Outsmart Rising User Acquisition Costs in Gaming

User acquisition costs are going through the roof, and game studios are definitely feeling the pressure. It’s not enough to just have a great game these days, you’ve really got to be smart about how you reach and keep your players. 

Let’s talk numbers. Industry data shows the cost of luring in just one player has skyrocketed by a brutal 60% in the last few years. Ouch. 

In 2023, U.S. consumer spending on video games hit  $57.2 billion, a tiny 1.1% bump from the year before. But when you factor in inflation, real revenues took a significant hit. With mobile games taking a significant share of the $100 billion gaming market, these rising costs are affecting mainly indie and mid-tier studios. 

It’s not just about paying more, it’s about squeezing every cent until it screams, all while trying to keep your growth stats alive. And as the industry wrestles with record layoffs (10,500 in 2023 alone) and declining player engagement post-COVID, the pressure to adapt and innovate is higher than ever.

Why Are User Acquisition Costs Rising?

User acquisition costs in gaming aren’t just rising, they’re out of control. We’re talking record-breaking numbers and high-cost challenges. The cost of acquiring just one player has jumped by a jaw-dropping 60% in recent years, with the average CAC now hitting $29 per user (up from just $19 a decade ago). The mobile gaming market, a major force within the multi-billion-dollar gaming industry, is packed with games all battling for players’ attention, making competition fiercer than ever. On top of that, developers lose a significant % of their revenue to app store fees, adding even more pressure on indie and mid-tier studios trying to stay in the game.

Here’s why bringing in new players feels like a difficult task with no easy way around it.

First off, the competition in app stores. You’ve probably already noticed it, but the app stores are a crowded jungle. With over 2 million games available on the App Store and Google Play combined, standing out is like trying to yell over a packed stadium. Every single day, new games are dropping, and the big players are flexing massive marketing budgets to keep their spots on the leaderboard. 

But it’s not just the usual suspects anymore. Competing app stores like the Samsung Galaxy Store and Huawei AppGallery are also shaking things up. The Samsung Galaxy Store gives developers access to a solid user base with serious spending power, while Huawei’s AppGallery is making waves with over 580 million monthly active users and 2.3 million registered developers. These platforms are carving out their own space in the app distribution game, adding even more competition to an already crowded field.

And about players, let's just say they’re incredibly picky.  Even if you manage to catch their eye, getting them to stick around is a whole different beast. Convincing them to become loyal, long-term users really is a grind, and it’s not cheap. A recent report indicated that the average cost per install (CPI) for casual games reached $4.83 for iOS and $2.17 for Android in 2024, reflecting a significant increase from previous years. This jump makes it crystal clear that user acquisition is only getting harder as competition grows and ad costs keep rising. With so many games fighting for those precious downloads, only the strongest marketing strategies are going to come out on top.

As if things weren’t tough enough, here comes the final blow: Paid ads. With reach on the decline, studios are being forced to dump more cash into paid ads just to stay relevant. But here’s the problem, everyone else is doing the same thing. The law of supply and demand is in full force, while the price of ads is climbing. What used to be a way to get in front of players with a decent budget is now becoming an arms race. And if you don’t have the cash to compete, you’re getting left in the dust. So, what’s the result of all this? Studios are finding themselves paying more for the same ad space while trying to keep up with bigger players throwing way more money into the mix. If you need more proof, here’s a stat for you: In 2022, the global video games advertising revenue stood at $70 billion, with projections indicating a significant increase to $137 billion by 2027.

Ways to Outsmart Rising User Acquisition Costs

Right now, user acquisition in gaming is facing a lot of challenges, but there are some solid strategies out there to stay on top and ahead of the game.

No. 1: Embrace Performance-Driven Affiliate Marketing

‍
User acquisition doesn’t have to feel like a guessing game. If you’re tired of pouring money into ads that don’t move the needle, take a page out of the playbooks of Supercell and PUBG Mobile, two studios that have mastered performance-driven affiliate marketing using the CPA model.

First, let’s talk about Supercell. The team behind Clash of Clans and Clash Royale is a great example of how to leverage affiliate marketing in a meaningful way. Supercell doesn’t throw money at every impression or click. They’ve built partnerships with affiliates who are only paid when real results happen, like installs, in-app purchases, or long-term engagement from players. In other words, Supercell is all about getting the right players, not just any players.

Their use of CPA (Cost Per Acquisition) means that Supercell only pays affiliates when actual players take meaningful actions. This goes way beyond the old-school model of paying for impressions or clicks. The beauty of this strategy is that it’s performance-driven, they’re not paying for ads that just look good on paper. They’re paying for players who stay in the game, make purchases, and contribute to long-term revenue. It’s a sustainable model that ensures every marketing cent spent goes further.

Supercell’s use of affiliate marketing has also been about finding the right partners who are invested in long-term growth, not just quick wins. By focusing on key affiliates who can deliver high-value players, they can grow their player base without overspending on broad, ineffective ad campaigns. This shift towards a performance-driven approach has been key to their continued success.

