Mobile games – everyone’s a winner
Matthew Webster: Digital Life
As I regularly – monotonously – say, there is nothing new under the sun but the digital world can show a different way of skinning the same cat.
A shiny new San Franciscan start-up that publishes games for mobile phones is essentially the same business as Faber & Faber in 1920s London, encouraging and marketing T S Eliot. I’ll explain.
Mobile-phone games are part of the latest internet gold rush. In gold rushes, very few miners make any money: the winners are usually the people who sell the picks and shovels to the miners.
And so it is in the mobile-games gold rush. The ‘miners’ are those who create the games; the shovel-sellers are the publishers who turn them into cash and take a slice.
The ‘miners’ are the thousands of technical and creative worldwide geniuses producing new games (or apps). Some work alone in their spare time; others work in companies dedicated to the industry. They make anything from simple word games to very complex action and adventure games with many characters and levels of success.
A game makes money three main ways. First, you may have to buy it, although most are given away. Secondly, some make small charges as you play the game; perhaps to get help or obtain more options. But the main source of income is from targeted advertising placed on the game, which plugs away relentlessly while you play and can’t be switched off.
This is where the pick- and shovelsuppliers step in. These companies – the publishers – provide a bridge between game developers and advertisers. They advise both sides and take a slice of all the advertising revenue that flows through the system, just as advertising agencies have always done.
They are vital to the whole games business, as game-developers don’t tend to know anyone who wants to pay to advertise on their game and couldn’t arrange it anyway; and advertisers don’t know any game-developers. Without the broker in the middle, it wouldn’t happen.
The company Applovin (it really is called that), founded in 2012, already has revenues of $1 billion, made up of millions of slices of advertising costs. It sees over 350 million daily users of the games it publishes and knows a lot about each one of these users: age, gender, playing ability and preferences, location and much, much more. This allows them to direct the adverts highly effectively, maximising the benefits to the advertiser.
Everybody wins, it seems: the developer receives part of what the advertiser pays and is happy; the advertiser receives highly targeted adverts and is happy; Applovin sits in the middle, raking in the cash, and is very happy indeed.
This market is growing very fast. In 2019, the total spend on mobile advertising was about $190 billion; in 2015 it was only about $55 billion. It could easily reach $300 billion by 2023.
When we think of publishers, we Oldie readers might think of John Murray in his 19th-century Mayfair drawing room, inspiring the likes of Byron and being the centre of a literary circle. Astonishingly, Applovin is doing almost exactly the same job. It encourages and develops people who create games, often taking a small financial risk; it holds conferences for them and acts as adviser. Then it arranges for the worthwhile games to be published – and hopes to reel in the cash.
The only real difference is that Applovin sells games and advertising, whereas Murray sold only books – but don’t tell me that Murray wouldn’t have sold targeted advertising in Byron’s books if he had been able to.
There really is nothing new under the sun.
come down for unauthorised overdrafts, it is likely to go up for agreed ones. Already several banks have announced a new uniform rate of 39.9%, which in some cases is more than double the old rate for arranged overdrafts.
Banks must also now advertise their overdraft prices with a single annual interest rate, an APR, so customers can compare them more easily. Banks must also identify account holders who show signs of being in financial difficulty.
Anyone with an overdraft who keeps a close eye on their bank statement will recently have seen their available balance – the amount of money in their account that they can spend – go down.
In practical terms, nothing has changed. Your available balance used to be the balance in your account plus any arranged overdraft. If you had £100 in the account and a £500 overdraft, this balance was £600.
Since December 2019, your available balance must include only the amount that is actually yours, with your overdraft shown separately.
Two years ago, banks were ordered to send text-message alerts to customers who were about to fall into unarranged overdrafts, giving them time to take action to avoid doing so. Showing how seriously they take overdraft behaviour, the Competition and Markets Authority has since fined several banks for failing to comply.
Santander was found to have committed six breaches and had already been ordered to refund £2 million to 25,000 customers for failing to send alerts.
HSBC had to repay £8 million to 115,000 customers. Its ‘unsociable hours’ policy meant it did not disturb customers between 10.45pm and 7.30am – so customers did not receive warning texts until the next day, by which time charges had been added to their accounts.
Nationwide had to refund around £6 million to 320,000 customers who had not received a text or had not been warned that they would incur charges for going overdrawn.
These actions are helpful in understanding that overdrafts are debt but are an expensive way to borrow and should be used only for the short term.