“What game should I make next?”
This is the million dollar question facing every gaming studio and developer.
According to data from Sensor Tower, 97% of game revenue on the App Store is generated by 2.7% of publishers. My goodness. That’s a really long tail of games that never see the light of day. In such a densely saturated market, one could easily argue that it’s become very challenging for a new game to stand out. There is, however, another way to look at this chart — as an opportunity for innovative games to shine even brighter in this deep abyss of mediocre games.
To answer the initial question, I want to expound on a basic framework that I use to evaluate new games in 2022. This framework is by no means perfect (as it’s constantly evolving), and meant to serve more as a foundation that can be built upon going forward.
Key pillars of the framework:
Target market
Content design and roadmap
Monetization model
Go-to-market strategy
Community building
I will go over the first pillar (target market) in this post, with more to come in future posts. Stay tuned!
Target market
According to Newzoo, there are ~3 billion gamers in the world. That’s ~40% of the entire population on Earth, yet people still tend to group gamers into one big bucket. The reality is that gaming is now a massive $200bn+ market, and there are many layers of segmentation in a fragmented landscape. As a result, it’s impossible to develop a “one size fits all” game that addresses the entire market. For example, an open-world MMORPG is generally not going to appeal to a gamer that only plays competitive first-person shooters (FPS). A real-time-strategy (RTS) game is probably not going to excite a casual gamer that only plays sports titles on consoles.
Modern games typically fall in between the following 2 categories when it comes to their target audience:
Games that target as broad of an audience as possible and have content that’s easily accessible to everyone. These games have the potential to scale faster, but generally see higher churn, lower average player spending, and more siloed communities.
Games that focus on a specific niche but go all in on making the best dedicated content for this population. These games can hit a user cap but have healthy cohort dynamics — strong user retention, high customer lifetime value (LTV), and a highly engaged community.
It’s worth mentioning that this is not a strict categorization — the best games often manage to expand beyond its original intended target population. In my experience, most of these games are category-defining and introduce brand new concepts (or a unique take on existing concepts) to the gaming world. These games are able to achieve best-in-class metrics (fast growth, high margins, strong operating leverage, efficient customer acquisition) for a sustained period due to their market leadership. Just one of these titles can turn an unknown studio into an industry stalwart.
So which market should game developers target? Contrary to conventional wisdom, games that target a larger market aren’t necessarily better (you’d be surprised how many industry veterans I’ve spoken to with this mentality). Would you rather have 100M active players spending $10/year on your game, or 10M active players spending $100/year on your game, ceteris paribus? I’d argue that both can be indicative of a successful game. Let’s illustrate this by comparing 2 successful games on each end of the spectrum.
A tale of two games
Candy Crush was released in 2012 by King Digital Entertainment, and became an instant worldwide sensation. Candy Crush grew to 93 million daily active users (DAUs)1 in just ~1.5 years post launch, and remains one of the highest grossing mobile games even today, 10 years post launch. Most impressively, the game was top 10 across mobile downloads, consumer spend, and monthly active users in Q1’22.
Candy Crush was designed to appeal to a very broad market with its simple and intuitive gameplay. Any demographic could easily pick the game up and start crushing within minutes. Teens on their way to school, hardcore RPG gamers taking a break from their open world adventures, and my elderly grandmother could all enjoy the game. The gameplay is simple: users switch 2 candies in the puzzle to make a match of 3 or more candies, eliminating those candies from the board and replacing them with new ones that fall in from the top. The game offers thousands of levels, each with its own goal to complete under a specified number of moves. Users could purchase candies with special effects or additional moves to clear a level.
Preceding Candy Crush Saga in the match-3 puzzle genre was the Bejeweled franchise, which released its third installation (Bejeweled 3) in 2010. In 2010 (2 years before Candy Crush Saga), the game’s studio, PopCap, announced that the franchise had sold 50 million units since initial launch in 2000. That’s a respectable number, but Candy Crush would eventually blow it out of the water, amassing ~300M+ monthly active candy crushers at one point and generating ~$2bn of annualized revenue for King. In contrast with Bejeweled which had a static board, Candy Crush focused on building a sustainable interest curve by changing up the board design with level progression. In short, Candy Crush took advantage of the smart phone / mobile boom that began in the late 2000s and deliberately appealed to a broad audience with its simple and addictive gameplay.
On the other end of the spectrum we have Genshin Impact, an anime-inspired single player / co-op role playing game (RPG) set in a massive open world. Genshin is designed to target a population that enjoys (1) the specific anime-inspired art style, (2) action combat, and (3) open world adventure & exploration. While there’s a sizable contingent of gamers (especially in APAC) who would enjoy these core elements of the game, it was not designed to appeal to as broad of an audience as Candy Crush, for example. A lot of industry veterans I spoke to back then were bearish on the game’s western release as they thought the game was too niche.
The Legend of Zelda: Breath of the Wild served as a rough initial reference point (26 million copies sold) for the total addressable population of Genshin, given the many similarities between the two games. As we know, Genshin has since far surpassed that figure due to its innovative design, cross-platform compatibility, and phenomenal execution. Several sources estimate that the game has over ~50M active players today, and achieved $2bn of player spending in its first year alone.
In summary, Candy Crush and Genshin Impact targeted very different markets, but both were wildly successful. We can see the difference in strategy from the high level numbers as well — as we can infer from the chart of top mobile games, the average Genshin player is spending a lot more than the average Candy Crush player (i.e. Genshin is the top game in player spending but doesn’t even make the top 10 in active users). If we assume Genshin had ~10M active players in its first year, that implies $200/year of spending per active Genshin player. If we assume Candy Crush had ~300M active players, that implies ~$6.70/year of player spending per active. This is why looking purely at top-line metrics can be deceiving when evaluating games — there are many different paths to success in gaming!
If we look even further beyond the surface, there is one important similarity between Candy Crush and Genshin Impact. Both of these games managed to expand far beyond their original intended target market. Candy Crush was able to achieve this through a robust monetization model, mobile-first platform strategy, and its unique take on the match-3 puzzle genre. Genshin was able to achieve this by building the first open-world cross-platform gacha game of its kind.
Below is a quote from Nan Duan, a games blogger who wrote a very insightful review during Genshin’s initial launch:
[Genshin Impact] succeeds in part due to its sheer audacity in vision and content scope – original IP, open-world, cross-platform (with mobile as the core), and years of live-ops content runway. miHoYo is well positioned to tackle this, having honed its IP creation skills in the Honkai franchise, and with good access to China’s “industrial scale” mobile production capabilities.
Remember when I said an open-world RPG game would generally not appeal to a FPS gamer? Mtashed, a popular Genshin streamer and content creator with ~1M subscribers on YouTube, used to stream Destiny, an online sci-fi themed FPS game. That’s about as far away as you can get in terms of genre!
The conclusion I’d like to drill home from this post is this — be thoughtful when choosing your target market, but don’t feel restricted to build games that reach the “biggest audience.” More importantly, focus on designing the best content you can for your target market. If you can do that well, the sky is the limit (OK fine, the space is the limit for you sci-fi gamers out there!).
Source: King Digital F-1 filing. Represents monthly avg. of daily active users in December 2013.