Gaming, Mobile App Growth, User Acquisition

Game devs: What middle class growth and mobile adoption rates around the world mean for you

Meghan Laslocky
Apr 7, 2017
Middle class mobile adoption rates AppLovin blog image

When you’re thinking about user acquisition for your game, it’s helpful to think about where there’s a growing population of users with money to spend on all things mobile. Indeed, it’s important to be aware of middle class growth trends in other regions, because that’s where the action will likely be before long — if it isn’t already. That information can be instrumental in helping you to plan your localization efforts, even if you’re not quite ready yet. It’s also important to know that, while in the short-term investing in markets with growing middle classes might show only incremental growth in terms of revenue, the strategy could pay off over the long term as these markets mature.

Here are a few key things to keep in mind:

A global middle class is emerging at an incredible rate…and that’s part of what is fueling the explosion in global mobile adoption.

One of the most compelling things about globalization is that it has created a global middle class and a positive feedback loop: globalization creates more good jobs, which bolsters the middle classes, which in turn have disposable income to spend on goods and services — like mobile phones and in-app purchases. Forty years ago, the global middle class was about 1 billion people. It now stands at about 3 billion people, having added one billion just in the last decade, and in 2015, 2.6 billion people were smartphone users. By 2021, the majority of the world’s population — an estimated 4 billion people — will be middle class, and a there will be 6.1 billion smartphone users. Meanwhile, smartphone ownership rates in emerging and developing nations — where the middle classes are growing, as I’ll cover in more detail below — rocketed from a median of 20% in 2013 to 37% in 2015, and this upward trend is expected to reach levels in advanced economies, which have a median of 68%. Put all of this together, and you have literally millions more people around the world with money to spend on smartphones and apps in markets many developers don’t tend to think off right off the bat (non-Tier 1 countries).

That synergy between smartphone penetration and the growth of the middle class will make some regions and countries particularly ripe, even for western games.

As you think about localizing your game, you’ll want to drill down into where the middle class is growing and where smartphone adoption is growing as well — though often of course the two go hand in glove. Sure, we all know that China is where a lot of the the action is in terms of middle class growth and smartphone penetration, which grew by 20 percent between 2013 and 2015, but what are some other areas that might not get the same media attention, but are still ripe for growth?

The answer lies in smaller markets that have enormous potential, such as Southeast Asia, where for many users, mobile is their first and only access to the internet (“mobile-only”). Look to the Philippines, for example, where the middle class has exploded thanks to outsourcing and which has the fastest growing smartphone market in the region (and, to make localizing even easier, where English is an official language). Or consider Indonesia, which has the world’s fourth largest middle class at 74 million people, in the past few years has seen significant jumps in smartphone penetration (it nearly doubled in just two years to 47%) and on Android the top 3 free mobile games with IAPs are all western. Then of course there’s Thailand and Vietnam, which also have swelling middle classes, accelerating mobile adoption and multiple top free games on Android that are from U.S. and Europe (see Thailand’s and Vietnam’s).

There’s a lot of attention given to the Asian markets, but it’s also worth being aware of what’s going on in Latin America and Africa in terms of middle class expansion and mobile adoption. Consider Brazil, which has seen its middle class expand by 40 million people (20 percent of the population) in the past decade and smartphones are popular with users of all ages. As for Africa, Nigeria is an excellent market to at least be aware of as yet another example of where the middle class/mobile infrastructure synergy is transformative: middle class habits are taking off and the country has been lauded as a “100 percent mobile-first market” where smartphone growth has been exponential. And no surprise there: many of the top free games on Android there are from the U.S. and Europe.

If you do localize, remember that you’ll need to adjust your expectations for different markets…and know that you’re staking a claim that might take time to pay off.

When you target middle class players in another country, particularly a country with a developing or emerging economy, you need to account for the fact that compared to mobile gamers from Tier 1 countries, they’ll have less disposable income to spend on IAPs, and there you get into a key difference between devices: on iOS, you can’t set local prices without rebuilding it specifically for a local market (say China), but on Android, you can review local prices and edit them.

Moreover, the incremental revenue and the kind of revenue that you do get will likely differ according to the type of game: just like anywhere else, users will spend relatively more on a strategy game (which in the U.S. might garner an ARPDAU of $0.50, mostly off purchases), while with a racing game, they’ll spend relatively less (in the U.S. maybe about $0.20 in terms of ARPDAU, but mostly off of interstitials and rewarded video). Once you’ve adjusted for local prices, that revenue will likely be lower (as will your CPIs), but you need to think of a foray into an emerging market as staking a claim, a long-term play where you secure market share and then wait for the incremental growth to become exponential. To determine where the fertile ground is, you might consider releasing your game worldwide, seeing if it gains traction in a particular geo, and then focusing on that geo.

While the middle class is growing in regions around the world and smartphones getting into the hands of literally billions of people, these regions are not at pace with the U.S. or even Chinese markets but they are ripening. Game devs should research emerging markets in which they can experiment with localization and user acquisition — that’s a good first step toward gaining a foothold that could pay off in time. With an awareness of the overall potential of these markets (smartphone penetration and appetite for mobile gaming in particular) and a basic understanding of what’s required in terms of localization, you can prepare yourself to grow revenues in countries and regions beyond the usual suspects — and get a leg up over your competitors.

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