Investors shifted their focus to quality over quantity, Appmagic says

In the eighth episode of game industry summaries with MY.GAMES, Appmagic took a look back to 2023 and summarized the industry’s outlook.

The game industry in 2023 continued to navigate the challenges left by COVID-19. The industry experienced a significant downturn, with many workers losing jobs and the market size decreasing.

In other words, the industry is trying to find a balance after rapidly expanding.

The game industry does not only face a challenge but also an opportunity. It undergoes a market shift that helps it to align with the enduring needs and desires of the market. As the industry evolves, it leaves behind the frantic pace of growth and enters a more stable stage, guided by visionary leaders and a commitment to sustainable progress. This change is vital for the lasting vitality and creativity of the game industry.

Appmagic‘s new industry summary shared the highlights of 2023.

Appmagic Recap Graphic for 2023

Investors moods, their focus on quality over quantity

In 2023, the games industry faced a challenging situation. Gone are the days when an impressive pitch could secure funding, especially for new studios without a strong portfolio. They have to prove their worth with concrete numbers and results. For established studios, fruitful partnerships and a track record of notable successes are crucial. Investors have learned from their mistakes and have become more selective, especially those new to the game industry. The industry has shifted its attention to PC and console gaming, and developers have struggled to find their niche or create original content to challenge dominant, content-rich games. The investment climate has lost heat, with a noticeable drop in IPOs and gaming SPACs. However, private investments and M&A backed by savvy and long-term investors remain active.

Hybrid-Casual Rising

This year, many large studios transitioned from hyper-casual to a hybrid-casual model, blending simple one-tap mechanics of hyper-casual games with the more involved meta-elements of casual games. Initially, hyper-casual games were a niche known for their simplicity, low cost of production, and low Customer Price Index (CPI). However, over time, they evolved, lacking complex graphics, advanced audio, or deep game loops, gradually resembling casual titles.

This shift poses challenges for smaller studios and independent developers. While hyper-casual games were once lucrative for small teams due to their unique game design and minimal production requirements, competing with larger studios regarding production quality is increasingly difficult. So, keep the focus on the blue ocean strategy and the high quality of the new games!

Shift towards a hybrid monetization model

The game industry started shifting from separate monetization models to a hybrid approach. Traditionally, hyper-casual games relied on in-app advertising (iAA), while mid-core and casual games mostly used in-app purchases (IAP). Now, there’s a trend toward combining these strategies. Hyper-casual games are introducing iAPs, and games focusing on iAPs add advertising elements like rewarded videos.

This hybrid model constantly proves its effectiveness, offering a more versatile revenue stream and adapting to various player preferences. For example, War Robots, initially iAP-focused, successfully integrated a ‘rewarded video’ ad, significantly boosting its revenue.

It’s a really cool case of Rush Royale

MY.GAMES created Rush Royale from scratch to scale up to 150 million $ in earnings from home (!), growing the team from 3 to 200+ people.

u003cstrongu003eForecast for 2024u003c/strongu003e

The game industry is heading towards a normal state in 2024 after facing delays and a flood of releases due to the pandemic. Console games dominate the market in 2023, but mobile and cross-platform games are gaining more popularity. The industry is also expecting better investment and user acquisition.

AI technology is key in game development, making studio operations smoother and performing well in simple, 2D tasks. Its application in complex 3D game creation is still under development, but it offers the potential for smaller studios to create big titles more effectively and affordably.

NEXT: Can puzzle games save the mobile game industry?

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