First, a quick reminder: Naavik will be at Gamescom this year! If you’d like to connect and learn more about how Naavik can support your team, please reach out here.

Moving onto our newsletter — in our inaugural issue, we deeply analyzed mobile F2P’s H1 2026 performance and what it means for the future of the industry. In today’s issue, we do something similar, but instead take a closer look at one of mobile gaming’s most enduring subgenres: 4X Strategy.

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H1 2026: 4X Strategy’s UA Reckoning

Written by Max Abrahamsen, Consultant at Naavik, and Abhimanyu Kumar, Naavik’s Co-founder

Compared to mobile F2P and its parent genre, Strategy, 4X Strategy’s H1 2026 performance looks impressive. 4X Strategy downloads rose by +5% YoY (+18M), while total mobile F2P fell by -12% YoY (-3B) and Strategy by -3% YoY (-29M). IAP revenue was also up +5% YoY (+$193M), compared with declines of -2% YoY (-$0.6B) for mobile F2P and -5% YoY (-$319M) for Strategy.

However, these six-month totals conceal a sharp quarter-over-quarter decline within H1 2026. The subgenre peaked during Q4 2025 and has since declined, with H1 2026’s YoY growth being concentrated in Q1. During Q2 2026, 4X Strategy’s downloads fell -27M QoQ (-12%) versus -5% across mobile F2P and -9% for the Strategy genre. Revenue declined similarly, dropping -$195M QoQ (-10%) versus -6% across mobile F2P and -11% for the Strategy genre. Notably, 4X Strategy accounted for approximately half of the Strategy genre’s revenue decline.

Examining the potential reasons for the deterioration of mobile F2P’s largest revenue-generating subgenre over H1 2026 is where 4X Strategy’s analysis gets interesting. Let’s jump in.

Data caveat: Throughout this article, data excludes DTC, China Android, and ad revenues. Also, the market size figures come from Sensor Tower’s “Market Size” feature, which covers a subset of the entire mobile gaming market. While the aggregate numbers are smaller than the broader mobile gaming market, we’ve confirmed that this subset is representative of broader market trends. We’ve also flagged where to keep the missing DTC revenue in mind when studying broader subgenre trends.

4X Strategy’s Slowdown over H1 2026

4X Strategy’s +18M YoY downloads increase during H1 2026 was not really concentrated on a particular platform or region. The relatively minor +5% YoY growth hints towards substantial title-level movement beneath the surface. Roughly 40% of all tracked 4X Strategy titles grew at various intensities, adding +150M YoY downloads. Around 50% saw small to large download drops, collectively driving a -131M YoY decline. The remaining 10% were flat. However, what’s interesting to note is what kinds of titles drove growth and which declined.

When slicing the data by title launch year, it was primarily new 4X Strategy launches over the last two years that added +112M downloads and drove the subgenre’s H1 2026 downloads growth. This included titles like X-Clash (+26M), Kingshot (+18M), Tiles Survive! (+17M), Last Light (+15M), Last Asylum (+14M), and more. Some of these games launched after H1 2025 (adding downloads to H1 2026 versus zero contribution to H1 2025), while others continued to scale UA over H1 2026.

On the other hand, 4X Strategy’s older portfolio (pre-H2 2024) offset -94M downloads of that growth. This included games like Lords Mobile (-13M), Total Battle (-11M), Dark War: Survival (-10M), Last War: Survival (-8M), Evony (-8M), among others. Some of these games are long-standing incumbents that are naturally unable to scale UA to the same degree as newcomers, while others scaled rapidly during 2025 but could not sustain that pace into 2026.

On the revenue side, ~30% of all tracked 4X Strategy titles grew at various intensities over H1 2026, adding +$962M in YoY IAP revenue. Around 45% declined, collectively removing -$769M, while the remaining ~25% were flat. The revenue story was similar to downloads; the subgenre’s older portfolio absorbed ~70% of the newer games’ revenue growth, leaving 4X Strategy up +$193M YoY over H1 2026.

