The Evolution of Mobile Game Development: Why Investment Has Become More Challenging

The mobile games market experienced unprecedented growth during the pandemic, with margins surpassing expectations. However, the current landscape is more complex. The hypercasual market, which accounts for 26% of global installs, has become increasingly competitive, with few new projects achieving success. The casual market has also undergone a significant shift, with investors now requiring preliminary metrics before funding a project. Developing a successful casual project now necessitates a substantial investment in a team of several dozen people, acknowledging that multiple attempts may be necessary before releasing a scalable project. The costs of developing hypercasual games have increased, with the average development cost for a project surpassing $20,000. The current average margin for hypercasual projects is around 10% to 15%, making it essential for studios to scale up their teams to remain profitable. The financial landscape for casual and midcore games is even more intriguing, with investment costs starting at around $500,000 and potentially reaching $2 million to $3 million. The profitability of a successful casual/midcore project must offset an average of $10 million to $15 million in unsuccessful investments. The mobile game development industry has matured, and it is no longer a gold rush where anyone can easily succeed. Investors are now more cautious, and game studio founders must demonstrate that their projects can generate profits comparable to those of other industries. Product quality and long-term sustainability have become paramount, and developers must balance their creative vision with the business aspects of the industry.