We Need To Talk About Gaming’s User Acquisition Problem

In the dynamic world of mobile and live service gaming, success hinges not only on the quality of gameplay but also on the size and engagement of the player base. User acquisition is therefore the lifeblood of the gaming industry, driving growth, fueling revenue, and cultivating vibrant, engaged communities.

But there’s an emerging problem – attracting and retaining players isn’t as easy as it used to be.

The identification of gamers is becoming more complex, raising costs, and decreasing the effectiveness of brands reaching targeted users. All of this makes user acquisition more expensive and less efficient.

As a result, game developers are looking at new ways to speak to audiences, uncover new user insights, and create self-sustaining game economies and ecosystems. Let’s discuss gaming’s user acquisition problem and the possible solutions in web3.

The user acquisition problems in web2

Take a look at gaming financials and it’s clear that times are tough.

Mobile games constitute nearly 50% of global gaming market revenue and almost all mobile games are live service games. Unfortunately, the global mobile gaming market revenue experienced a 1.6% year-over-year decline in 2023, marking the second consecutive year of decline.

For example, major publishers like Zynga’s owner, Take-Two Interactive, have downgraded their financial outlooks, citing challenges in the mobile segment. So, what are these “challenges”? In a nutshell, stricter regulations and tougher competition are tightening bottom lines.

Regarding the former, Europe’s GDPR and California’s CPA complicate personal identification for game studios, driving up costs and hindering brands’ ability to reach specific users effectively. Regarding the latter, competitive pressure is up in the face of a saturated market and similar projects. There are just too many good games in popular genres like shooters, simulation games, multiplayer online battle arena games, and role-playing games.

As a result, it’s harder than ever to get user acquisition right, impacting both studios and ad networks reliant on game advertising revenue. Something’s got to give.

The user acquisition hope in web3

In stark contrast, there are fewer user acquisition barriers in blockchain gaming and web3. This is due to three main reasons: demographics, community, and conversion.

First, demographics. Users in web3 typically possess stronger spending power, high project loyalty, and the ability to understand complex games. These are all very valuable attributes in attracting users to a game. Additionally, by entering web3, games can avoid direct competition since web3 user acquisition focuses on another user base than web2.

Second, community. From airdrops and yield farming to community contests with token-based prizes, web3 counts new methods to build community beyond traditional advertising. Again, this can more quickly bring users to the game and give them an incentive to remain in the ecosystem. Further, from the perspective of game studios, web3 offers the chance to create valuable in-game assets and currencies that they oversee, unlocking new revenue streams.

Third, conversion. Web3 user acquisition channels have the capability, especially compared to traditional advertising platforms, to guide users through in-depth in-game conversions with incentives and token expectations. Better yet, these users are then searchable thanks to blockchain-backed platforms and data protocols. Going forward, users can choose to share their data (for compensation) and games can access high-quality first- and zero-party data for better user targeting, attribution, and understanding in a regulatory-compliant way. Win-win.

User acquisition will decide the next wave in gaming

It’s a simple equation: there are no games without gamers. Therefore, amidst significant challenges within the traditional framework, expect user acquisition to have an oversized impact on what developers decide going forward.

Web3 presents a promising alternative through its demographic advantages, community-building opportunities, and enhanced conversion capabilities. If the above financial and user acquisition problems persist, don’t be shocked if the next wave moves to the blockchain to better attract and retain players.

It’s also worth noting that, beyond how games are made and consumed, web3 also improves how players interact. The meeting of social media and gaming credentials – like NFTs to depict accomplishments – helps gamers to tell their stories. Again, this improves overall engagement and leads to improved retention.

Ultimately, whatever method can most efficiently acquire players will win. Game on.

Leo Li is the Chief Growth Officer of CARV.