More specifically, newer titles released over the last two years added +$620M YoY in H1 2026, while older titles took away much of that growth (-$425M YoY). Kingshot was the major growth contributor (+$403M), given its early 2025 launch and rapid UA scaling since. Last Z was another bright spot (+$193M YoY) — it technically belongs to our definition of the older portfolio due to its mid-2024 release, although it truly began scaling over 2025, and the game’s H1 2026 results inherited that marketing momentum. However, established incumbents declined significantly. Last War: Survival saw steep declines in downloads, MAU, and ARPDAU over H1 2026, resulting in a significant -$135M YoY (-17%) decline. Whiteout Survival was also down -$126M YoY (-16%) due to declining MAUs, primarily driven by falling downloads.

Based on the graphs and notes above, two observations emerge:

1. 4X Strategy’s performance would’ve been flat to declining if not for newly released titles that successfully scaled UA during their launch years, thereby driving up overall subgenre revenue.

2. For older 4X Strategy games, sustaining revenue seems to require regular top-of-the-funnel replenishment through stable new- and returning-player-focused UA strategies — especially when new competitors appear. Keeping long-term retention healthy and improving ARPDAU could even result in growth.

The above represents why we found 4X Strategy’s downloads and revenue deterioration over H1 2026 surprising. As a reminder, between Q1 and Q2 2026, 4X Strategy’s downloads fell by -27M (-12% QoQ) and revenue by -$195M (-10% QoQ).

On performing a revenue-weighted analysis of which metrics drove 4X Strategy’s revenue decline over H1 2026, a broader DAU deterioration drove ~73% of it, ~92% of which was attributable to new user acquisition and ~8% came from natural erosion of existing users. The remaining ~27% was attributable to lower ARPDAU over the period.

This demonstrates the critical role of UA in sustaining overall 4X Strategy health — and over H1 2026, UA didn’t play that role very well. Among the subgenre’s top 100 U.S.-grossing games over H1 2026 (representing ~98% of U.S. subgenre revenue), 81 games were running UA in 2025, and 68% of them recorded YoY declines of at least -10% in their U.S. UA channel impression share. Quarter over quarter, 8 of the top 10 grossing saw a similar intensity of impression share declines in the US. Further, 54% of all new releases, and 60% of all old games also recorded impression share declines of at least -10% in the US.

While this does not mean that the top 100 grossing 4X Strategy games stopped acquiring users altogether, it indicates that many of them were no longer investing in UA with the same intensity as before. This could be an early and critical indicator that 4X Strategy’s ability to acquire users with its current UA tactics is beginning to weaken in a new UA environment that’s rearing its head more prominently over 2026.

Why 4X Strategy Might Be Pulling Back on UA in H1 2026

There is likely no single explanation for this UA pullback over H1 2026, but here are a few factors we believe could be contributing.

#1 – A Contracting Mobile Downloads Market: Mobile downloads fell by -12% YoY during H1 2026, despite gaming ad spend increasing by +8% and impressions by +14%. Publishers likely spent more to compete for a shrinking pool of installs, putting pressure on acquisition costs and weakened returns. For top-grossing 4X Strategy titles, such UA conditions could’ve made previous levels of marketing investment increasingly difficult to justify.

#2 – Midcore Impression Share is Increasingly Consolidating: As mentioned in our H1 2026 mobile F2P analysis, AppLovin and AdMob now control roughly two-thirds of mobile gaming’s ad revenue. This percentage moves up to ~75% when looking only at midcore genres, and consolidation accelerated over H1 2026. 4X Strategy lives within and also acquires new users more broadly from midcore subgenres. Therefore, as midcore’s ad impression share increasingly consolidates around fewer networks, 4X Strategy publishers increasingly compete within a more concentrated auction pool — not only against one another, but also against advertisers across other midcore subgenres. That, of course, could put more pressure on 4X Strategy’s H1 2026 UA economics.

#3 ‒ Non-midcore Subgenres are Competing with 4X Strategy for Impression Share Too: The point above also extends to non-midcore subgenres, whose impression shares are increasingly consolidating towards AppLovin and AdMob too. This can be seen in the graph below, where non-midcore subgenres like Match Merge 2 and Sort have contributed to 4X Strategy’s declining impression share over 2026, likely driven by rapidly scaling games like Gossip Harbor (Match Merge 2) and Pixel Flow (Sort).

