2020 Predictions #1: Prepare to Crown the New King of Puzzle Games
all predictions can be found here.
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Before you jump in, let us sum up how we arrived to the predictions.
We originally created a taxonomy together with Game Refinery dividing the games market into four different categories: Casual, Mid-Core, Casino and Sports. Then we further broke down the categories into genres and sub-genres based on feature sets.
We pulled the data of top 1000 games from last three years from the one and only App Annie and aligned the data with the categories, genres and sub-genres.
Once we had a clear view of what happened, we got together and wrote our predictions.
Please, take the numbers presented with a giant grain of salt. They are there more to show trends and to give rough estimates.
This analysis is written by Miikka Ahonen, Niek Tuerlings and yours truly.
Alrighty then, lets kick off the predictions with the Puzzle genre!
Puzzle Games Continued to Grow
Western casual games category broken down into genres and sub-genres. Ad-revenues excluded, except within Idle and Hypercasual sub-genres.
Puzzle genre is the second largest, after strategy games, on mobile in terms of in-app purchases. Last year Puzzle games generated a whopping $4.5Bn in IAP revenues while growing 18% year-on-year. The lion share of puzzle game revenues come from Match-3 games, which generated $3.4Bn in IAPs growing at a healthy pace of 13% year-over-year.
For the past years, the competition at the top of the Match-3 games has been dominated by King, Playrix and Peak, in that particular order. And that is the order going into 2020 though it looks to be a matter of time before the order at the top changes. Close to the top there are companies, such as Jam City (Cookie Jam, Panda Pop), Rovio (Angry Birds Dream Blast), Tactile (Lily’s Garden), AppLovin (Matchington Mansion, Clockmaker) and Storm8 (Home Design Makeover, Property Brothers) making strides with a hit or two, yet remaining miles away from the top three.
In 2018 it became clear that nailing down retention and monetisation are not enough to create a successful Match-3 game - marketability became the gatekeeper for scalability. IPM became the new LTV. In 2019 the importance of marketability led to M&A focusing on diversification as well as vertical integration.
AppLovin, the US-based ad network turned publisher, which came clear about their investment into Firecraft Studios, acquired Belka. This is a typical vertical integration where AppLovin combines their mediation and user acquisition expertise with Belka’s games and PeopleFun’s superb traffic for Match-3 games.
At the same time, Playtika continued to diversify their casino centric portfolio by investing heavily into casual games with the acquisitions of Supertreat and Seriously, which join the previously-acquired Jelly Button and Wooga. Not to mention Playrix investing in Vizor among a dozen other investment in CIS countries.
That’s the big picture. And as you very well know, we at Deconstructor of Fun don’t stop at the big picture….
Our 2019 Match-3 Predictions and What Actually Happened
Match & Decorate grew the most in terms of overall revenue. Other Match games grew the most when looking only at the growth percentage.
In the Match-3 genre the biggest winners, not surprisingly, were the Puzzle & Decorate games and especially Playrix’ portoflio with Gardenscapes, Homescapes & Fishdom, which overtook the lead from Classic Match 3 games towards the end of the year as a result of aggressive growth in downloads.
Classic Match-3 games, headed by King’s portfolio, saw decline largely driven by the declining downloads. Bubble Shooters also continued to decline in terms of revenue despite growth of downloads. With King and Jam City taking it easy, Ilyon had free reign to grow its signature game, which led to the company getting acquired by Miniclip.
Tile Blast games, defined largely by Peak Games, continued smooth sailing. There was no-one to challenge Peak in the category. Other Match-3 games on the other hand grew significantly driven by Rovio’s breakout hit, Angry Birds Dream Blast.
On the revenue side:
King’s revenues decline significantly. Playrix passed King in December and is creating distance every month. Matchington Mansion (Firefox) has declined significantly in a year as AppLovin has put its love in Belka (Semfinaco), which grew exponentially in 2019. Peak is stable and controls its sub-genre of tile blasting. Tactile and Rovio both grow significantly as their new titles scale up. Jam City hold it stable with the power of a large catalog as the new games fail to scale.
On the downloads side:
Playrix going all-out on user acquisition spend. King lost third of downloads but woke up towards the end of the year to fight back for downloads. Zenjoy coming out of nowhere with their design home meets puzzle title and scaling massively. Rovio’s downloads fluctuate and decline towards end of the year. Tactile on the other hand seemed to find a second wind with additional push towards end of 2019. Belka seems to have found a ceiling for its only puzzle title and is ramping down the installs. Big Fish pushed it’s Toy Story Drop title mid year but clearly didn’t find it to be that scalable.
