Q3 earnings reveal that the negative effects of ATT on gaming were largely overestimated. As I argued here previously, the benefits of ATT are significant, and now more clearly far outweigh its short-term losses.

U.S. consumer spending on all types of video game products increased 7% in Q3 2021, totalling $13.3 billion, the highest third quarter spend in the sector’s history. Console content and accessories declined but mobile games increased 9% YoY.

Quarterly earnings highlights from mobile developers:

  • EA’s mobile rev was +34% YoY with net bookings +27% YoY in Q2 (EA’s Q2 ended 9/31)
  • Zynga’s Q3 revenue was +40% YoY, with its mobile audience +120% YoY. Zynga, however, waited to launch Farmville 3 until growth rates returned to pre-ATT levels, according to CEO Frank Gibeau
  • Activision’s net bookings were +6% YoY in Q3
  • Tencent’s online games revenue was +45% YoY and +8% QoQ

Now that we better understand the actual impacts of ATT, what should developers do? 

First, reorient to and optimize for the new rules of the Apple platform. In general, it seems like online advertising will be less accurate, broader reaching, and more protective of the end user. This will be most beneficial to larger companies that can afford to experiment, can capitalize on broader, branding-building messages, and have relationships with Apple. 

Second, invest more in retentionary tactics, like customer support and VIP programs, to keep players longer. Customer support continues to be an area of opportunity for mobile gaming, and VIP programs are only really well-established in the casino gaming market (plug alert: we recently released a Deep Dive on VIP Programs; DM me for details). 

Third, experiment with new forms of user acquisition. For small- to mid-sized companies, the decrease in effectiveness of Apple’s advertising increases the expected value of experimenting on new user acquisition techniques. For instance, Seriously used radio to grow their user base (check out the DoF podcast with Philip Hickey). Finding alternative user acquisition channels will be a big win for mobile developers, since it will reduce our reliance on Apple and Facebook.

Lastly, look into the different genres less impacted by this change. In Q3, for example, hyper-casual continued to be the number one genre downloaded worldwide, with over 3.5B downloads. Ad targeting is less relevant for hyper-casual since companies don’t have to target as specific an audience. What other genres might become more or less valuable due to this change?

Ultimately, the depreciation of IDFA has impacted gaming much less seriously than many predicted, and is actually a win for the industry. Not only has mobile gaming grown, but ATT facilitates greater trust among users and safeguards against government intervention. In gaming, changes are certain, frequent, and often substantial. Not only must we try to adjust quickly to these changes, but we must also try to take advantage.

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