Taken together, these market factors could’ve created tougher UA conditions for 4X Strategy — a subgenre that has historically relied on UA for stability and growth. While both new and old games seem to be impacted, new titles at least have a novelty factor to combat the evolving UA environment. On the other hand, older games have already spent years running UA profitably at scale. For them, as the most receptive audiences are gradually acquired and re-targeted, reaching additional high-value players can become increasingly difficult. Therefore, older titles might generate better returns by prioritizing retention and monetization improvements.

That said, acquisition is only the beginning of 4X Strategy’s modern commercial funnel, which we covered here. Broadly appealing advertising and highly accessible onboarding must ultimately convert players into the deeper 4X experience. Pressure at the acquisition stage of the funnel will therefore affect each game differently depending on how well the game has executed on the stages that follow.

How 4X Games are Reacting to Harder UA in H1 2026

This part of the analysis will focus on the four 4X Strategy titles that clearly dominated the subgenre’s revenue ranks over H1 2026 — Last War: Survival, Whiteout Survival, Kingshot, and Last Z. Interestingly enough, each of these titles seems to be tackling 2026’s UA environment slightly differently.

#1 ‒ Last War Might be Retrenching: No title contributed more to 4X Strategy’s Q2 2026 contraction than Last War: Survival. IAP revenue fell from ~$406M in Q1 to ~$278M in Q2 (-32% QoQ), accounting for approximately two-thirds of the subgenre’s quarterly revenue decline. This has primarily been a function of the game taking two very questionable steps in 2026:

1. UA seems to have been effectively turned off since May 2026. The game reported near-zero impression share on Sensor Tower over the last three months, with slow UA reductions since January 2026. This, combined with natural existing audience erosion, impacted the game’s MAU curve, collectively driving ~72% of the game’s quarterly revenue decline over 2026. MAUs might settle at a core audience baseline over time.

2. The developer also reduced the game’s monetization pressure in April 2026 by removing a broad selection of purchase opportunities, which impacted the game’s ARPDAU baseline. This move coincided with a Discord message titled “Returning to Our Roots”, where the developer informed players that they agreed with player feedback around how “the constant pace of spending has started to feel overwhelming”, and took action by making “adjustments to some packs, events, and certain purchase entry points, as well as how they are presented in the game”. While this move might’ve been spurred by the game’s ARPDAU gradually declining over 2025 (as the active user base grew), the developer ended the letter in a very telling way: “We know this kind of decision might be confusing. It goes against the usual logic of this industry, and it means accepting some very real costs on our side. Some people may not understand it. Some may feel that these are only words. We understand that some people may see it that way. But if we don’t take even this step, then talking about returning to our roots means nothing at all.”

While we cannot be absolutely certain why Last War: Survival is going down this seemingly self-sabotaging route after dominating the subgenre since 2024, a possible (optimistic) hypothesis is that the game might simply be retrenching – scaling back UA to potentially wait out a harder UA environment, doubling down on improving retention of its most valuable players in the meantime, and evolving the monetization strategy in a way that fits the lifecycle stage of the game. After all, not many 4X Strategy games last forever, and 2026’s UA environment might be making Last War: Survival realize that truth even more. If the hypothesis is true, the key question for Last War: Survival will be whether this approach can minimize established audience churn without sacrificing too much revenue in the process.

#2 ‒ Last Z is Cautiously Returning to Acquisition: Last Z followed a similar UA playbook to Last War during its initial scaling phase. But starting from Q4 2025, ad impression share started to weaken. Interestingly enough, Q4 2025 was also the time Last War: Survival made a major (and possibly last) UA push, which could’ve impacted Last Z’s impression share figures. Fortunately, this Q4 2025 movement did not bubble up to the game’s downloads and MAU curves. However, during 2026, Last Z significantly scaled back UA efforts, which drove half of the game’s quarterly revenue decline. The other half was driven by lower ARPDAU in Q2 2026, which is also when Last Z cautiously started turning UA back on.

The game’s new UA strategy seems to revolve around reducing its focus on AppLovin and AdMob, and instead trying out new channels like TikTok and Moloco. However, the game’s creative strategy hasn’t changed much. Overall, it seems like Last Z has simply chosen to replenish its lost user base by trying a new channel mix. Although given the ARPDAU weakness coinciding with increased UA, it seems like the game might need to go back to the drawing board to find a new growth strategy.

