Is 24-Month Payback the New Normal?

🎮Is 24-Month Payback the New Normal? 🎮

Zhen Jie (ZJ) Sim joins us from UA financing company, PvX Partners, to discuss insights from UA data they’ve gathered from over 300 games in 2024. 📊

Here’s what they found:

Rising User Acquisition Costs 💸: User acquisition costs have surged, nearly doubling in the past year, particularly on platforms like AppLovin and Unity. This increase is primarily attributed to heightened competition, especially during peak seasons. Some studios are exploring alternative channels like TikTok to mitigate these costs.

Monetization Trends 💰: While monetization has improved, it hasn’t kept pace with the escalating UA costs. PVX is observing a growing trend towards hybrid monetization models, where traditionally IAP-focused games incorporate rewarded ads, and vice versa.

Declining Return on Ad Spend (ROAS) 📉: ROAS performance has declined by approximately 20%, resulting in extended payback periods for games. Some games are now projecting payback windows of three to four years.

Importance of Payer Retention 🤝: Revenue is becoming increasingly concentrated within a smaller base of payers, emphasizing the critical need to retain these high-value users to avoid costly replacements.

Predicting Payback Success ✅: Month 1 ROAS and Day 14 payer retention are strong indicators of long-term ROAS success. PVX offers a service called Lambda to assist clients in projecting ROAS for their games.

Channel Performance Insights 💡: While AppLovin remains a dominant channel for casual games, Google and Unity are demonstrating better ROAS performance. Last-click attribution models might influence this difference.

Casual Puzzle Game Dynamics 🧩: PVX’s data highlights a significant performance gap between the top-performing and median cohorts in the casual puzzle game genre. The top cohorts maintain superior long-term retention and achieve up to 200% ROAS by month 12.