The Challenges of Securing Investments in Mobile Game Development in 2024

The mobile gaming industry has undergone significant changes in recent years, with the pandemic-era growth giving way to a more nuanced market. While hypercasual games still account for a substantial portion of global installs, the success rate of new projects has plummeted, with only a handful of titles achieving significant traction. The majority of installs are now concentrated around established projects, which have been developed and supported by publishers over the years using a games-as-a-service model. However, the profitability of this sector has become increasingly challenging to assess. The casual market has also experienced a significant shift, with investors now requiring preliminary metrics before investing in projects. This has resulted in a highly competitive market, making it difficult for small, young teams to launch successful projects. To develop a successful casual project, it is now essential to invest in a team of several dozen people, acknowledging that multiple attempts may be necessary before releasing a project ready for scaling. The costs of developing hypercasual games have increased substantially, with the average development cost for a project with promising metrics surpassing $20,000. The current average margin for hypercasual projects hovers around 10% to 15%, with teams requiring significant investment to sustain themselves. The financial landscape for casual and midcore games is even more complex, with investment costs starting at around $500,000 and potentially ballooning to $2 million to $3 million if the project makes it to launch. The success rate of these projects is statistically low, with only one in ten projects achieving significant returns. The profitability of a successful casual/midcore project must offset an average of $10 million to $15 million in unsuccessful investments. Mobile game development is no longer a gold rush, where companies can easily achieve high margins. Instead, it has become a mature industry where serious contenders with comprehensive strategies and deep expertise thrive, while smaller companies face significant challenges. Investors are now more cautious, prioritizing return on investment and seeking projects that can generate profits comparable to those of other industries. The restaurant business, for example, offers a higher chance of profitability, with initial investments ranging from $3 million to $6 million and a payback period of two to four years. In contrast, mobile game development projects have declining profitability, with successful launches becoming increasingly rare. Product quality and long-term sustainability have become essential, and developers must balance their creative vision with the business side of the industry. Ultimately, the market operates on financial logic, and economic considerations are paramount in any investment decision. The industry now comprises companies that not only have game development skills but also understand and handle all the necessary business aspects.