ABOUT JON: Linkedin | PlayEmber |

ABOUT ROCKETSHIP HQ: Website | LinkedIn  | Twitter | YouTube


KEY HIGHLIGHTS

🖥 What is the hypercasual genre?

🌄 What precipitated the ascent of hypercasual?

🌅The vastness of the hypercasual market

✈️When hypercasual began to take off

🚂 Is this another boom and bust cycle?

 🛣Unlearning & re-learning for a new genre of games

📱 Game design is not a very core element in hypercasuals

🎡 What are game mechanics & how to identify a good core loop

✅ How publishers validate hypercasual games through ads

🕰 The timelines for developing & validating hypercasuals

💲 The economics of hypercasuals

💣 Why IPM for hypercasual games is 10 times that of casual games

🏦 The likelihood of crossovers between industries for hypercasual games

🌱 How hypercasuals will evolved over the next few years

KEY QUOTES

What is the hypercasual genre

 The reference point I always give is Netflix. For me hypercasual is like Netflix, you log in and  watch whatever you want to watch.

How are hypercasual games designed

I call it the nan-test. So if my nan can play one of our games and understand it within two seconds, it’s non-punitive, in no way do you feel like you’re being punished for not succeeding and you’ll see the hypercasual games. It’s so adaptive. Now, if you don’t pass the level and you play it again, the level won’t be the same, it’ll be even easier because it wants you to succeed. It’s a game that everyone can play.

The genre that turned mobile phone owners into gamers

 With your smartphone, you remove that barrier of, “I am a gamer, I’ve got my console, I’ve got my PC, have all my equipment around it.” and go directly to “I’m just a mobile phone owner.” 

How big is the hypercasual industry

The hypercasual industry is estimated to have a value of around 2.5 billion dollars in 2019. In terms of users, stats from Tenjin said that in 2019, it will hit 160 million monthly active users. So that’s up 68% from 2018, where it was 500 million. But if you look at the speed of growth in 3 years, if we go back to 2016, the number of MAU that Tenjin recorded was 65 million. So in three years to get from 65 million to 860 million, 1,000% growth in three years, it’s incredible.

The early days of hypercasual

At Ad Colony when you start seeing new names, new developers, new publisher names driving crazy volumes, in terms of impressions, that’s when you start paying attention and doing your homework. That’s when you start to realize that there’s something very exciting happening here under the surface.

A different strategy for user acquisition

Facebook, and Google, are very dominant in other areas of gaming, but surprisingly, in hypercasual there are other UA channels that perform more effectively than Facebook and Google.

The monetization model used in hypercasual

In hypercasual, for UA and monetization we don’t have separate teams. It’s the same person because we need to have that granular view tying user installs, and user activity with revenue.o you need to be wise about how you spend your cost because otherwise, the test can be way too expensive.

A changed concept of game design

For me, a good core loop is basically putting you in this state of flow. It’s a bit like how Netflix draws you in. But this good core loop isn’t born from an idea that you just implement and that you build on. It’s through constant testing. So you pick an idea that’s got potential, and you’ll build a video ad to test it out on real players, you evaluate the depth.

What is a game mechanic?

A game mechanic is just the action of playing. What are you getting the user to do over and over again within the context of the game? Are you asking them to jump, swerve or fly? So the mechanics in a game are often set up by the rules of the game. So the challenge in a game would generally come from applying your game mechanics to certain situations. 

What are the game mechanics in hypercasual?

In casual games, you might see an IPM of around four, so four installs for every 1000 impressions versus a top hypercasual game, you might see an IPM of 40. So that’s 10X. 

That’s why hypercasual can buy users with a lower CPI versus a casual game and still get the same CPM in the waterfall that we’re bidding on. That’s why you’ve seen this explosion of hypercasual in the charts because we can compete with any other big game launches.

The strategy for creatives in hypercasual

In terms of creative, for hypercasual generally, it’s video playable ads specifically, that are driving most of the revenue. You’ll see how drastically different they are when creatively compared to other genres. Because you are effectively playing the game, you would see no difference between a playable ad versus the game. Versus if you look at a lot of ads for let’s say triple-A games, the ad you’re watching almost looks like a movie, then you go play the game. That wouldn’t look anything like what was advertised. 

So I think that the closeness between the ad creative, and the game itself also results in a much higher install rate. 

 

FULL TRANSCRIPT

Shamanth 

I’m very excited to welcome Jon Hook. 

Jon 

Thanks for having me. 

Shamanth 

Absolutely. And this is a conversation I’ve been wanting to have for a long time. As background for some of our listeners, as of this weekend, the top five games on the iTunes App Store included Call of Duty, Icing On The Cake, Mario Kart Tour, Drop and Smash, and Draw Race. So two proven IPs that have had decades of investment, and three that seem almost frivolous in their nature. This is the phenomenon – hyper-casual that we’re here to talk about today. And Jon is among the best people to talk about hyper-casual, just because he’s been so deep in and worked on so many games that are such huge, huge hits. 

