1,887 developers make more than $1M annually from the mobile app markets

SINGAPORE — Success in mobile gaming is a lot broader than Supercell, King, and other publishers in the top 10 highest-grossing charts. The trouble is that many struggle to unlock their value when they need it most.

1,887 developers make more than $1 million every year from spending on the iOS and Android app markets, according to Pollen VC chief executive officer Martin Macmillan. During a talk at the Casual Connect conference in Singapore, the CEO suggested that plenty of studios are generating significant revenue from mobile gaming, which is counter to the common sentiment that only the handful of games at the top of the charts are successful. Macmillan said that the big reason for this perception is that it takes a long time for developers to reach any profitability in the $36.9 billion mobile-gaming industry.

[aditude-amp id="flyingcarpet" targeting='{"env":"staging","page_type":"article","post_id":1953859,"post_type":"story","post_chan":"none","tags":null,"ai":false,"category":"none","all_categories":"business,games,mobile,","session":"D"}']

“It gets to about to a year before you have enough cash in the bank to start using your own money for marketing and reinvestment,” he said.

That’s because developers have to wait a couple of months for Google and iOS to start sending out payments. A standard new release might generate a ton of revenue, but it’s unlikely that it’ll make enough to leave any cash in the coffers after paying for player acquisition.

Of course, this is the problem that Pollen is specifically addressing.

Last year, Macmillan and Pollen launched as a service that can help provide funds to developers who already have money coming their way. A studio on the app store can easily look at its analytics and performance indicators to figure out how much revenue it can expect in eight, 12, or 16 weeks and beyond after launching a mobile game. Pollen helps out by lending money to developers in the periods before Apple or Google pays out those revenues. This means that studios can have cash earlier — and that’s crucial for acquiring new players in the early days of a game’s life.

This means Pollen can fund those 1,887 millionaire developers (which doesn’t even include any cash studios make from in-app advertising) with their own cash. The idea here is to “recycle” the revenue directly back into the game for player acquisition — although Macmillan noted that studios can also use the cash for other important moments in a game’s life like scaling and optimization. Pollen works directly with advertising networks. This relationship enables it to loan $5,000 to a developer who is expecting $5,000 in payments from Google and Apple. But instead of cutting a check, that cash can go right back into growing the game’s player base. Of course, studios have the option of getting that cash for a fee.

But Pollen makes it clear to most studios that they stand to benefit the most by maximizing their user acquisition when they know it’ll generate a positive return-on-investment.

“If you can acquire a user for $1, and that user is going to give you a lifetime value of $2, that’s like going to Las Vegas and finding the machine that pays every time,” he said. “You want to hit that every time.”

Macmillan highlighted developer Pixonic, which makes the mobile game Walking War Robots. This studio used Pollen to immediately invest its revenues back into growing its games through player acquisition, and it found that it was able to generate far more revenues a few months later with the same amount of money without having to given up equity to a venture firm.

[aditude-amp id="medium1" targeting='{"env":"staging","page_type":"article","post_id":1953859,"post_type":"story","post_chan":"none","tags":null,"ai":false,"category":"none","all_categories":"business,games,mobile,","session":"D"}']

Pollen has seen this model work, and now it’s looking to expand into Singapore. And it seems likely that this model could perform well in any market around the world as developers look for a variety of ways to keep their momentum going beyond selling off chunks of their company.

Casual Connect arranged for my travel to its event. Our coverage remains fair.