On Friday, June 22, Game of War: Fire Age developer Machine Zone laid off a significant portion of its marketing and user-acquisition team, according to affected sources and those familiar with the company. Approximately 125 people lost their jobs as MZ attempts to restructure in an effort to generate a profit.
I reached out to MZ, and it declined to comment.
The layoffs hit the internal MZ user-acquisition team, which is responsible for purchasing ads on various platforms to bring in new players to Game of War, Mobile Strike, and Final Fantasy XV: A New Empire. It also laid off everyone who was working under its Cognant brand, which is its for-hire user-acquisition business that was working with clients like Oath and piloting a potential partnership with AirBNB.
MZ chief executive officer Kristen Dumont and chief revenue officer Deepak Gupta led the meeting where the company announced it was cutting jobs at Cognant, according to sources. Both of those executives stressed that the company needs to prioritize generating a profit.
The studio will still has a skeleton crew working on Facebook ads, which is where it plans to focus most of its user-acquisition efforts moving forward.
MZ came to prominence for its battle-management games, which all have players building bases or kingdoms and then fighting against other players. But while the studio is known for those games, its central talent was in making money from small but dedicated audiences, and it is arguably best known for its massive marketing campaigns that included Super Bowl ads featuring Kate Upton.
Those marketing campaigns and huge ad spends only worked because of the technology that MZ built to acquire users through social media platforms. The Kate Upton Super Bowl ad would put the Game of War or Mobile Strike names into your head, and then if you saw an install prompt on Facebook or Twitter, you might followup and install the free-to-play game.
And that strategy was working for MZ, which found ways to turn many of those installs into an astronomically high average revenue per player. In 2015, the average Game of War player spent $550, according to research firm Slice Intelligence. That was approximately 6-times the average amount of money players spent on mobile games as a whole that year. MZ generated that kind of per-player revenue by building its games specifically for the biggest spenders, according to analytics firm ThinkGaming.
“Most of us think of hardcore video gamers as those paying extravagantly for immersive and complex games, but data shows that mobile gamers are in fact the big spenders,” Slice analyst Taylor Stanton wrote in a blog post in April 2016. “The mobile game with the largest average in-app spend is Game of War …. What do Game of War players buy? Crates of gold, with the average item price hovering at $52 dollars.”
But MZ has not maintained that kind of spending behavior in Game of War, and Final Fantasy XV: A New Empire has had to make up the difference. That game is part of an expensive licensed property that MZ doesn’t own, which means it likely has to share a portion of its revenue with publisher Square Enix.
Jobs cuts will save some money for MZ, but it’s not a long-term solution. The company needs new methods of generating revenues from the players it is retaining. It may also need to launch a new kind of game in the future. The good news for the studio is that people are not over spending money on mobile. Fortnite has generated $100 million since launching on iOS. And hey, I just had an idea — how about Game of War: Royale? I think it could work.