Hi, it’s Jules from HOMA. I’m helping studios develop and publish free-to-play Hybrid Casual games like Aquarium Land. Game Musings is a monthly newsletter about discovering new designs and business models for mobile games. Today we’re diving into the state of Premium games and whether this business model is still interesting for developers.
After over a decade of continued hypergrowth, the mobile games market has suddenly slowed down in 2022.
Driven by privacy regulations and the end of lockdowns in most countries, mobile game revenues are forecast to fall by 6.4% this year to $92.2bn (Source: Newzoo). Free to play games (F2P) make up the vast majority of this pie, with over 97.7% of mobile game revenues last year coming from F2P.
The rise in advertising costs is making it more expensive to acquire new players and much harder to launch new games, studios need to adapt if they want to be successful.
Could straying away from F2P altogether be a viable strategy for studios? How are Premium games faring on mobile?
Let’s take a look at Premium games, defined as games that players have to buy before they can install them.
What is the size of the Premium games segment on mobile?
In 2022, there were 1211 premium games on mobile
These games represented 53M downloads and $296M revenue in 2022
The Premium segment thus represents 0.3% of mobile games revenue, a very narrow niche overall.
Premium games revenue shrunk 23% in 2022, underperforming the F2P segment
How much can a studio hope to earn from Premium games?
Median revenue data for a top 100 Premium game
$700k net revenue
167,000 downloads
Median data for all Premium games
$30k net revenue
6000 downloads
It could be viable for a studio to switch to Premium games if they manage to secure a spot in the top 100, but just like in free to play an “average game” cannot be financially viable vs production values needed.
Who are the leading players in the Premium games segment?
Out of the $296M premium game revenues, $100M are from Minecraft’s mobile version, making Microsoft by far the leading player in the segment.
13 Publishers netted over $1M revenue last year from Premium games, none of which are new entrants in the space.
Only 1 top 100 Premium game was published in 2022, Football Manager 2023 Mobile from SEGA
Most top 100 Premium games use IPs from PC, console or board games, only 37 are mobile native IPs.
Premium games is a segment where incumbent IP holders hold a dominant position. There were no new entrants in the top 100 last year aside from SEGA. IP dominance makes sense here given players cannot install the game for free, brands can have a tremendous impact in reducing cost per install.
Looking at it holistically, the Premium mobile game market is small, shrinking, and utterly dominated by incumbent IPs. Therefore, Premium game pure play cannot be a viable strategy for mobile studios.
Although not viable for most studios, there are some specific use cases where Premium mobile games could serve as a viable strategy:
We see successful Steam indie games being ported to mobile as Premium games. Stardew Valley, Slay the Spire, Farming Simulator, Human: Fall Flat and Dead Cells each make over $1M net revenue annually, making it a viable secondary distribution channel.
Premium game “hits” have a chance to be acquired by the big subscription services: Apple Arcade and Netflix, which could lead to a lot more interesting financials for the studio (not much data available on this topic yet)