Next, let’s talk about PUBG Mobile, which provides another clear example of how CPA-based affiliate marketing can drive massive growth without wasting ad spend. When PUBG Mobile launched globally, they didn’t just target anyone with an internet connection. They worked with affiliates who were rewarded for bringing in real, high-value players. And by high-value, they mean users who were likely to stay engaged for the long haul and spend money over time, rather than just downloading the game and leaving after a few minutes.

In markets like Southeast Asia, PUBG Mobile worked with affiliates who focused not just on installs, but on getting players to reach milestones within the game and make in-app purchases. 

No. 2: Optimize your creatives for better results

A well-optimized creative can reduce your CPI by up to 30%, which could mean the difference between breaking even and seeing huge returns on your campaigns. For example, the ideal video ad length varies by platform. Meta suggests that video ads should be between 6 to 15 seconds to effectively convey your message. However, some marketers report better results with video ads lasting one to three minutes, depending on the platform and audience. Playable ads are another fantastic way to engage potential users. Platforms like Duolingo have effectively utilized gamification strategies to increase user engagement, providing a sense of purpose and challenge that keeps users motivated.

Make your creatives speak directly to different audience segments. Not all players are the same, so treat them like they aren’t. Audience segmentation is crucial for making sure your creatives hit the mark. For example, for hardcore gamers, show intense combat and fast-paced action, as in titles like Call of Duty: Mobile or Diablo Immortal, while for casual gamers, highlight how easy it is to jump into the game and the social fun of titles like Candy Crush Saga or Among Us. Segmenting by age, location, or gaming preferences makes sure you’re speaking directly to your target audience and not wasting money on ads that don’t work.

Now that you’ve got your creatives dialed in, it’s time to focus on storytelling. Effective ads tap into emotions and tell a story that sticks with the viewer, and good storytelling builds excitement and makes people feel connected, leading to more installs and keeping them engaged in the long run. 

No.3: Want to boost LTV? Retention is the key.

The journey begins with a smooth onboarding experience. First impressions really matter, and a good tutorial can help players get the hang of your game quickly while making sure they have fun from the get-go. For example, The Legend of Zelda: Breath of the Wild uses an open-world tutorial area, introducing players to game mechanics naturally without feeling restrictive. Similarly, Portal integrates its tutorial into the gameplay, teaching players how to use the portal gun through intuitive level design. These examples show how effective tutorials set players up for success and keep them engaged right from the start. Once they’re onboard, it’s all about keeping them engaged through live operations. Regular updates, events, and rewards keep the excitement going. Also, limited-time skins and surprise loot drops are great for making sure players keep coming back for more.

Building a community around your game is another key component of retention. Whether through forums, Discord servers, or in-game social features, creating a sense of belonging for players can make them feel more invested in your game. When players feel a sense of community and connection, they’re not only more likely to stick around but also more likely to spend, increasing your overall LTV.

No. 4: Invest in Analytics Tools to Make Smarter Decisions

Tracking user behavior is one of the most powerful ways to understand how players interact with your game. By identifying where drop-offs occur, you can make the necessary adjustments to improve player retention. Monitoring ad performance metrics is equally important. By keeping an eye on key metrics like CTRs, CPIs, and ROAS across different channels, you’ll be able to see which platforms and strategies are giving you the best results.

No. 5: Maximize Your Organic Reach

While paid ads might be the main option, don't forget about the power of organic growth. Focus on building your game’s community, creating buzz through word of mouth, and generating organic installs. The beauty of organic growth is that it lowers your overall marketing costs, making paid UA campaigns more effective and cheaper. When players start sharing your game and generating positive word of mouth, it reduces your dependency on paid ads, driving down your Cost Per Install (CPI) and increasing your ROI. This means tapping into user-generated content (UGC), encouraging players to share their experiences and showcase their achievements on social media, or even giving them tools to create and share content related to your game.

User reviews, ratings, and social media chatter can drive a significant amount of installs without the hefty cost. Offering rewards or recognition for sharing gameplay videos or fan art can further boost your visibility. This helps create a genuine, loyal player base that spreads the word and increases organic downloads. All of this can make a noticeable difference in your user acquisition costs, giving you some breathing room as you continue to market your game.

Attending the Games Forum Barcelona 2025?

Are you a gaming app developer or a publisher attending the Games Forum Barcelona conference? Interested into scaling your user acquisition or monetizing your traffic effectively?

Hadar, our account manager in charge of our gaming clients will be attenting Games Forum Barcelona on February 5th & 6th. Schedule a meeting with him and discover how Z2A Digital can help you power up your gaming growth. Don’t miss out—secure your spot now and let’s chart a winning course together!

Game On

Phew, we’ve covered a lot of ground in this article, haven’t we? Yes, user acquisition costs are on the rise, and in the gaming world, that means studios and publishers have to get super smart about how they approach things. The competition is tough, and if you’re not staying ahead of those rising costs, you’re going to be left in the dust.

At the end of the day, UA isn’t about just throwing money at ads and hoping for the best. It’s about being strategic with how you spend. 

So, are you ready to step up your game? Learn more about our work with gaming apps like yours, and how we tackle user acquisition costs here.