So Jon, to start off, tell us what hypercasual is as a genre of games.

Jon 

I always think it’s a good question. If you say hyper casual to most people outside of our industry, then they’ll think of something like Flappy Bird or it’ll conjure up an image of people in their bedroom, making really low-quality games that maybe hit the charts for a few days and disappear. But I think there are two ways to look at what hypercasual is. First by the audience type, so talking about like mass market games audience, they don’t really identify as gamers versus mid-core or hardcore gamers. As a result, it is confusing because if you look in the App Store, hyper-casual isn’t yet an app store category, it permeates multiple categories like puzzle, casual, action, racing. 

Most games are usually classed as either arcade or casual. So if you look at your phone, I suspect there probably is a hyper-casual game on there.

The reference point I always give is Netflix. For me hypercasual is like Netflix, you log in and  watch whatever you want to watch.

But of course, outside of the audience, there are certain ways that you can spot a hyper-casual game. By the publisher, there are some really top publishers in hypercasual games, but also by the game, mechanics, and gameplay. 

So typically, in hypercasual, we talk about a one-tap game, it needs to be really easy to understand.

I call it the nan-test. So if my nan can play one of our games and understand it within two seconds, it’s non-punitive, in no way do you feel like you’re being punished for not succeeding and you’ll see the hyper-casual games. It’s so adaptive. Now, if you don’t pass the level and you play it again, the level won’t be the same, it’ll be even easier because it wants you to succeed. It’s a game that everyone can play.

So that makes sense. If you think about the market, you’re building these games for people that aren’t gamers, it all fits in.

Shamanth 

The word that you used that was interesting to me that I’d like to dig into further down this interview is non-punitive. But I will also point out that the concept of hypercasual games as you describe them isn’t radically new. A lot of the arcade games of the 70s and 80s had mechanics that we would come to identify as hypercasual in today’s world. Space Invaders, Tetris, and Pong are all games that I remember playing and those all seem to have a lot of similarities to games that we would think of as hypercasual today. 

Yet, the first wave of mobile games, let’s say 2008 to 2015, did not have these games. So with your understanding, why do you think these games were absent in that first wave? And what precipitated the ascent of hypercasual? 

Jon Hook

Everyone has got an astounding memory of their earliest hypercasual game, Snake on the Nokia, that kind of single tap, raw mechanics, easy to play. To your question, if we take that point, these games have always been around, what is it that’s really accelerated this in recent years? I think the first thing for me is the human element. So what I mean by that is, with smartphones, they’ve democratized gaming. So if you think this classic stereotype of PC gamers and what we just discussed about the hypercasual audience are not gamers well,

with your smartphone, you remove that barrier of, “I am a gamer, I’ve got my console, I’ve got my PC, have all my equipment around it.” and go directly to “I’m just a mobile phone owner.” 

So I think that coupled with the other simple human trend that our attention span is decreasing. You hear stats of like 10 seconds, seven seconds is the average length of human attention. So look at the rise of Facebook, Instagram, TikTok & Snapchat, we’re being conditioned to consume content in bite-sized forms. So if you put those two elements together, it’s no surprise that hypercasual has exploded because it just fits into human nature. Most people on the planet have a smartphone, everyone’s got short attention spans, they’re expecting short-form snackable content, and hypercasuals today tick that box. 

So for me, the second part is, it’s the technological advancements. I know we’re going to touch on this, but I think just the speed of innovation in game design and UA monetization, have enabled these mass market games, to ensure the economics network that you can advertise and acquire so many users and run a very profitable business. It’s the kind of simple math that we’ll talk about around IPM and LTV. I think some of these great startups are pairing the hypercasual industry combined with the kind of human element and optimization of gaming that have just seen this explosion of hypercasual.

Shamanth 

Sure. It sounds like in many ways the last couple of years have brought forth quite the perfect storm, in that there’s been large-scale proliferation of smartphones. People have been more and more open to snackable bite-size experiences. That’s the way that hypercasual has been quite on top. 

Jon we talked about how hypercasual has taken over the App Store and in very many respects, public imagination just because they’re so front and center in the App Store. Can you give a sense of how big the market is? Or the numbers you can chat about how much hypercasual games have proliferated on our phones today?

Jon 

Quite simply your total addressable market would be anyone that owns a smartphone. So you’re talking about billions of people, it’s incredible. If we actually talk about the reality of where we are right now,

the hypercasual industry is estimated to have a value of around 2.5 billion dollars in 2019. In terms of users, stats from Tenjin said that in 2019, it will hit 160 million monthly active users. So that’s up 68% from 2018, where it was 500 million. 

But if you look at the speed of growth in 3 years, if we go back to 2016, the number of MAU that Tenjin recorded was 65 million. So in three years to get from 65 million to 860 million, 1,000% growth in three years, it’s incredible.

Again, it is a global audience. So one market of real interest right now to all hypercasual developers or publishers is China. 

