Activision Blizzard, whose acquisition by Microsoft was recently called into question by the UK’s Competition and Markets Authority (CMA), announced Q4 earnings on Monday. Because its transaction with Microsoft is still pending, Activision did not host an earnings call or publish an earnings presentation. But Activision’s earnings summary did reveal some impressive insights about its mobile portfolio, which is comprised of King’s titles (including the Candy Crush franchise), Call of Duty Mobile, Diablo Immortal, and Hearthstone, among others. Notable in Activision’s earnings release:
- Mobile net bookings grew by “mid-teens” on a year-over-year basis;
- Call of Duty Mobile net bookings grew by “double-digits” on a year-over-year basis to a new quarterly record;
- King’s revenue grew by 6% on a year-over-year basis, with in-game net bookings increasing by 9%;
- Candy Crush Saga, the flagship title in the Candy Crush franchise which celebrated its 10-year anniversary in November, saw in-game net bookings grow by an astonishing 20% year-over-year in each quarter of 2022.
This performance stands in stark contrast to the broader mobile gaming market, which many alternative data providers estimate declined in 2022:
- SensorTower estimates that the mobile gaming market shrank by 2% in 2022;
- Newzoo, by 4.3%;
- Data.ai (formerly AppAnnie), by 5%.
What, then, is different about King’s portfolio, and Candy Crash Saga specifically?
To unpack this question, it’s important to consider how ATT disturbs the growth and general operational routine of mobile games. I describe how ATT disrupts the hub-and-spoke model of digital advertising in this piece; given that mobile games are mostly reliant on direct-response app install advertising for growth, it logically follows that if targeting efficiency breaks on the largest app install platforms (Meta, Snap, Google UAC) as a result of ATT, then mobile gaming companies would see their revenue growth weaken as a result. I walk through the impact of ATT on targeting efficiency in this piece and articulate why I think ATT is responsible for frailty in the mobile gaming market in Mapping the post-ATT future of mobile free-to-play gaming.
But the depredations of ATT are not evenly distributed, as I propose in IDFA deprecation: winners and losers. In that piece, written in October 2020, I attempt to gauge the magnitude of the effect of ATT on various portions of the mobile landscape. The estimated impact chart for mobile games is below:
About “Moderate IAP Monetization Games,” or casual games, I state:
While many “Casual” games like puzzle and simulation games rely on the monetization profiles owned by ad platforms for targeting, they have larger underlying appeal, they tend to be easier to advertise without hyper-targeting, and they rely less on extreme monetization from a very small percentage of the user base — what I call the long-tail LTV distribution — for economic viability.
And in How iOS14 might change consumer behavior on mobile, as well as in my 2023 predictions for mobile gaming, I argue that ATT would precipitate a “move to the middle” within the mobile gaming category related to content:
The extreme ends of the mobile gaming spectrum — “core” games driven by regular in-app events and extreme in-app purchase monetization, and hypercasual games that monetize exclusively through advertising and allow the aforementioned core games to go “whale hunting” via IDFA-targeting — thrive in the current, profile-centric advertising environment, and both of these categories face significant headwinds when the IDFA is deprecated…I think gaming probably moves to the middle: not only do the games become more broadly appealing cosmetically but also in terms of accommodation of play preferences.
If one game was held up as the standard bearer for the “middle” of the casual-to-core spectrum of mobile gaming, it’s Candy Crush Saga: lightweight but effective monetization mechanics paired with expansively appealing aesthetics and a straightforward and intuitive puzzle game mechanic.
Candy Crush Saga and the broader Candy Crush gaming franchise capture the profile of a game that would excel in the post-ATT market: buoyed by an updraft of near-total brand awareness, with a large total addressable market, casual game mechanics, and a universally-inviting aesthetic and tone (see The Power Triad of Resonance for Mobile Games for more background on how theme, tone, and mechanic intersect to define a game’s marketability).