May 25, 2021
Good morning! This week in Protocol Gaming, your weekly guide to the business of video games: How Apple's IDFA privacy changes are affecting mobile game ad spend, Epic v. Apple comes to a close, and Netflix signals serious interest in gaming.
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It's been roughly one month since Apple released its iOS 14.5 update, allowing people to opt out of mobile ad tracking. In the process, the company is disrupting a key pillar of the mobile gaming business, and now we're starting to see the first signs of the aftermath. Turns out it's not all doom and gloom for iOS — and it is in fact proving to be quite the boon for Android.
Mobile games are far and away the biggest revenue drivers on smartphones, and game developers are among the biggest advertisers. They use app install ads to drive user acquisition and rely on tracking to measure the effectiveness of those ads on major platforms like Facebook.
Apple's privacy shift could have long-lasting consequences for the future growth of the mobile game business, so long as Google doesn't follow suit. The issue lies in the opt-in rate of App Tracking Transparency (ATT), Apple's name for the feature that blocks apps from collecting an iPhone owner's unique identifier (known in the industry as IDFA) without user permission.
But the iPhone is where the money is, accounting for more than 65% of global mobile revenue despite having a fraction of the install base. That means game developers can't afford to forgo iOS entirely. Game makers and ad platforms will have to figure out ways to advertise that don't rely on cross-app tracking and rethink their user acquisition strategies.
Apple's push for privacy may yet be a net positive. The mobile ad industry has relied on public ignorance and ambivalence toward privacy, and iOS 14.5 signals the beginning of the end of the consent-free era of tracking, at least with respect to the iPhone customer base.
To reach consumers, advertisers will now have to get smarter and savvier instead of relying on surreptitiously collected information. In the interim, Android presents an opportunity for advertisers to continue clinging to the old model while they figure out a new one.
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The game industry will once more be flooding the news cycle starting next month with its summer programming, starting with Ubisoft's Forward showcase on the first day of the second all-digital E3 on June 12 and continuing on with steady events until EA Play on July 22. In addition to Ubisoft, the official E3 will include showcases from Microsoft, Nintendo and more than a dozen major participating game publishers and developers. Geoff Keighley's Summer Game Fest also kicks off June 10, and an all-digital GDC starts July 19. It's going to be a busy couple of months.
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