Before jumping to predictions for 2020, let us review how our last year’s predictions faired:
2019 Prediction 1: More and more mashups, following the steps of Home Design Makeover and Matchington Mansion, will enter and do well in the category.
More and more mashups definitely did enter the category. Only one new entrant made a big splash: Lily’s Garden by Tactile Games. The Danish veteran developer rose to new heights with help from its distinctly bold ad creative. Ad creative is also the topic of Prediction 2.
2019 Prediction 2: Creatives of Match-3 games reach new highs or lows, depending on how you view it. Funnel conversion and decrease of CPI will be chased with all-means-available.
While we did foresee the phenomenon, we did not expect to see the Gardenscapes protagonist in chains, clearly inspired by the success of another Playrix-affiliated title Hero Wars’ creatives. Playrix went to great lengths in 2019 also in terms of marketing spend - taking us straight to Prediction 3.
2019 Prediction 3: Marketing payback times will be over a year, which will make market entry hard.
Playrix scaled their marketing spend throughout 2019, driving growth for the entire genre, but also making entry for newcomers difficult. The other big incumbents, Peak and King, were flat and in decline, respectively. This gives us the segue into the final three predictions that are about the big three.
2019 Prediction 4: King will go all-in on Candy Crush Franchise, releasing soft launched experimental Candy games.
This one we got wrong: the new Candy games were never released globally. King instead has evidently focused on growing its flagship title, Candy Crush Saga. This is a logical decision given a) how difficult it is to scale a Match-3 game and b) how “poorly” (compared to the original Candy Crush Saga) the follow up titles have performed.
2019 Prediction 5: Playrix will launch an additional title to strengthen its position as the second largest developer in the category
Playrix released a new title, Wildscapes, although it failed to scale. While the zoo theme was on the money just a few years ago, with the rise of the animal rights movement, building a prison for animals is arguably not something the majority of their target audience fantasies. The game itself though is extremely well made.
2019 Prediction 6: Peak will focus on profitability after years of hyper growth.
Whether a conscious choice or a forced hand, Peak tuned down their user acquisition spend during 2019, resulting likely in higher profitability. One could argue that the Turkish company is setting itself up for an acquisition.
Lesson From 2019: Don’t Poke the Russian Bear
As outlined earlier, the Match-3 genre has been dominated by three big companies: King, Playrix, and Peak. You’d think that market share would make for boring stories, but 2019 for sure was full of action. As the year started, the newcomer Firecraft was eating Playrix’s lunch by imitating the product and innovating on the marketing side. This direct attack led to unproportional counter attack from the Russian publisher.
Both Firecraft Studios and Playrix borrowed freely from each other whether it came to core gameplay, theme, art style, store creatives, icons or video creatives.
The pink graph shows Matchington Mansion starting to scale in early 2018 followed quickly by the scaling up of both Homescapes (purple) and Gardenscapes (blue). In late 2019 Matchington Mansion starts to decline rapidly, which may indicate that the battle between Playrix and AppLovin is over on this front. Though with the acquisition of Belka and PeopleFun we believe that the war between the two has only started.
By the time that our Firecraft post was published in June (read: Matchington Mansion - You Won't Believe the Truth), Playrix had already put the pedal to the metal in an immense show of force. The bear was now fully awake, leaving not only Firecraft but also King and Peak behind.
Playrix, taking the pole position in marketing spend, downloads, and revenue, generated a whopping 308M downloads in 2019 with its puzzle portfolio (Fishdom, Gardenscapes, Homescapes, and Wildscapes). Just to put that in perspective, it’s roughly 50% more than King's Candy Crush portfolio with its 205M downloads. Maybe going head-to-head with Playrix wasn’t such a good idea after all? Given that the growth affected genres outside the puzzle, with Glu reporting decline due to rising CPIs driven by Playrix’ and AppLovin’s battle.
While the battle between Matchington Mansion and Homescapes was at its peak, King chose to focus on their Candy Crush franchise. Unfortunately avoiding conflict has steered them toward a very conservative product and marketing innovations and put the publisher on track to lose the crown in the category they once defined. Though, things are not bleak for King in any way imaginable. They are still highly profitable and successful publisher and an important piece in Activision-Blizzard’s investor story.
288% Growth driven by Core Gameplay Innovations
Rovio made waves last year with Angry Birds Dream Blast, growing the Other Match-3 sub-genre revenues by close to 300%. It’s arguably one of the few successful core gameplay innovations in the past couple of years; a smooth combination of Tsum Tsum and Toy Blast cores. In a ruthless defensive move, Rovio even put out a reskin of their own game before competition had time to do it.