30% of all games downloaded in China are hypercasual games already. I believe that figure will be close to 50% in the next couple of years. I think another important fact, in terms of market size, is really key. So when we look at our games we see a rough 50-50 split between males and females. That really surprises a lot of people. Coming back to this stereotype of gaming being very male-dominated, it’s actually slightly skewed in favor of female to male. So that’s a really important point. It’s not just sort of total addressable smartphone orders that are male, aged 18 to 44. That gives you a size of where the industry is at and the fact that it’s still growing exponentially in some areas. And in some countries, and we’ll talk about this a bit later, specifically, China, hypercasual is still just in its infancy.

Shamanth 

Yeah, those are humongous numbers. Like you said, hypercasual games have a MAU right now of 816 million. So by that comparison, more people play hypercasual games than having profiles on social networks, more than Twitter and Snapchat, certainly. So that’s a very, very humongous stat as the growth rate that you just alluded to. 

I’m curious though, in your background, you ran an agency a couple of years ago, and you worked in ad sales, when did you see that hypercasual was a thing, that it could be the huge deal that it is today. And what brought you to hyper-casual?

Jon 

It’s an interesting question when I kind of look back and we’ve already talked about the kind of nostalgia of Tetris and Snake on Nokia. So it’s kind of been this thing that’s always been there, it’s just never had this classification. You’ve obviously had the rise of gaming, but if I think about it from an ad perspective and particularly, brands spend a lot of time working with brands and helping them understand gaming, but the kind of default was the great theme. That activation was brought by Candy Crush who was kind of leading the charge on trying to really bring brands into gaming and help them understand. 

But I guess

at Ad Colony when you start seeing new names, new developers, new publisher names driving crazy volumes, in terms of impressions, that’s when you start paying attention and doing your homework. That’s when you start to realize that there’s something very exciting happening here under the surface.

I think the thing that really struck me from the supply side, when I look at the analogies of how long the raw video guys operate in a network, every impression has a value. So if one game doesn’t work, it doesn’t matter, the platform will optimize. 

What I started to see was, it’s a very similar way of thinking in a way that the hypercasual world works exactly the same, that every impression every user has a potential value. So I actually saw there were some real similarities between working on Ad Colony, and the way hypercasual was functioning. Also the fact that a lot of what happens in hypercasual is really led by data. I really liked that, because having spent a lot of time on the agency side, I have been very lucky to work with some incredible planners and creative thinkers. And what I learned from my agency days is there is a lot of great thinking and tapping into human emotion. But a lot of it was still grounded in data. 

When I look at what happens in hypercasual, that is still true for hypercasual, there’s no real difference. Yes, we can get excited about a game or see a prototype. But really, it does come down to what the data says. And if the data isn’t telling us that this could succeed, then we don’t move forward. So actually, when I looked at this before talking to you today, I think working in an agency and spending a lot of time and always training under some great planners has really helped train my brain for working in hypercasual.

Shamanth 

Sounds like you were looking at this data from publishers that are emerging and growing and really exploding on impression volume. That started to tell you hypercasual could be a thing. You’re grounded in the data working on the agency side in the past. So that clued you in. 

I’m also curious, though, did you wonder at the time, if this was just a fad? Are there all these publishers that are exploding in volume that are buying up massive amounts of ad inventory? Is this another boom and bust thing that is going to happen? Did that cross your mind at any point? 

Jon

Yes, of course, if you look at it within a certain timeframe, you can start thinking, this is just a kind of boom. But if you look back at the context that we’re thinking, look at that broader picture, then it doesn’t look so much like a short-term trend. If you go back to the early days, this has been something that has just been evolving with consumer behavior, then you’ve had the advances in technology. There’s a great investor community within gaming, some great early stage funds. But you know, when you get Goldman Sachs investing $200 million into Voodoo, I think it’s a great validation of what the team of Voodoo is doing. 

It really put hypercasual on the map. I had a lot of friends at VCs calling me up saying, what’s going on? Who is Voodoo? What is hypercasual? I find that really interesting, because it tells me, to the outside world, you do forget how gaming is still perceived as really a kind of the main investment channel, the main channel that brands should be in. And to me, that’s crazy. So I genuinely believe that was a big tipping point, certainly for hypercasual with that money from Goldman pouring in.

Shamanth 

Sure. Of course, the data continues to show the consistent growth of hypercasual. I’m curious, though, as you transitioned into hypercasual, what were some of the things you had to unlearn? And what were some of the things you had to learn as you started to work on a completely new category, a completely new genre at the time? 

Jon 

Things that I’ve always applied no matter what role I’ve been in, from agency side to the supply side, to launching startups, I think it’s just a blank sheet of paper, there’s always going to be things that you can bring with you. But when you create a new opportunity, you should always be open to what you can learn. How can I do things differently? So that applied when I started in hypercasual. I was really excited about the opportunity to work with the great team of entrepreneurs that are behind Homa to bring some skills that I developed over the years, but also just learn something completely new. I guess the biggest change in hypercasual and certainly, the team at HOMA, we literally don’t do anything unless there is data to back it up. 

