From Layoffs to Leadership: Rethinking Strategy in the Gaming Sector

Recently, the video game industry and other major high-tech sectors have witnessed a spate of layoffs. These cutbacks are frequently attributed to advancements in artificial intelligence (AI) by the companies involved. However, I'm inclined to take a critical stance and argue that this reasoning might be a facade. I believe the real catalyst behind these layoffs is the diminishing profit margins these companies are experiencing. This situation prompts organizations to reduce their workforce to boost their stock prices—an approach that, while financially motivated, overlooks the human cost.

My perspective is not rooted in a desire to challenge the status quo for the sake of argument or to maintain a sense of moral superiority over the unfolding reality. Instead, it stems from a commitment to understanding the underlying factors driving these industry-wide trends. I believe in confronting and solving complex problems, as they stimulate intellectual growth and bring a sense of purpose and vitality to my work.

In analyzing the companies affected by layoffs, I've observed a significant trend: many have not achieved a leading position in the mobile gaming sector. This observation is crucial because mobile gaming represents the largest market segment by device within the gaming industry. The dominance of mobile gaming underscores the importance of strategic positioning and innovation within this space for companies aiming to thrive.

The silence surrounding the strategies for success in mobile gaming is telling. It's often said that those who know the path to success in this industry seldom share their insights, while those who speak up may not possess the depth of knowledge required. This secrecy is likely due to the complex nature of the industry and the critical role that people's livelihoods play in it. Despite this, there's a noticeable lack of discussion on the art of User Acquisition (UA), community management, the importance of A/B testing, soft launches, and the collection of user behavior data for informed decision-making. Successful publishers understand that putting ego aside and listening to data is the key to winning in this competitive arena.

The crux is that many game companies collect vast amounts of user data but either fail to make decisions based on this data or make incorrect decisions. A/B testing, for instance, should not be conducted merely out of curiosity or to settle internal disputes. It aims to inform actionable strategies that can be implemented promptly based on the insights gained.

If this article has yet to capture your interest, I urge you to examine the top ten grossing mobile publishers. Analyzing their products and revenue generation strategies can offer valuable lessons. There's wisdom in the Buddhist saying, "Your worst enemy can be your best teacher," which resonates with my approach to understanding and addressing the challenges faced by the gaming industry. It's important to recognize that not all game companies are struggling; several are achieving remarkable success. The key is to pay attention to these successful examples and learn from them.

Albert Einstein famously quipped, "The definition of insanity is doing the same thing over and over and expecting different results." This sentiment is particularly relevant for industry veterans who may resist change. The gaming market constantly evolves, and adapting to these changes is essential for sustained success.

As an illustration of adaptation and success in the mobile gaming market, consider the game "Whiteout Survival." Its persistent advertising presence across various platforms suggests a significant investment in user acquisition. This, coupled with sustained advertising efforts over 6-12 months, implies profitability. Tools like AppMagic offer insights into download and revenue numbers for mobile apps and games, providing a window into the strategies employed by successful publishers. Use this link to get a discount if you wish: https://appmagic.rocks/pricing?pricingPromoCode=montediscount

Yes, that’s $366,802,789 USD in NET REVENUE, not gross, generated in its lifetime.  In the past year, it has generated USD 352,620,146 in net revenue. Here is the download number and net revenue for last month, Feb/2024:

"Whiteout Survival" has achieved substantial net revenue, placing its publisher in a commendable position within the global ranking, yet not at the top. This underscores that financial success in the gaming industry does not require being the leading publisher but rather implementing effective strategies and understanding market dynamics.

Grasping the industry's complexities can be daunting due to numerous factors, such as fluctuating user acquisition costs and the ever-changing landscape of game distribution. Over the past 40 years, the industry has transitioned from arcade games to physical game distribution to digital distribution, and not all companies have successfully navigated these shifts.

I hope that new, innovative companies will emerge to refresh the industry. If the current giants fail to adapt, these newcomers could potentially replace them. Companies need to sense changes in the market and adjust their strategies accordingly. The gaming industry is filled with talented individuals, and it would be a significant achievement to see the legacies of established game companies preserved and carried forward by a new generation of publishers.

 Attached here a ranking chart of the top-grossing mobile game publishers on the day I wrote this article, 8th March 2024.  I want to point out that the number two company on this chart is no longer a US company; they are the publisher of Monopoly Go. A foreign entity has purchased its shares, and I do not believe they are profitable; the tremendous net revenue results from outspending massive UA money, and it is widely believed that they are not breaking even yet.

Thank you for bearing with me in my rant. I hope you found something within these observations and analyses that resonates with you or offers a new perspective. This article was written with a heavy heart, as the challenges and disappointments currently facing the video game industry are deeply felt by many of us within this community. In many ways, we are soaked in our sorrow and frustrations over the direction things have seemed to take.

However, my intention in laying out these thoughts was not to dwell on the negatives but to encourage a broader understanding of the underlying dynamics at play. Now more than ever, it's crucial for those of us in the industry—whether we're developers, executives, or passionate gamers—to see what is happening beyond the surface. With this understanding, I hope to inspire a collective movement towards actionable change, to alter the status quo in ways that preserve our industry's rich legacy and secure its vibrant future.

I've dedicated significant time to research and analysis. Before composing this article, my efforts included engaging directly with "Whiteout Survival," where I not only played the game but also meticulously mapped out its design elements and reverse-engineered its underlying game mechanics. This process involved a series of in-depth studies that delve into the core of its success. However, the depth and breadth of insights gained from this exploration are challenging to articulate fully through words alone. Thus, if this topic holds importance for you, I encourage you to embark on a similar journey of discovery. The nuances and knowledge to be gained are substantial, extending far beyond what can be captured in a straightforward narrative.

Change, especially within an industry as dynamic and fast-paced as ours, is never easy. It requires courage, innovation, and sometimes a willingness to take the road less traveled. Yet, the potential rewards for such bravery could reshape our industry and ensure its resilience and relevance for generations to come.

Once again, thank you for your time and attention. Let's not view these challenges as insurmountable obstacles but as opportunities to learn, grow, and ultimately thrive by embracing change and making informed, strategic decisions to lead us into a brighter future for the video game industry.