Other fresh takes in this category - and probably worth checking if you’re tasked with designing new match core gameplay - is Traffic Puzzle by casino publisher Huuuge and Dr Mario World by Nintendo.
Rovio’s Angry Birds Dream Blast was a great fresh take combining tile blasting and physical puzzle. Huuuge entered Match-3 with a very interesting Traffic Puzzle that looks to be scaling nicely. Nintendo’s Dr. Mario World was a fresh take but just like most of the publisher’s games on mobile, it sadly tanked.
“Other Match-3” is also home to string-matching games - such King’s Diamond Diaries Saga. The biggest string-matching game by far is Best Fiends, which is categorized as a Puzzle RPG due to its progression mechanic. Though from a gameplay and traffic source perspective Best Fiends is arguably closer to Match-3 games than to RPG games.
In any case, Best Fiends managed to almost double its revenue year on year, which is a great feat to say the least. Interestingly enough, towards the end of the year Seriously released yet another sequel attempt to its first and only hit game. The sequel, Best Fiends Stars, shares the core gameplay but cuts away most of the complexity in the meta game. And at least at the moment, the game is trending to unfortunately miss its mark, just like Best Fiends Rivals and Best Fiends Forever before it.
In 2020, we predict that in Match-3 games:
Consolidation continues. The market is running out of obvious acquisition targets and the next tier of M&A will focus on acquiring companies that have the most fitting audience for Match-3 games. AppLovin is leading the charge with an acquisition combo of Belka and PeopleFun. Most likely consolidation will occur with:
A publisher with $10M+ in yearly revenues in the genre, such as Tactile, PlayQ, AWEM, or PlayDots, will be acquired by either Playrix, Zynga, Playtika or AppLovin.
Word and other puzzle game companies with sizeable DAU and great audience fit with Match-3 publishers will get picked up by the four companies mentioned above.
Playrix will become the new king of Match-3 as the Puzzle & Decorate sub-genre passes the Classic Match-3 sub-genre. This is because:
King’s focus on a single franchise combined with conservative product and marketing strategy has opened the door for competitors.
At the same time Playrix has become extremely aggressive on both product and marketing fronts - and the company is not held back by quarterly responsibilities to investors.
Players are arguably interested in more depth that Puzzle & Decorate games deliver through visual progression and light narrative
Peak Games will start to decline. Given the company’s massive run-rate, it’s possible that the company will get acquired in 2020 - provided that they’re willing to sell. The best fit would be Zynga, who already bought Peak’s card games business before and has established strong presence in Turkey through Gram Games. We are predicting Peak Games’ decline and eventual sale because:
The company has not released a new game in years
The market growth is driven by Puzzle & Decorate games, which require massive amounts of content. This leads to having larger than average team sizes. Which is counter to Peak’s current Supercell-like small-team setup.
Peak has been active with its stealth technology venture, which is clearly outside the focus area of highly competitive puzzle games.
Peak has lost some of its senior talent to the booming games scene in Istanbul
Zynga has weak presence in the Puzzle genre
Marketability will continue to be the name of the game in Match-3 games. Bolstered by the success of Lily’s Garden and warned by the difficulty to scale experienced by Jam City’s Vineyard Valley and Playrix’ Wildscapes, we’ll see new puzzle themes specifically designed to hook target audiences of mature female players.
Merge Games - Zynga’s Magical Playground
During the last couple of years, Gram Games has been busy merging. It was just a matter of time before they found a re-skin that would scale.
Last year we predicted that Merge Dragons will receive several follow-up titles from Gram and others, but that none of them would come close to the success of the original game.
This prediction was one that we got 100% right! Perhaps unsurprisingly, the only new merge game that’s been able to make any impact so far is Gram’s own Merge Magic. And it’s not from lack of trying. You name it, you can merge it: planes, dogs, even pizzas. Somewhat higher-profile entrants include fast-follow Mergical from the mystery developer Betta/REIN Technologies and Zeptolab’s IP-driven Om Nom: Merge.
It’s noteworthy though that experience-wise hyper-casual games such as Merge Plane are a far cry from the immersive island-building and discovery of Merge Dragons and its ilk. Merge Dragons is such a well-designed game that it’s hard to differentiate from it without making it worse. Even so, merge games remain relatively easy to produce, which leads us to our prediction for the genre:
After the release of Merge Magic, the combination of the two games makes little more than Merge Magic at its peak. This may mean that Merge Magic is cannibalizing Merge Dragons, or it may be that Gram has scaled down UA spending on Merge Dragons and is running a more profitable combo. Only Zynga/Gram knows, but the scaling down of Merge Magic installs is a hint…
In 2020, we predict that in Merge games:
More merge games will continue to hit the market. Some will be straight copies of Merge Dragons; but we’ll also see eccentric takes on both mechanics and theme. However, as the design of the original is very hard to improve on, Gram/Zynga will keep its merging monopoly for years to come.