#3 ‒ Century Games Focused on ARPDAU Improvements: Unlike Last War: Survival and Last Z, Century Games took a very different path with Whiteout Survival and Kingshot to combat weakening audience metrics over H1 2026.

Whiteout Survival’s quarterly revenue did not decline in H1 2026. It increased from ~$318M in Q1 to ~$325M in Q2 (+$7M, +2% QoQ). Under the hood, the game did see downloads deteriorate over the same period, and MAU followed. However, this new-user-driven decline was more than made up for with a very healthy ARPDAU over H1 2026. The game did not change much with its UA channel or creative mix either. In other words, if the game did not see healthy ARPDAU, its new user decline would’ve driven a roughly -$23M quarterly loss.

Kingshot showed a similar story over H1 2026. The game’s revenue increased from ~$236M in Q1 to ~$255M in Q2 (+$19M, +8% QoQ). This was primarily because the game’s downloads decline was more than made up for by healthy ARPDAU. If ARPDAU wasn’t healthy, the game would’ve seen a roughly -$20M quarterly revenue decline due to reduced new player supply. That said, the key difference in Kingshot’s story is that it is still in the early innings of its lifecycle, which means it’s likely getting significant backing from Century Games’ UA warchest. This is probably why it was also able to fly above H1 2026’s harder UA environment and maintain a relatively stable impression share throughout the period. It may also be why Whiteout Survival’s impression share dropped to a new baseline in 2025, when Kingshot launched and took the company’s spotlight.

Where Does 4X Strategy Go From Here

4X Strategy remains mobile gaming’s largest subgenre by IAP revenue (~15% share). But the subgenre’s deterioration over H1 2026 raises questions about the growth model behind it. While top 4X Strategy publishers seem to be reacting to the evolving UA environment in different ways, how long the current UA environment persists through 2026 and 2027 will determine how 4X Strategy will fuel its next stage of commercial growth.

That said, and on a more encouraging note, this is not the first time that changing market conditions have forced the subgenre to adapt. Since 2010, 4X Strategy has cycled through four generations. Each generation thrived under its market conditions while standing on the shoulders of the previous generation to strengthen the subgenre’s fundamentals. This can be seen in the image below, where the table showcases how Generation 4 utilizes all the goods from previous generations while adding something new on top.

While the subgenre is currently in Generation 4, the UA environment pressures visible in H1 2026 could be creating the conditions for an imminent Generation 5. If the consolidation of ad impression volume becomes more permanent, we believe 4X Strategy will need to:

• Focus its marketing efforts on either stronger differentiation or net-new user pool unlocks — both difficult endeavors, with the former likely being slightly easier than the latter.

• Focus its product efforts on finding new ways to either monetize highly valuable acquired users for longer periods of time or simply improve long-term retention — again, both tough nuts to crack; the latter is especially a long-standing untapped area of the subgenre, and we sometimes like to call it one of 4X’s last battlegrounds.

In other words, 4X Strategy’s era of acquisition at any cost may currently be facing some headwinds, but that may not necessarily be a long-term threat for a subgenre with a long history of successfully adapting to disruption. It may instead be the catalyst for its next evolution. What form this evolution takes remains uncertain, but innovation will likely be required across both marketing and product.

Top News Items

Written by Max Abrahamsen, Consultant at Naavik

Apple objects to UK regulator’s attempt to open up the App Store

• The UK Competition and Markets Authority has proposed allowing iOS developers to direct users outside their apps to complete digital purchases. Apple could still charge a fee on those transactions, but, according to regulators, the terms would need to be fair, reasonable, and make steering commercially viable for developers. Apple argues that these restrictions would amount to price regulation and give the CMA an intrusive role in determining how it monetizes the App Store. The consultation has closed, and the regulator is assessing responses before reaching a final decision.

• For mobile game publishers, the value of steering will be determined less by the right to link externally than by the fee Apple is allowed to charge. A sufficiently low fee could make webstore discounts worthwhile, improve margins, and give publishers more control over pricing and player relationships. If the fee remains close to Apple’s existing commission, those benefits could be absorbed by payment-processing costs and the added friction of moving players outside the app. The CMA is therefore tackling the most important weakness in similar reforms: payment choice means little when platform fees make the alternative commercially unattractive. Its final framework will determine whether external payments become a meaningful monetization route in the UK or mainly a formal compliance option. Similar disputes have played out internationally, most directly in the EU and U.S., while South Korea and Japan have adopted their own alternative payment regimes. Across these markets, the argument has increasingly shifted from whether alternatives must be permitted to whether Apple’s fees and conditions make them commercially viable.