So this could be from just a simple playable ad, it could be game design, could be big data, or campaign optimization. I think just always letting go of that emotional side of your brain that exists, and trying to just switch that off and purely just operating in a rational way. Because that is how you succeed in hypercasual. There are some other practical elements that are more specific to hypercasual. 

Things like the marketing level, like user acquisition channels.

Facebook, and Google, are very dominant in other areas of gaming, but surprisingly, in hypercasual there are other UA channels that perform more effectively than Facebook and Google.

So learning to work more deeply with those partners as we release more games. The same in terms of technology providers, there are some great conferences in the UA world and I always enjoy listening to people not just in gaming, but the non-gaming world to understand their tech stack. But again, because the economics of hypercasual are very different, heavily ad-based, there have been some really fantastic startups and growing technology partners that we’ve started to work with. 

So for example,

in hypercasual, for UA and monetization we don’t have separate teams. It’s the same person because we need to have that granular view tying user installs, and user activity with revenue.

So again, that was a little different. There are friends in other categories that have got completely separate gaming, user acquisition, and monetization teams. So there are some things that are totally different and you have to learn pretty quickly. 

A lot of people that we’re hiring for UA & monetization are investment banks analysts. I think if you have a data analytical brain, hypercasual is definitely something you should be looking at.

Shamanth 

Interesting, how every decision you make is grounded in data. I’m very curious to dig into that. Because if you read interviews of game designers, or if you talk to game designers, in the conventional sense of people who had traditional conventional game design backgrounds, they speak a lot about how the story arc is important and how narratives are important, emotion is important. 

The other two games in the top five that I alluded to, Call of Duty and Mario Kart Tour, I imagine they both lead very, very heavily on a lot of these emotional elements. Yet, I’ve also heard, much like you said, that game design does not matter in hypercasual. 

Can you elaborate on what that means? Is that the sentiment you agree with? And why game design in the conventional sense not mattering, is actually very important for hypercasual? 

Jon 

I’d say in the early days, that was kind of correct. That’s how hypercasual worked, it was all about market potential over game design, a tried and tested game mechanic that has had some form of a hit before. You can release games quicker than anyone else. and off you go. But I think now, a couple of weeks ago I was in the Pocket Gamer and just two days immersed in talking to developers, both from a developer community world and also hyper-casual, I definitely think that is changing. 

There are some publishers that say that’s true, but they still will put market potential over game design. But I believe the way hypercasual is going particularly when we start thinking about the retention of the hockey stick in hyper-casual, there needs to be a real balance between game design and game art as well as its market potential. Do the numbers stack up? We’ve already spoken about data, but it’s really exciting to work in this generation of data-driven, creative game design. Because if you’re a hyper-casual developer, and you even got the faintest idea, you can really quickly test this out on real users to see if this is something that is even worth putting time and effort into a prototype. 

So hyper casual has completely changed the whole concept of game design. But to answer your question why it’s important, I think this is an obvious point to dive into or just at least link it to user retention. So if you think about a top hypercasual game, on day one, we might see around a 40% retention, but on day seven this drops to 15%. Now one way that you can obviously improve that retention is game design, and specifically a good core loop. So the heart of game design, you’ve got your core mechanics and the gameplay loop, it’s the main activity that’s going to structure the entire design, and the players engage repeatedly to create this looping sequence. 

For me, a good core loop is basically putting you in this state of flow. It’s a bit like how Netflix draws you in. But this good core loop isn’t born from an idea that you just implement and that you build on. It’s through constant testing. So you pick an idea that’s got potential, and you’ll build a video ad to test it out on real players, you evaluate the depth.

So that for me, is really important because there is this day seven challenge in hypercasual that I’m hearing a lot about from all angles. UA and monetization, that’s the second step. But if you haven’t nailed down the core game mechanic in game design, then you can have the best team when it comes to execution in terms of UA monetization, but if you don’t have that hit game, that core loop, then it’s not really going to make a difference.

Shamanth 

So Jon, tell us about what game mechanics mean, in the context of hypercasual. And can you give us some examples of these?

Jon 

A game mechanic is just the action of playing. What are you getting the user to do over and over again within the context of the game? Are you asking them to jump, swerve or fly? So the mechanics in a game are often set up by the rules of the game. So the challenge in a game would generally come from applying your game mechanics to certain situations. 

So for example, walking around the game is a game mechanic. Whereas a maze, that’s the kind of challenge that you’re applying the game mechanic to. The kind of game mechanics, if you look at any hypercasual games, there are lots of different ones but some kind of the cool ones have a tap action. 

So if you look at our game, Tiny Cars, you have to tap to stop the car so that it doesn’t crash, for example, then you’ll have a stacking or kind of turning mechanic type game. If you look at  Tower Color, it’s throwing balls at a high stack of different-shaped columns that you have to knock down. Or there’s this classic rising-falling mechanic that if you look at a Voodoo Helix Jump, for example, that’s fairly similar to I mentioned one earlier, a swerve mechanic, might be just you’re navigating the ball around a long track or some sort of car. 