Merge Magic will make around 30% of what Merge Dragons is making. These games are identical down to their themes and it was surprising that out of all the different themes Gram attempted the one with Magic prevailed. But the closeness of the two themes will result in likely very much similarity of an audience thus limiting the growth of Merge Magic and likely cannibalising Merge Dragons.
Hidden Object Games - After years of climbing, Wooga finally reached the top
The Hidden Object sub-genre saw healthy growth during 2019, primarily driven by Wooga’s June’s Journey and the newcomer Hidden Hotel by WhaleApp. In a world where shocking ad creative seems to triumph over great games, it’s refreshing how Wooga has attained its #1 position in the genre with quite traditional methods: building arguably the best product in the market and providing players with high-quality content at a regular pace.
Top 6 Hidden Object games. The growth of Hidden Hotel indicated that there’s room in the sub-genre. The rapid decline of revenues initiated by the scaling down of user acquisitions questions this notion. We’ll get confirmation based on how Playrix’ Mano Matters fairs.
As far as Hidden Hotel is concerned, it seems like we have come a sort of a full circle in meta game innovation. Playrix first put its prior hidden object meta into the Gardenscapes puzzle game in 2016, with widely-known consequences. In 2019, WhaleApp took it and put it back in a Hidden Object game, successfully growing Hidden Hotel throughout last year.
Finally, smaller successes beyond the top 10 include the innovative take on the genre 5 Differences Online and Mytonas Seeker’s Notes follow-up Ravenhill.
2020 Predictions for Hidden Object Games
Competition will get stiffer as Playrix re-enters the sub-genre not only with their soft launched Manor Matters, but also with possible new games from their network studios.
June’s Journey will remain at the top of the sub-genre. The game will be hard to overthrow, given the loyal nature of the HOG players and Wooga’s razor-sharp focus on its unique game loop and quality storytelling. On the other hand, G5, Mytona and especially WhaleApp will be hard-pressed to keep their market share.
Solitaires and Mahjong Solitaire - There’s a new boss in town
After some years of not much happening, there is a new star in the Solitaire genre, and it is Supertreat. The Austrian developer’s Solitaire: Grand Harvest is on an outlandish growth track: there’s not a single quarter since it’s launch that it hasn’t grown in revenue. That is 11 consecutive quarters of revenue growth. Whatever price Playtika paid for the rising star, it’s likely that they’re happy with it.
The growth curve of Solitaire Grand Harvest is simply a work of art. The game is currently at around $7M a month run-rate with no stop in sight.
Product-wise Solitaire: Grand Harvest is exemplary in at least two ways. First, the game itself is a great mix of proven elements across the Solitaire and Social Casino genres while keeping true to the essence of the single player card game experience. Second, the way that Supertreat has grown the game is yet another indication that doing well in this business isn’t about mastering the sprint (or the dubious “strategic launch”). Instead, it’s a marathon.
Prediction for 2020 is simple:
Everyone who sees the graph above will greenlight a fast-follow title for Solitaire Grand Harvest.
Word, Trivia, and Board - Meager growth driven by existing IP
After some years of revenue growth, Word, Trivia and Board sub-genres remained relatively stagnant in 2019. The big three of the genre are Wordscapes, New YAHTZEE With Buddies and Board Kings, racing neck-to-neck for #1 spot and leaving everyone else far below the top 3 in revenues.
We predicted last year that IP would have no additional value in this genre. We’re the first to admit that we got that one wrong! Handful of new games did see some minor success below the top, and all of these were either titles utilizing known IP (Mattel’s UNO! and Sony’s Who Wants to Be a Millionaire) or follow-ups from incumbents (PeopleFun’s Word Stacks).
Prediction for 2020: New games using known IP enter the mobile games market as toy and entertainment giants scurry to search their backlog of board games and game shows.
Action Puzzle and Other Puzzle - look here for growth ideas!
Action Puzzle and Other Puzzle are home to a ragtag bunch of games. Action Puzzle is mostly dominated by Angry Birds slingshot portfolio, which saw a sharp decline in 2019. The Other Puzzle sub-genre is, on the other hand, a home to a variety of unique puzzle-style games that are hard to categorize.
