(Bloomberg) – Adam Jaffe’s mobile game passes nearly a million people daily to the Apple Inc. App Store. to attract users – and ideally some willing to spend real money to increase their chances of victory.
Now, the ability of the CEO of Tenko Games to attract those profitable players is about to decline.
In an iOS update expected this month, Apple will start asking users for permission to track their data between apps. With the majority expected to say no, the tech giant is decimating a system that has allowed studios like Tenko to find high-spending potential and sell targeted ads. While giants like Facebook Inc. hit Apple by the planned changes, smaller application developers will have the weight of success.
Jaffe expects Underworld Football Manager, which grossed $ 3.5 million last year, to see revenue from iPhone users drop by about 20%.
“It’s like an atomic bomb,” said the former Barcelona professional footballer, who is also a consultant for other game studios. “People will have to reinvent the way they do their marketing business – well, they’re not reinventing, they’re going back to where they were 10 years ago.”
He’s not the only one crying out for a world without IDFA or Advertiser ID, a unique code assigned to every Apple mobile device.
Snap Inc. and Unity Software Inc., which sells video game building tools, both warned of a discontinuation of the change. Facebook, which empowered game developers to promote their products with little effort, said last year that an experiment showed a drop of more than 50 percent in sales to third-party publishers when they couldn’t customize ads – although some experts have questioned the accuracy of the company’s claims regarding IDFA.
Application companies to Apple: Thank you, sir. Can I have another one?
It’s a familiar dilemma that puts consumer privacy against the economy of free entertainment – and also one of the Davids and Goliaths in an industry, starting with a blockbuster year of record ratings and rising profits.
“Users should be able to choose from the data collected about them and how they are used,” Apple said in a statement. The company pointed out that apps and advertisers can still track users as before – the iOS update only requires businesses to ask users before sharing their data with other companies.
Tracking large expenses
Like cookies in web browsers, IDFA allows a network of advertising platforms and application developers to share information and essentially compile profiles based on each user’s habits.
To sell Tenko’s football game, for example, Facebook could identify those with a history of playing sports and spending money on it – much more crucial information than any demographic. These profiles also make in-app ads more valuable.
Ad prices could fall by more than half, said Ken Rumph, a technical analyst at Jefferies. “The fear of the market is that the values will disappear for a few months until prices or data analysis stabilize.”
Apple is hosting an event on Tuesday, with the iOS update coming soon after.
While Jaffe is confident that the appeal of his game is broad enough to survive this new era, he intends to stimulate marketing among Android device users and dissect the early behavior of large consumers so that Facebook can use more data. snapshots to refine your game marketing campaign.
But even with its best efforts, small developers such as Tenko could still be disadvantaged by larger players such as Tencent Holdings Ltd., Ubisoft Entertainment SA and Playtika Holding Corp., which can promote their products. cross-linking, gathering user data in their own suite. applications and remove intellectual property such as Harry Potter and Kim Kardashian.
Zynga Inc., which has built a multi-billion dollar gaming empire in recent years, said it would strengthen its own advertising network, possibly through acquisitions.
“Seizing the territory”
Apple has made privacy an important part of its consumer pitch and is a right of praise that sets it apart from the rest of Big Tech. Instead IDFA will be a system that reveals less about user identity and the performance of marketing campaigns.
“Support for small businesses has been at the heart of the App Store since its inception to help developers of all sizes develop, test and distribute applications,” Apple said in a statement. He pointed to a new program that halved the fees that most developers charge.
However, many in the gaming industry are skeptical about the iPhone maker’s motivations.
“It’s a land grab,” said Eric Seufert, a consumer technology consultant and author of the Mobile Dev Memo blog, who believes the IDFA enrollment rate will be less than 25 percent for games. “What Apple wants to do here is control of the fight from Facebook and Google and other advertising platforms, so they can use that control to their advantage.”
Small developers will be most severely affected because it will hinder their ability to build a user base from scratch, Seufert said. “It will destroy a lot of business,” he warned.
There could be a silver line, according to Michael Pachter, an analyst at Wedbush Securities. As Facebook and Google become less effective at promoting applications, gaming companies could attract more advertising dollars from their own industry, he said. The studios themselves may also pay lower ad fees.
For now, this little comfort for small game developers trying to survive a year of rupture. In the real world, just like in Jaffe’s mobile football game, money matters. Only about 5% of users pay real money in the app – and locating them is about to become much more difficult.
“You just won’t know who you’re targeting,” Jaffe said.
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