We spoke earlier about the kind of nostalgic element from Snake on the Nokia, that had a sort of growing mechanic. Today, you’ve got lots of different clones of that original snake game. But that’s another common one. So I think there are lots more but those are some of the main ones that you’ll see in hypercasual.

Shamanth 

How do you identify what is a good core loop? And how do you validate what in your experience separates a good game from a great one?

Jon 

It’s a good question. So what makes a good hypercasual game? If we go back to a couple of years ago, where we’re talking about, it’s not so much about the game itself, it’s more about can I market this game, it’s about perception. So, therefore, it’s not really about what the developer thinks about their game, or the publisher, it’s really about what the data is saying. 

Can I acquire as many users as possible, and get them to watch a certain number of ads that makes this game profitable. So that takes the emotion out of it. But then what’s interesting is, each of the top publishers has a different angle on what they believe makes a top game. Some publishers still buy into it, it’s not about the perception, I don’t think the quality of their games is as good but they are charting incredibly highly because it has that mass market appeal. 

Whereas if you look at the style of some of the other top games in hypercasual, you can just see the quality is really, really high. The games are polished, they almost are merging and could be mistaken for a casual game. In terms of what is going to make it a hit game, it really comes back to process. 

A lot of the mistakes that we see for hypercasual developers are actually easily solvable. So if you look at some simple mistakes, for example, it could be like a really simple choice of colors. So they’re going against the trends of what we see in the market. If the game mechanic is good, but it’s the wrong color, we’ll be able to pick that up really quickly in the testing phase. We’ll just see that purple versus green delivers a much more effective kind of LTV and brings the CPI down. 

We see very modular hypercasual developers, and some of them have never built a hypercasual game before. So one thing they might do is think, “Oh, I’ve just seen a great game, I’ll simply copy the design,” it doesn’t necessarily work. Or some of them are still sending in prototypes that are kind of like 2D, generally, 2D doesn’t work. Except maybe in a puzzle. I love mistakes because that’s something you learn from and I think that’s the bigger picture. hypercasual is that there are so many developers now pouring into hypercasual. Because, from a business perspective, that’s where you can make money, maybe Apple is going to change that with Apple arcade if they can get a lot of these devs over there. But a lot of the mistakes we see are just born from just people learning how to develop hypercasual games.

Shamanth 

Just to dwell a little bit more on the validation process you touched upon. From what I’ve read, some publishers build ads to validate games, even before the game is fully built out. Is that something you guys do? What does a typical validation game look like?

Jon 

A developer will send us a concept in very different stages, but in its simplest form, they could send us a video APK. So we can just make sure they’re building something that, for example, we haven’t seen already or tested already. But what happens is they’ll send us a video or test flight and then we’ll test the game with real users. So we’ll be able to see pretty quickly whether this is something that we can progress to the next stage. 

But generally, if it is a more advanced prototype, then we’ll put it in the Facebook SDK, and we’ll test this in one country. We’ll look at all aspects of the game. In particular, we’re looking at day one, day seven, and average session time. Depending on the game’s performance, that initial process could take 5 to 10 days, each publisher is going to have its own metrics or performance thresholds that you need to meet. Then it’s really a question of working with the developer and feedback and making changes. At that point, that’s when the developer or the publisher will get to a stage of them negotiating contract terms and how they’re going to work together before you then proceed to the next phase, which is where you get on to a lot heavier testing. 

So the game design team is going to recommend a pre-launch roadmap, improve the gameplay, new features, AB testing, and the monetization team will get involved and it’d be various mediation, and SDKs to implement if you don’t have them in them already. 

The major video SDKs are Vungle, Ad Colony, Unity, etc, along with the likes of ironSource and Mopub. That’s what I love about hypercasual, It’s not just data focus, it’s all about the process. The kind of publishers I would look for are the ones that are almost like Techstars, they’re like a tech company combined with the business accelerator, they are there to help you build your own business. So if you have an idea, just start talking to them as early as possible.

Shamanth 

Something you didn’t explicitly mention or underscore was how quick a lot of this process is, especially when you contrast it with traditional game development. A lot of traditional games can take months or years to develop. Just the process of validation of hypercasual games can be far, far quicker. 

Can you give us a sense of what kind of timelines that validation process you just described can look like?

Jon 

 That entire process from submitting an idea to launching your game worldwide, which can happen in six to eight weeks, just blows people’s minds. But for me, it’s super exciting. That has implications on basically, if you’re a marketer, and you’re thinking about where can I quickly execute marketing campaigns hypercasual can compete with how long it takes to create a TV ad, for example, let alone other categories of games that could take 12-18-24 months to develop. I just think that six to eight weeks and the amount that is happening behind the scenes is just incredible.

Shamanth 

One of the things that contribute to the massive success of hyper-casual games, as you touched upon earlier, is the massive scale of user acquisition that is possible with hyper-casual. Oftentimes, I’ve seen economics that are an order of magnitude better than casual games, or other genres of games, when you compare hypercasual versus other genres. 