While in absolute terms the games remain small - typically less than $10M in yearly revenue - it is still refreshing to see games in more obscure genres built into sustainable businesses. Examples of games that managed to grow in 2019 include Mahjong City Tours, Magic Jigsaw Puzzles and Lemmings.
2020 Predictions for Action and Other Puzzle Games
As the impactful puzzle genres become gradually more and more saturated we’ll see many more smaller developers finding their niche with simple but original puzzle games. The straightforwardness of ad monetization will further help to monetize these niche puzzle games.
Mobile Publishers will become more active in investigating these sub-genres either for M&A opportunities or for traditional third party publishing. The hypothesis is that these games have great KPIs but the lack of user acquisition resources is the reason why they remain diamonds in the rough.
Summary of Puzzle Predictions
Puzzle Games genre generates close to 60% of all IAPs in casual games.
Consolidation continues. The market is running out of obvious acquisition targets and the next tier of M&A will focus on acquiring companies that have the most fitting audience for Match-3 games. AppLovin is leading the charge with an acquisition combo of Belka and PeopleFun. Most likely consolidation will occur with:
A publisher with $10M+ in yearly revenues in the genre, such as Tactile, PlayQ, AWEM, or PlayDots, will be acquired by either Playrix, Zynga, Playtika or AppLovin.
Word and other puzzle game companies with sizeable DAU and great audience fit with Match-3 publishers will get picked up by the four companies mentioned above.
Playrix will become the new king of Match-3 as the Puzzle & Decorate sub-genre passes the Classic Match-3 sub-genre. This is because:
King’s focus on a single franchise combined with conservative product and marketing strategy has opened the door for competitors.
At the same time Playrix has become extremely aggressive on both product and marketing fronts - and the company is not held back by quarterly responsibilities to investors.
Players are arguably interested in more depth that Puzzle & Decorate games deliver through visual progression and light narrative
Peak Games will start to decline. Given the company’s massive run-rate, it’s possible that the company will get acquired in 2020 - provided that they’re willing to sell. The best fit would be Zynga, who already bought Peak’s card games business before and has established strong presence in Turkey through Gram Games. We are predicting Peak Games’ decline and eventual sale because:
The company has not released a new game in years
The market growth is driven by Puzzle & Decorate games, which require massive amounts of content. This leads to having larger than average team sizes. Which is counter to Peak’s current Supercell-like small-team setup.
Peak has been active with its stealth technology venture, which is clearly outside the focus area of highly competitive puzzle games.
Peak has lost some of its senior talent to the booming games scene in Istanbul
Zynga has weak presence in the Puzzle genre
Marketability will continue to be the name of the game in Match-3 games. Bolstered by the success of Lily’s Garden and warned by the difficulty to scale experienced by Jam City’s Vineyard Valley and Playrix’ Wildscapes, we’ll see new puzzle themes specifically designed to hook target audiences of mature female players.
More merge games will continue to hit the market. Some will be straight copies of Merge Dragons; but we’ll also see eccentric takes on both mechanics and theme. However, as the design of the original is very hard to improve on, Gram/Zynga will keep its merging monopoly for years to come.
Merge Magic will make around 30% of what Merge Dragons is making. These games are identical down to their themes and it was surprising that out of all the different themes Gram attempted the one with Magic prevailed. But the closeness of the two themes will result in likely very much similarity of an audience thus limiting the growth of Merge Magic and likely cannibalising Merge Dragons.
Competition will get stiffer in Hidden Object sub-genre as Playrix re-enters the sub-genre not only with their soft launched Manor Matters, but also with possible new games from their network studios.
June’s Journey will remain at the top of the Hidden Object games. The game will be hard to overthrow, given the loyal nature of the HOG players and Wooga’s razor-sharp focus on its unique game loop and quality storytelling. On the other hand, G5, Mytona and especially WhaleApp will be hard-pressed to keep their market share.
New Word and Card games using known IP enter the mobile games market as toy and entertainment giants scurry to search their backlog of board games and game shows.
As the impactful puzzle genres become gradually more and more saturated we’ll see many more smaller developers finding their niche with simple but original puzzle games. The straightforwardness of ad monetization will further help to monetize these niche puzzle games.
Mobile Publishers will become more active in investigating these sub-genres either for M&A opportunities or for traditional third party publishing. The hypothesis is that these games have great KPIs but the lack of user acquisition resources is the reason why they remain diamonds in the rough.
bonus:
A good handful of companies will start the development of “Solitaire: Grand Harvest with a Twist”
