users.
AppsFlyer’s data also reveals a shift in revenue strategies, with the lines between Hyper Casual and mid-core games becoming increasingly blurred. Traditionally, Hyper Casual games relied on in-app advertising (IAA) while mid-core games focused on in-app purchases (IAP). However, the report shows that a hybrid model combining IAA and IAP is on the rise. This year, 43% of games used a hybrid monetization model, up from 36% in 2023. The gap between games using a hybrid model and those relying solely on IAA has narrowed significantly.
The adoption of hybrid monetization strategies is driven by several factors. Hyper Casual games have been impacted by Apple’s App Tracking Transparency (ATT) changes, which have reduced data availability, making it harder to find high-value users or “whales.” As a result, these games are incorporating more IAP to offset declining IAA revenue. Conversely, mid-core games are adding IAA to compensate for stagnating IAP growth and are benefiting from less intrusive ad formats that no longer pose a significant retention challenge.
For developers planning to utilize in-app purchases, it’s important to note that only about 5% of users typically convert to paying customers. However, those who do are likely to make repeat purchases, with approximately 70% of payers making additional purchases. AppsFlyer emphasizes the importance of the first week in converting players into payers, with about 50% of lifetime payers making a purchase within the first three days on both iOS and Android.