What would you say contributes to this order of magnitude differential inefficiencies, these could be the cost of acquiring a user, but also an IAP. Can you touch upon why that’s important and what contributes to this sort of lack of differential in economics?

Jon 

In simple economic terms, hypercasual games are a commodity, it’s a product with an addressable global market. Each hypercasual game doesn’t significantly differ from others that preceded it. You see some great games that are very quickly copied. So that’s why for hypercasual precise targeting, it’s not necessarily as important as a low CPI. Because the people that we’re trying to acquire could be pretty much anyone who hasn’t played my game, regardless of age or income. So for me, it is IPM. So installs per 1000 impressions are talked about a lot in the world of hypercasual. 

You need the lowest CPI, the highest conversion, and therefore you need a high IPM. So you want as many as possible to lower the CPI. So ironSource released figures on this and to put it into perspective,

in casual games, you might see an IPM of around four, so four installs for every 1000 impressions versus a top hypercasual game, you might see an IPM of 40. So that’s 10X. 

That’s why hypercasual can buy users with a lower CPI versus a casual game and still get the same CPM in the waterfall that we’re bidding on. That’s why you’ve seen this explosion of hypercasual in the charts because we can compete with any other big game launches.

It’s fascinating talking to friends that work in other genres of games, the impact these hypercasual launches are having on their own game launches because they can just go up and launch and cannibalize a market. We’re talking like 10-15-20 cents CPI versus 1 to 5 to $10 CPIs that other gaming companies may be buying, just to be understood. It really comes down to that IPM number.

Shamanth 

Can you touch upon why that IPM is 10 times what a casual game maker can achieve? To put it differently, if a casual game or a strategy game were to say, I’m going to mimic hypercasual creators exactly and they’re going to feel inspired by what you’ve done. I’m sure at least somebody would have tried that. Would they be able to achieve that sort of IPM? I’m trying to understand what about the ad creatives would result in a 10x differential.

Jon 

Hypercasual, you precisely know the LTV and CPI that we need to hit to break even on day seven. Versus a mid-core title, which you may allow half a year to break even. So as a result, the way that you deal with UA channels is totally different. If you’ve got a mid-core game, you might invest a bunch of money in Facebook, come back in six months’ time, and then you can start figuring out all your different cohorts and then adjust CPIs, etc. But in hypercasual, we just don’t have that, everything that we do is based on user-level impression revenue data. So we know the exact value of user A versus user B, we know the exact value that we’re willing to bid on a user, not just by ad network, but by a specific app, and placement within the app, let’s say ironSource. So it’s a level of sophistication that we can apply. 

But with the advantage that we know the answer to the sum that we’re trying to achieve up front, we don’t have to wait six months to figure it out. On your point

in terms of creative, for hypercasual generally, it’s video playable ads specifically, that are driving most of the revenue. You’ll see how drastically different they are when creatively compared to other genres. Because you are effectively playing the game, you would see no difference between a playable ad versus the game. Versus if you look at a lot of ads for let’s say triple-A games, the ad you’re watching almost looks like a movie, then you go play the game. That wouldn’t look anything like what was advertised. 

So I think that the closeness between the ad creative, and the game itself also results in a much higher install rate. 

Shamanth

So in some sense, the sheer simplicity of hypercasual games leads to very close correspondence in the ad versus the game itself, which I imagine can result in tremendously high performance. As you said this very, very granular data, even at the user level, lets you target and acquire these users much more effectively. That’s what it sounds like is happening. Since you do seem to have that granular level of data, would you say that programmatic channels become much more effective for hypercasual? What’s been your experience with programmatic? 

I also ask because being able to crack programmatic understanding is very heavily dependent on having very granular data so you can bid for new impressions, basically, based on the users and their propensity to make future revenue for you. Since you have that level of understanding, I would imagine for programmatic, you will be in the very best position to capitalize on. I’m curious about what your perspective has been on programmatic and what your experience has been.

Jon 

On the one hand, we are in a very strong position because thanks to the likes of Tenjin and ironSource, and Mopub, we’re able to make every impression count and aggregate vast amounts of data coming in from different network supply sources and analyze everything from demand, source, ad placement, currency, country, etc. When it comes to programmatic having all of that data should be a great place to start, but there are times when we’ve been testing various DSPs there is a pricing problem if you think about the CPI that we are typically looking to acquire users at 10 cents 20 cents obviously varies by country. 

A lot of DSPs typically are asking for, let’s say $1 minimum when it comes to acquisition costs so that at times can be a problem because the basic math don’t work. So a lot of the acquisition is still being done manually but automated with a lot of ad networks and influencer marketing companies and social platforms like Tiktok. 

The other challenge, we’ve certainly tested a few and I’ve got my own a couple of startups in this space, but I think the way it’s going when I look at colleagues and other games that have successfully deployed programmatic, I think where we’re going to land in hypercasual is working with some of these startups that are offering effectively a bidder as a service, that we can start feeding all of our campaigns and link to our cost aggregation platform or analytics and even something a little bit more custom, rather than just taking a seat on one of the bigger, I would say there are some great DSPs out there, but they’re probably built for brands, and then some of the more performance DSPs. We’ve also tested but still we still are probably a lot more heavily working with ad networks and social platforms versus having picks like one DSP, and funneling all of our buying through it.

