Here’s how iCandy Interactive benefits from the ‘long tail’ of mobile gaming revenues
For mobile game developers, a key strength of the business model lies in the capacity of a successful title to generate long-term revenues, at a minuscule marginal cost.
A good example is the popular mobile puzzle game Candy Crush, which was first developed back in 2012.
But data from Statista shows it’s still generating huge annual revenues for its parent company – to the tune of $US473m between January and September last year.
With the latest release of its game title – Masketeers: Idle has Fallen – in the December quarter, ASX-listed games developer iCandy Interactive (ASX:ICI) now also has plans to capitalise on a revenue opportunity of its own.
Following its launch in October, the game immediately generated more than $1m in revenue across its first two months of operations.
That flowed through to $1.3m in cash receipts from customers for Q4 – a figure which was higher than the previous three quarters combined.
In light of the game’s early success, iCandy Chairman Lau Kin Wai recently caught up with Stockhead to discuss the next phase of growth.
“We did well in Q4, but there’s definitely still a big window of opportunity to scale up Masketeers,” Kin said.
“The first growth area is in marketing, because the game only just launched late last year. So we haven’t got it fully into the hands of our target audience.”
The second key development is in content – adding features to the core gaming platform to drive interest around important dates or events.
“For example, typically once we’ve developed a game, we make small changes for events like Halloween and Christmas. And for Europe and the US you’ve got the summer holiday period (from June to August),” Kin said.
“So for those kinds of events we can add content which both attracts new players and gets existing players to maintain their engagement levels.”
“Users attract users. If you have a very engaged audience, they are bringing their friends and family to compare scores and things like that.”
Taking stock of the ICI’s early success with the Masketeers title, Kin said the end-to-end timeline for ongoing revenue generation is around two to three years – 12-18 months for game development, and another 12-18 months to complete distribution.
“Typically from our experience, for a game to scale up and get to its full potential — it’s easily a 12-month process,” he said.
“For one thing, it’s a piece of software so there will be improvements and new features that we continue to introduce.
“Even today, the Masketeers game looks very different than it did three months ago when we launched it.”
In terms of the scale-up process towards long-term revenues, Kin said a key advantage of the ICI studio is that as a games developer, it’s purpose-built for game roll-out across a global audience.
Its core target market is the US and North America, but the company regularly publishes games in up to eight other languages.
“We’re unique in that sense because we’ve always had an international team,” Kin said.
As a comparison, Candy Crush operates in multiple languages now but it didn’t add that capability until its fourth or fifth year of operations,” he said.
“We consider ourselves to be a lot more international from day one. That means it’s simple for us to roll out games to different markets such as China, Japan. Those markets are easy to access for us but we won’t do it until we’ve got the game optimised.”
Kin added as part of its commercial strategy, ICI also puts a premium on leveraging data insights from successful game titles.
“For example, there’s a number of insights from Masketeers and we’ve actually funnelled quite a bit of that behaviour analytics into (new game) Claw Star.”
“In our early Claw Stars update, the early metrics are even better than Masketeers,” Kin said.
“That’s not a fluke shot, it’s learning the lessons from a successful title and putting it into the next game.”
“In a way it’s kind of upgrading our products based on data behaviour, so we’ll continue to do better in terms of those metrics and how we engage our users.”
And with proof of early revenue traction across multiple game titles, ICI now has the pieces in place to drive long-term revenue growth of its own.
“I think a lot of people know how to make games. but they often make games that aren’t commercially viable,” Kin says.
“We know how to make games that are viable in terms of download numbers and are still able to drive commercial outcomes.”
“That’s really something that we’ve been building towards and mastering for the last six or seven years, and now we’re starting to see the results of that hard work.”
This article was developed in collaboration with iCandy Interactive, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.