Success stories of hits that make $5-10M or more in profits are inspiring. But this is not a good example to look up to. Sufficient numbers start at much lower numbers — the game could be considered a hit long before it earns $10 million, or $5 million, or even $3 million.
First, development studios should be prepared for the situation where even a hit game will not generate revenue from day one. It might take several months and more.
Second, based on our experience, a common reference point is the amount of money the game makes in the first three months. The primary indicator that affects profits is ARPU or average revenue per user. On average, in hyper-casual games, three months ARPU ranges between $0.3 and $0.7.
It means that in the case of 10-20M installs, the game's profit will reach a maximum of $700,000 within its whole lifetime. Then this amount is divided between the publisher and the developers; therefore, both the publisher and the development team can earn $350,000 each on one game they worked together on.
This calculation is critical for assessing the costs of game development and deciding whether it is worth developing. In the beginning, developers need at least $50,000 to make 20-40 unsuccessful projects and eventually come up with one hit out of them.
As the project grows and time passes its ARPU changes. According to Unity and Adjust Hyper casual gaming 2020 Report analysis
, the average Lifetime Value of Hyper Casual Gamers equals $0.13. Nevertheless, this is no reason not to strive for more. The top 25% of games reach $0.23 in ARPU within their lifetime, and the top 10% of games — $0.30.
As the project grows, profits should continue to grow. Reward placement analyses can facilitate the growth and iterations, diving deeper into users' motivations to receive certain items in game, adding new scenarios, characters, trends, and responsiveness to user behavior.
If the unit economics of the project keeps being weak despite all efforts, the game should stop being supported.