AppLovin Part 4 - Apps
Today, we'll break down the apps segment of AL's business. Although this is arguably less important to AL's operations and revenue streams going forward, I believe this is still a key area of the business to understand nonetheless, so we can get a more holistic view of the overarching business strategy, and the parts that make up the mammoth that is AL.
Apps:
AL's apps business consists of a global portfolio of over 200 free-to-play mobile games, run by 11 studios (Machine Zone, Lion Studios, Redemption games, etc. These studios are either owned or partnered).
AL's apps mainly span across 3 genres:
- Casual (think Fruit Ninja)
- Match three (think Candy Crush)
- Card/casino games (think free blackjack)
Al's rationale for focusing on these genres is that they generally have a lower risk of development and more predictable revenue streams and returns.
Annnnd that's it. That's pretty much all AL had about their apps business on their K-10.
For me, this is a major signal (among many others) that AL really does NOT consider mobile gaming app development to be a part of their core business. Strategic reviews of the apps portfolio have caused the divestment and closure of certain studios, reductions in headcounts and reducing user acquisition spend (basically, slowly phasing out the apps business).
The next question here is - what caused AL to make the strategic shift to divest from their Apps business? Was this the plan from the get-go, or an opportunistic play given changing market conditions?
However, despite the gradual divestment, the apps division is still responsible for almost 44% of total revenues in 2023. A question here is what is the extent of divestment that AL is looking to do for this business area, and what do the timelines look like?
Unfortunately, I've run out of time today.
In the next blog, we'll do a deeper dive into the individual studios in AL's portfolio, as well as finally do some digging into AL's strategic thinking (where the meat of this analysis will most likely lie).
Until next time folks!
Price at time of writing: $82.16