Shamanth 

And that certainly seems like an opportunity for the right company and you mentioned that you have your eyes on a couple of companies that could capitalize on this. Definitely, something that I’m curious about, and definitely something I’m going to be keeping an eye on.  

You’ve worked on a lot of games, and you’ve seen this category emerge, just over the last couple of years, to a significant size. What have you seen recently that has surprised you about hypercasual? It could just be either with regard to a specific game mechanic or the way data is used. What surprised you recently?

Jon 

I think, what’s surprised the industry is how hypercasual just keeps going on, because people just think it’s going to just disappear. It’s not going to disappear. I think it’s just going to evolve. So I think what surprised me and excites me is coming from the developer community, the way that you’ve got different genres of developers that have never built a hyper casual game, but bringing their knowledge from casual, a great developer that builds puzzle-based games, but actually kind of studies physics at university. 

I’m getting really excited about how we can start bringing great gameplay and depth to hypercasual games, that if we fast forward 12 months, I’d like to believe there’s going to be a really strong category of hyper casual games that are very different to what you see now. I think the speed at which our technology partners are moving is incredible. So we’ve already discussed a little bit about our obsession with impression level revenue data, but I think it’s gonna go a step further as it were. 

So it’s not just about a specific network, placement and creativity, I think what we’re getting is discussions are already happening, but actually linking all of our user acquisition, and monetization data and bringing it even earlier, and tying it to specific changes that we’re able to make in a certain country when it comes to gameplay. Everything we do is powered by data, but actually, an even earlier stage to be able to tie just the slightest change to game design to that bottom right-hand corner on our spreadsheet in terms of net profit per install, for example, I think we will get to that point where we can measure absolutely everything that we’re doing directly tied to net revenue net profit.

Shamanth 

Certainly, I can see how that is set to advance. This also reminds me of one of the developments that have happened in the last couple of months, which also ties into the idea of cross-pollination that you touched upon that one of the bigger players in the hypercasual game today is someone that started off as an ad network AppLovin. 

So they were basically in the ad tech space and they are among the big makers of hypercasual games today.  Which to me was surprising at the time, but it’s increasingly understandable given the size of the hypercasual market. How does an ad tech company coming into the gaming space impact someone like you that’s also looking to do deals with this particular ad tec

company? So you’re clearly competing against somebody that’s potentially buying on that entry. How do you look at this particular development? Do you see more crossover like this happening as you go forward? Do you think this is good for the space?

Jon

There are a lot of elements in that. If you look at hypercasual now and certainly when we launched Homa, this is very much in our thinking. So there are two types of publishers, there are hypercasual publishers that purely just focus on the ad side, just UA monetization and there are others that then focus on the other side, all about game design and the game art then makes the ad piece a lot more effective. 

I think if you look at what Adam and the team have done, an incredible job is, they fused the two. They’ve got their games publishing arm in terms of Lion, but then they also have this incredible user acquisition platform to then publish their games on. We use AppLovin, they’re a great partner. But there are also some others like ironSource. Its similar size in terms of market cap. 

Actually, for our first launch with Idle World, they were one of the top performing partners. I don’t think if you don’t own your own ad network, you’re at a disadvantage. When we built Homa, we wanted to build this blend of not ad tech, but a technology business that has automation at the heart of everything it does, user acquisition & monetization is part of that. But also blending it with a business accelerator.

 The oxygen of hypercasual is developers, whether you’re doing it in-house or partnering. What these developers really need is their own Techstars, they are running their own business, so they need someone that’s got their best interests at heart that’s going to help them grow, that’s gonna be able to plug them into their own kind of Data Analytics Suite to help them design better games. So I certainly don’t think you’re really disadvantaged if you don’t have that. The other element in there is where you are most likely to acquire hypercasual users. It’s from other hyper-casual games. 

Lion has a great suite of games. But there are lots of other hypercasual studio publishers that we acquire users from they’re acquiring users from our games. It’s no different from any other where you’re going to acquire a player that likes other RPG games. So that element is nothing new. But what I expect to see happening is in this sort of automation tech stack, that this new era of hypercasual publishers are building out, having their own in-house competencies, back to the last point about programmatic, having your own in-the-house competencies and way of doing user acquisition is going to be a key differentiator. So you know, it’s as with anything, we have access to the same networks as all the other publishers, but it’s going to be about how we can neatly tie together everything we’re doing. 

We have our own MMP in house. So it’s not just about having that data. But how are all the tools that we have built on top of partners like Tenjin, Game Analytics, Mopub, ironSource, how can we then execute that more effectively than the team at Lion.

Shamanth 

That also speaks to the level of sophistication that you alluded to in your data and how you’re using that on a day-to-day basis. 

How do you see hypercasual evolve and mature over the next couple of years? Because 816 million MAUs are huge. Where do you see this going from here?

