A look into Merge Games and their next phase of growth
Merge games have been all the rage in mobile F2P recently, so I decided to take a deeper look to understand the genre’s past performance and future trajectory. Download volumes have remained relatively stable over the past 2.5 years, even though the number of games have almost tripled over the same time period. This was definitely surprising to see for a relatively young genre with so much hype around it.
Metacore’s “Merge Mansion” is the only one aggressively scaling users at this point (thanks to Supercell), while long time incumbent “Merge Dragons” by Zynga has dropped to a Q2 2021 market share of 13% versus 40% during Q1 2019. Since the overall genre downloads pie hasn’t really grown and competitor concentration has increased, two observations can be made -
Merge Dragons is potentially losing new and existing audiences to all the new competitors
It also doesn’t seem like many new players are entering the genre ecosystem at the moment
That said, the genre’s revenues look much more healthy. Q2 2021’s revenue volume was almost triple that of Q1 2019’s, and the genre as a whole is on a clear revenue uptrend. In other words, every merge game that has been able to reasonably scale is juicing the long term monetisation lemon for its already acquired player base.
More specifically and as can be seen in the graph below -
Merge Dragons continues to dominate with stable revenues on dropping downloads, which showcases the strength of this product’s long-term LTV curve
Big Fish’s “EverMerge” is scaling revenues brilliantly on the back of scaling UA, and seems to be on track to take the crown from Merge Dragons
Merge Mansion is doing the same as EverMerge - but long-term stability for both games remains to be seen
Zynga’s second merge game “Merge Magic!” is starting to see a revenue downtrend, and will likely need to figure out how to stabilise medium-to-long term LTVs
There is no doubt that merge games generally see equivalent or better LTVs versus their Match 3 counterparts. After all, merge games have two big advantages right off the bat - 1) they could potentially start at a higher LTV baseline by replicating and one-upping Match 3’s well established best practices, and 2) the core merge mechanic is perfect for relatively low cost content scalability, which is especially important given how this genre’s audience is as content hungry as they get! The second point also puts more pressure on Merge’s meta design and live operations, and the longer-term game design challenge will likely be figuring out how a fundamentally different core merge mechanic can utilise the best practices playbook Match 3 has built for itself.
The big question remains - how does Merge unlock its next stage of audience growth? From today’s download numbers, one could conclude that the genre is struggling to scale. But for such a young genre that has generally lacked competition, my guess is that the slow downloads growth is more driven by two factors -
The existing market has been hungry for a new “non-Merge Dragons” experience for a very long time, and they finally have so many more options to play. And so players are going through an exploration phase, which is driving the market share movement above.
A more macro factor is that Merge essentially competes with Match 3 genre for the same audience, and Match 3’s audience is 6x higher and still growing - that is not an easy UA battle to win, and “profitably”.
Therefore, my hunch is that Merge’s next phase of growth will likely be driven by product differentiation - not just within the same genre, but also inter-genre differentiation so that Match 3 players a compelling reason to switch over. This could come in the form of gameplay, art, theme, narrative or even gender differentiation, all while the merge core is kept intact and meta systems + live operations continue to be optimised. Merge is definitely a genre to keep an eye on going forward, and I’m excited to see how its future unfolds!
This article originally appeared on Naavik.co (Written by Abhimanyu Kumar of Master The Meta)
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