Let’s break down the three main factors that influence the profit margin.
Retention rates (RR) are the percentage of users that keep playing the game over time. They’re usually the highest when it comes to Supercasual, as the game offers more options and has a more complex design, and are the lowest for Ultracasual, where progression is minimal and achievements are almost instant.
HC games’ RR sits halfway between the two genres. Statistically speaking, a HC developer should expect their RR to drop from around 30 to 50% on day one (RRD1) to anywhere between 5 to 10% on day seven (RRD7). For optimal rates, HC developers focus on increasing their RRD1 through the onboarding process. Having good knowledge of the RR is essential for managing the next factor.
As mentioned before, in-app purchases (IAP) aren’t something to rely on for HC games. With their relatively low RR, only relatively few users are ready to spend money on a game. Likewise, Ultracasual games don’t even have IAP in their business models, while Supercasual games can usually focus more on them with their higher RR.
The most common type of IAP in HC games is the “Remove Ads” option, which lets the user pay a small sum to remove ads definitely. And for profitability, that sum should be higher than the average user ad revenue (UAR).
That’s because UAR, or in-app advertising (IAA), is the primary source of revenue for HC game developers. It accounts for more than 95% of the expected revenue. Three types of ads are involved:
- Rewarded Videos (RV), that offer the player in-game rewards for watching a video ad;
- Interstitial Ads, that usually play at natural pauses (at the “Loading Level” screen, for example.)
- Banner Ads (BN), which are pretty standard in Ultracasual games but are also found in HC and Supercasual games, even though they offer a relatively low eCPM.
RV are usually the most profitable type, which means they offer the highest Effective Cost Per Mille (eCPM). Still, developers have to keep an eye on the ads that are displayed in their apps. They should keep monitoring the frequency and types of in-game ads over time to avoid eCPM decay.
The CPI is a negative value. Therefore, developers can only afford to increase their investment in marketing their game as long as the game’s LTV increases. This explains why they only develop Ultracasual games with a CPI of around 10 cents to make up for the low LTV.
Regarding Supercasual games, developers stick to a standard CPI of 0.4 to 1 dollar, but this number can go much higher in rare cases, reaching 1.5 dollars, as these games’ average LTV lies between 0.5 to 2 dollars.
As mentioned before, HC developers opt for a low CPI. Fortunately, there are many ways to lower the CPI without losing UA rates, which help maximize the profit margin.
The HC business model relies on how users interact with the game. Its attractive and accessible design is very effective in advertising, helping reach a lower CPI. In addition, the game’s satisfying and engaging mechanisms help preserve a good RR, which in its turn brings optimal revenue thanks to IAA, but also to IAP.
Homa Games usually achieves maximal monetization in action HC games thanks to RV, IAP, and a relatively high RRD7. However, we are always looking to diversify our projects and bring value to different categories of users. This is why our scope englobes many Supercasual and Ultracasual games, with various satisfying, idle, or puzzle mechanisms.