Jon

Some people are saying it’s going to shrink, I actually see a lot of green pasture ahead. So if we look at China, roughly 800 million mobile phone users, 240 on iOS and the rest Android, right now. China has been a tricky market with the ever-changing government legislation locking down licenses for nine months, and they opened up and they closed it again, not necessarily a problem for hypercasual. But that said, the legislation is still being defined. So for me, if you think of China, iOS is the same size as roughly the US and it’s still early, I just see a huge amount of growth in China. 

In Asia, we’re also hearing rumors about certain companies outside of hypercasual that have got aspirations to move into hypercasual. One that I know has moved into hypercasual is Bytedance. So again, the more you have these huge tech companies with things like TikTok in their armory, moving into hypercasual, you’re just gonna see more great games in the market, particularly, given the complexities and the uniqueness of certainly the Chinese UA market. 

Not to mention there are like 50 different Android app stores to start within China. I think, the more you’re going to start to see chart-topping hypercasual games in that market are going to bring more and more of the Chinese user base online. So that really excites me. Yes, you might see some stagnation or decreased level of growth in Western markets, but Asia is very interesting. We spoke about it earlier and how UA monetization tools continue to develop giving even more depth in terms of what and how we can measure exactly everything that’s happening in our games is really exciting. 

We spoke earlier about the investment money moving in, we’re seeing more global game studios moving into hypercasual. So if you think back to 2016 – Ubisoft, they acquired the idle studio, Green Panda. We’ve got  Netmarble being fairly loud and trying to move into hypercasual space, you’ve got Tab Tail, Gizmo and for me, it makes sense purely from a business perspective, because you have a great overlap between hypercasual and casual in terms of players that also play IP-based games versus every time you launch a new title spending $5 to acquire new users. 

If you have a hypercasual studio in your portfolio with the level of detail we have, that exact tipping point where someone is migrating from hypercasual games to IP based games. The big studios deserve a really smart user acquisition play completely separate from the team and technology that I think you can absolutely apply to your casual UA stack. We touched on it earlier, but I just see hypercasual is a massive marketing channel. So I honestly believe in a couple of years’ time if I’m Universal Pictures, and I’ve got a new movie launching, alongside creating a TV spot in every single market for a very low cost and within six to eight weeks, I can have a mass market, hyper-casual game/TV ad out there around the world exposed to millions of millions of consumers, not gamers, consumers. I can just see hypercasual just almost if I go back to my agency days, it’s going to be on the media plan. 

It’s just like buying your out-of-home TV ads. I think brands are already spending heavily in terms of rewarded videos, we see a lot of brand performance ads in our games. But I just think the way brands are now going to start embracing hypercasual is similar to how they jumped into eSports, for example. So that really excites me as well.

Shamanth 

Given the sheer scale that hypercasual is already attained it doesn’t surprise me as to the outlook you see for hypercasual for the years ahead and absolutely excited to follow along. 

Jon, I do know you’re coming up on time. I would love for you to tell our listeners a bit more about how they can find out more about you and how they can find out about Homa games.

Jon

You can find us in the App Store under HOMA games. You can see our current portfolio of live games, you can check out the team on LinkedIn. We’ve got a team of 30-plus people in Paris, which is our HQ. Multicultural team powering all of our hit games. 

You can find various podcasts or YouTube videos of the team speaking at different events. And you know, feel free to just reach out and find me on LinkedIn and whatever aspects of hypercasual games you want to talk about from how do I get into it from a developer’s perspective to you’ve already got a game and you want some help in terms of publishing or anyone from the investment community that really wants to understand the hypercasual landscape and how to navigate it, are the kind of questions to ask. 

We get a lot of inbound activity from potential investors and larger M&A teams or studios wanting to find out more. So super happy to chat with anyone that just wants to learn more about hyper-casual games, hit me up on LinkedIn. And I’m sure there’ll be a link from the podcast to my details. So just drop me a line.

Shamanth 

Yes, of course. We’ll link to your website, your games, your LinkedIn, and the show notes to this podcast. But for now, I know we’ve come up on time. So I want to say thank you for taking the time to be on the show. We really appreciate you taking the time. I’m very, very excited to put this out into the world very soon. Thank you, John.

Jon 

Thank you, and thanks to everyone that’s tuned in to listen.

A REQUEST BEFORE YOU GO

I have a very important favor to ask, which as those of you who know me know I don’t do often. If you get any pleasure or inspiration from this episode, could you PLEASE leave a review on your favorite podcasting platform – be it iTunes, Overcast, Spotify or wherever you get your podcast fix. This podcast is very much a labor of love – and each episode takes many many hours to put together. When you write a review, it will not only be a great deal of encouragement to us, but it will also support getting the word out about the Mobile User Acquisition Show.

Constructive criticism and suggestions for improvement are welcome, whether on podcasting platforms – or by email to shamanth at rocketshiphq.com. We read all reviews & I want to make this podcast better.

Thank you – and I look forward to seeing you with the next episode!