Matthew Ball interview: Can new stores and D2C turn the tide on high UA costs?

• Global user acquisition costs outside of China are estimated at under $25 billion for 2025.
• Costs for UA and ad exchange fees, on top of high development budgets and app store royalties, are squeezing publishers.
• Matthew Ball believes the proliferation of alterative app stores in the West could alleviate UA costs.

Stay Informed

Get Industry News In Your Inbox…

Sign Up Today

This was first published in the PocketGamer.biz weekly newsletter. Sign up here to get articles like this straight to your inbox.

It’s no secret how high user acquisition costs have become. It’s a persistent challenge facing mobile games publishers for years.

Matthew Ball’s State of Video Gaming in 2026 report estimates worldwide UA costs just under $25 billion for 2025, excluding China. That figure is actually down from 2023 and a 2021 high. Publishers are feeling the crunch – Ball says UA expenses have exceeded app store fees on consumer spending since 2020. By 2027, ad exchange fees on ad revenue could pass them, too, he claims.

Offering a weighted average, publishers are said to spend around 32% of net revenue on UA – though figures can vary significantly across the top companies. Zynga, Playtika and AppLovin have spent above the average, while Garena, NCSoft and Nexon have spent well below it.

The direct-to-consumer movement – and the regulatory and legal challenges against app store fees – has provided some alleviation for publishers. But that extra money can easily get eaten up by those UA costs.

Across the industry, not exclusive to mobile and outside of China, operating profits are said to have declined since 2019, despite consumer spending rising by 40%+. While the aforementioned costs are tightening margins, rising development costs and R&D spend are also impacting profitability.

New discovery channels

Speaking to PocketGamer.biz at GDC, Ball believes part of the reason UA costs have gone up is because the ability to reach customers is so constrained. Of course, Apple’s IDFA changes were a major shift, too.

If a proliferation of alternative stores starts to happen in the West – as enabled by rulings and deals like the recent Epic/Google settlement in certain regions – Ball believes this could alleviate marketing costs.

“If you have distribution channels that are already pre-targeted, or a little bit more filtered down to the audience you’re seeking, and those stores actually have the incentive to drive the installation, you should see UA improve because your efficacy of reach has improved too, for discovery. So I’m pretty hopeful there.”

Ball says one hard to measure but key aspect of UA over the last three years has not been UA to a specific game, but UA to a publisher’s own channel, as publishers build communities to boost their direct-to-consumer efforts.

“They’re doing that because they find positive returns from doing that. Most of them will say their UA expenses are up year-over-year because of their D2C efforts, but they don’t expect that to continue because they’re shifting those customers and once their behaviour is reset, then they no longer need to spend.

“So you can actually say that not only has UA come down as a percentage of revenue over the last three years, that’s despite new forms of UA happening that are more like a one-time event. It’s like, moving into your home, you buy a lot of furniture, but it’s not like that’s representative of your recurrent furniture spent, right? 

“And then the second thing that’s happened is to bring those customers over, they provide financial incentive – discounts, loyalty. You mentioned earlier that revenues are four or five years flat based on the data that I was using from Sensor Tower – part of that is the same thing.

“And so some of the strains that we’re seeing in the ecosystem right now are developers saying I’m going to spend a little bit more to bring [users] to my channel and I’m going to bring in less revenue to bring them into my channel. That’s a transitional moment that we have enough precedent to show that actually the economics pay back, but they look at a two-and-a-half-year recoup cycle. Again that’s a reason for optimism, but it’s pent up in much of the world. And now as a result it’s all being co-experienced.”

Photo credit: Gabor Jurina.