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MM 0919

Mobile Monday: UK Parliament Calls for Loot Box Regulation, Report Suggests More Focus on Ad Revenue in Games

Posted Sep 16, 2019

With pressure from governing bodies across the globe, game companies are re-thinking loot boxes’ place in their revenue structure. The British Parliament released a report last week saying loot boxes could be considered a form of gambling and should be regulated as such. Meanwhile, a study shows that conversion rates for mobile games are down, which could mean a need for more ad-based revenue. Read all the details in this week’s Mobile Monday!

House of Commons Cracks Down on Loot Boxes
After months of hearings with technology and gaming companies, Parliament has advised that video game loot boxes should be regulated as gambling and that children should be prohibited from purchasing them. This was a part of a report recently released by a House of Commons committee in the United Kingdom regarding immersive and addictive technologies. Microtransactions like loot boxes have been a major source of revenue for game publishers in addition to a one-time download price and in-app ads.

The digital, culture, media and sport (DCMS) committee’s report states that if loot boxes are purchased with real money, the game should be marked as containing gambling and regulated under the Gambling Act of 2005. The committee stresses safeguarding children from addictive and inappropriate games by enforcing age-ratings. Loot boxes have already been classed as gambling in Belgium, while a United States Senator proposed a bill to ban them earlier this year. As governing bodies continue the debate over loot boxes, gaming companies will have to rethink their revenue strategies in case they are hit with strict regulations.

Lower Conversion Rates, Higher Ad-based Revenue
GameAnalytics has released its Mobile Games Benchmark report for H1 2019, which analyzes aggregated data from 1.2 billion monthly players to better understand how mobile gamers play and pay. According to the report, conversion rates have been slowly declining suggesting developers are focusing less on in-app purchases and more on ad-based revenue. The start of Q3 2018 had the top 25% games with a conversion rate of just under 0.7% which then declined to almost 0.5% by the end of Q2 2019.

The report also looked at conversion rates across mobile game genres. For most genres, having over a 0.5% daily conversion rate is above average.  Role-Playing and Strategy games have the top rates by far, reaching as high as 1.5%. While data shows that retention tends to be lower for these games, they actually have more earning potential here.

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