The brutal economics of mobile games

Dean Takahashi of VentureBeat uses some new figures from the market research firm SuperData to explain why mobile gaming has become a brutal industry for developers and publishers. The cost per install — CPI, or the cost of advertising to acquire a user — has skyrocketed to $2.73, SuperData estimates, and is expected to increase as the holiday season ramps up. Meanwhile, the average revenue per user remains less than $2. So publishers not only must find ways to convert more non-spending customers into big spenders, they must also find ways to keep those users engaged for at least two months. And SuperData notes, “two months is an eon in mobile game time.”

Those figures also highlight how important it is for developers to find innovative — and cheap — ways to market and distribute their games outside of traditional channels. Game makers who boast successful titles should use those games to promote lesser-known or newer games, of course, and developers should constantly be using social media to attract attention. And with Apple’s App Store and Google Play each offering hundreds of thousands of titles, it’s certainly worth considering smaller storefronts (like Amazon Appstore for Android) and alternative platforms (like Windows Phone).