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Beating the Recession: Interview with Christoph, Sunday’s Managing Director

It’s not a secret that the world economy is entering a recession phase. Naturally, consumer-focused entertainment companies, including those in the hyper-casual industry, are among the first to feel it. To touch base and learn about the current state of hyper-casual, we sat down for a chat with Sunday’s Managing Director and mastermind Christoph. He’s seen the hyper-casual market in its baby phase, rode the wave to the top of the charts, and he’s not planning on slowing down. What’s his take on the current events in the industry? Is it worth it to stay in hyper-casual? And what does Madonna have to do with it? Read on for fresh insight straight from the leading voice of Sunday.

Hi, Chris! There’s no one else more well-suited to answer this question: what’s the current state of the hyper-casual industry?

Let’s get into this! So, over the last months, three things happened.

First, the big lockdown phases are over. People spend less time with their phones: it’s better for the world, but worse for the revenue growth of gaming companies. Also, it seems like players are less open to investing time in trying out new games.

Then, my second observation is related to the crisis with energy and the economy. With the interest rate and inflation going up, every company and every consumer has become a bit more conservative with their spending. So, basically, in the whole advertising market, there’s less money. You can see it like this: the number of games is the same or even bigger, but the cake got smaller and, still, the games need to divide the cake among them, right? So, the overall revenues of all the games are going down and the overall downloads, too. 

“Back then, it was still very “wild west”. Anything could work: just throw some funny ideas against the wall and see what sticks. Now, a lot of small studios appeared all over, and, suddenly, the hyper-casual market is supersaturated.”

Finally, the market today is much more saturated than it was two or three years ago. Back then, it was still very “wild west”. Anything could work: just throw some funny ideas against the wall and see what sticks. Now, a lot of small studios appeared all over and there are tons of successful games. As a result the hyper-casual market has become quite saturated. There are no more quick and easy wins. Now you need to fight harder battles to get a competitive product out there.

Alright, this status quo is imperfect. How does it make you feel? Are you able to stay positive about it?

It’s affecting every company in the hyper-casual space, but, as for me, I actually also like it, because it’s a challenge. Now the wall we need to climb to be successful just got higher: it’s survival of the fittest. And I kind of like that because it helps us focus and sharpen the blade.

A recent Hyper Casual Gaming Market Report states that the hyper-casual market is expected to retain its exponential growth until at least 2029. So, the good signs that tell us to continue doing hyper-casual are also there, right?

The mobile market has actually dropped for the first time in history in Q1 and Q2 of 2022 by 7%. It’s never happened before; until then it had been steadily growing like 10-30% a year. Even though the drop didn’t affect the long-term growth that much, it has still caught people off guard. But when you think about it, it’s normal that we go back to more of a baseline curve from this super-inflated growth that happened during the lockdown times. 

“There will always be games that can monetize through ads the same way any other media format in the world does. And as long as the population and the number of mobile phone users grows, hyper-casual games will also roll with it. Naturally.”

And when you look at it realistically, there’s a growing world population, and people will continue to have more smartphones. There will always be a need for free games. For example, people still watch TV or Youtube for free by watching commercials. The same will be true for games. There will always be games that can monetize through ads the same way any other media format in the world does. And as long as the population and the number of mobile phone users grows, hyper-casual games will also benefit from it. Naturally.

It seems like we’re in a peculiar situation. You mentioned that the market is getting more saturated. At the same time, we’re also noticing that many publishers and studios are leaving hyper-casual for other genres. Why is this happening?

Exactly. Because it’s getting harder. There’s like three different types of companies right now. 

Some companies say nothing has changed and they will follow the same recipes. Of course, they’re often bigger companies that are already quite established on the market. So, they’re still able to produce a fraction of the output they used to make trying to find another gem. My prognosis would be that many of them will fail if they continue doing this, and then they’ll need to reorient or they go broke or get acquired for a low price.

It’s kind of like an old horse that won’t learn new tricks.

Exactly. Then some companies just try to find the path of least resistance or what they think the path of least resistance is. And that can either be switching to another genre or trying out something completely different like NFTs or Metaverse. There are a lot of companies trying to switch to hybrid-casual or even casual. It looks like an easy solution at the beginning, but it’s not, because these games require either higher investments or years of development and are not that easily marketable. Basically, they try to get around the obstacle. 

“There are a lot of companies trying to switch to hybrid-casual or even casual. It looks like an easy solution at the beginning, but it’s not, because these games require either higher investments or years of developing and are not that easily marketable. Basically, they try to get around the obstacle.”

And then some companies are crazy like us and say “Okay, the obstacle just got higher. It’s more difficult, so we need to get better, but we still want to get over that obstacle”.

And how exactly do we get better? 

First, to get better at climbing over the obstacle, you need to have a long breath. What does it mean? You need the willingness to invest in this and go deep, and also the money for it, right? We’ve got this. We are in this for the long term. We’re going the strategic way and we’ve got the $100 million invested to build this ecosystem at the beginning of the year.

Could you expand on Sunday’s strategy? How’s the company going to solidify and accelerate its success?

You need two things to be still successful in the market, and we’re actively developing both. First, that’s our own ad monetization. Why is it important? Because normally you’ll always pay a very big revenue share of your ads to other companies. The only way to crack it is to have your own directed partnerships with other advertisers. This way you’re selling your traffic directly without a middleman who takes up to 50% of your revenue, and this 50% cut hurts every publisher super, super hard. Not to mention, it’s also unfair to the creative people that actually build the games, you know? That’s why we are moving our ad-monetization inhouse through our sister company adjoe. 

Second, what we have the most control over is our product strategy. We have a team here that can build the best hyper-casual games in the world. We just need to feed it with the right ideas and focus on the right market opportunities. What we see everyone doing, or what we saw everyone doing in the last years is this fast-follower approach. You know, everyone sees one company doing something, and the whole market moves in this direction. And everyone tries to be one day faster than the other. However, if you’re always trying to follow trends, you’re never inventing new ones. With our new product strategy, we want to invent trends.

And what’s Sunday’s approach to inventing trends? 

To predict the future, you first need to understand the past, right? So, to be super innovative, we need to look back. What we did was analyzed basically all of the cash cow games that had ever hit the hyper-casual market and searched for patterns: are there any and how were they created, intentionally or unintentionally?

Were you able to find any?

Yes, we found those patterns and now we try to recreate them. However, you should never do just a copy of anything, right? You could compare it to a remix in music. Let’s say, ABBA and Madonna: ABBA invents the melody, and Madonna takes it and reinterprets it to put it in a fresh new context. People still recognize the melody and they like this music from the past, but there’s something completely new and unexpected about it. That’s the same effect that we want to trigger with games that have a familiar feel but are still innovative and fresh. You know, there are a lot of people downloading certain games two, even three years after they got released. So we want to give these people something new that they will love, something that other developers haven’t.

Thanks, Chris!

It’s clear that Sunday is ready for a marathon and is not getting off the hyper-casual track. We’re equipped with a team of gold, a clear vision, and exciting new strategies. Want to know more? Stay tuned, because soon we’ll be sharing more insights on how to make it in the industry.