AppLovin shares plunge nearly 20% as ad model delays raise growth concerns

• AppLovin reported Q2 revenue of $1.92B, up 53% YoY but slightly below expectations, while its Q3 outlook also disappointed. Management attributed the shortfall to a quarter with fewer meaningful improvements to its advertising models, saying the company “fell short of that standard.” However, a significant model upgrade launched shortly after the quarter ended, and management said Q3 started strongly. This suggests the weaker quarter may have reflected the timing of model improvements rather than softer advertiser demand.

• AppLovin remains one of the most important user acquisition and monetization platforms in mobile gaming, and 53% YoY revenue growth demonstrates the continued strength of its advertising business. The sharp share-price decline reflects the exceptionally high expectations embedded in AppLovin’s valuation more than a meaningful deterioration in its competitive position or product capabilities. Slower growth in gaming advertising and fewer model improvements are worth monitoring, but one weaker quarter provides little evidence that AppLovin’s competitive advantages have diminished. Such reactions are common when high-growth companies deliver strong results that nevertheless fall short of Wall Street’s expectations.

Krafton achieves record Q2 results with revenue up 95%

• Krafton delivered record second-quarter revenue and operating profit in Q2 2026, driven by the PUBG franchise and Subnautica 2. Revenue rose 95% YoY to ₩1.29T ($899.5M), while operating profit increased 67% to ₩410.9B ($286.5M). PC was the main growth engine, with revenue up 155% to ₩560.4B ($390.8M), helped by Subnautica 2 selling more than five million units within 22 days of its early access launch. Mobile remained Krafton’s second-largest platform, generating ₩451B ($314.5M), up 6% YoY, as PUBG Mobile and Battlegrounds Mobile India continued to grow.

• PUBG Mobile remains a durable asset, and the next mobile growth lever is turning PUBG from a hit live-service game into a creator-led content platform. World of Wonder has already produced more than 5.4M user-created maps, and planned Naruto and Spider-Man collaborations should bring more players and creators into that ecosystem. If Krafton can pair stronger creation tools with meaningful monetization opportunities, PUBG Mobile can expand its content supply without relying solely on internal teams and licensed events, improving engagement and extending an already unusually long lifecycle.

Playtika’s DTC revenue jumps 63% as Disney Solitaire approaches Bingo Blitz

• Playtika generated $731.1M in Q2 revenue, up 5% YoY, while DTC platform revenue increased 63.1% to $286.9M. Disney Solitaire generated $142.4M during the quarter, up 15.5% sequentially and 288.6% YoY, putting it close to Bingo Blitz’s $145.1M quarterly revenue (down 10% YoY); SuperPlay also became a positive adjusted EBITDA contributor.

• Playtika is now generating almost $287M per quarter through DTC, demonstrating how meaningful webstore migration has become for large mobile publishers. Disney Solitaire is also strengthening Playtika’s results, but its growth has required substantial upfront investment. Playtika front-loaded user-acquisition spend into H1, partly because SuperPlay’s earnout incentivized early investment, and now plans to reduce that by roughly 70% in H2. Management expects Disney Solitaire’s revenue to decline sequentially as a result, but says strong retention should allow the game to remain profitable on the players already acquired. Meanwhile, Playtika’s acquisition terms require up to $1.25B in additional cash payments tied to SuperPlay’s revenue and EBITDA through 2027. A reported sale to Tencent could provide cash and reduce these obligations, but would also surrender Playtika’s strongest growth asset.

Court orders Papaya Gaming to pay Skillz $719M in false-advertising case

• A U.S. court has ordered Papaya Gaming to pay $719M to Skillz Platform after an April jury found Papaya liable for false advertising and unfair business practices. Skillz alleged that Papaya used bots to simulate human opponents while marketing its cash-based mobile games as fair, skill-based competitions. Trial evidence showed that Papaya’s bots outnumbered human players between 2021 and 2024. The court selected the $719M disgorgement of unjust profits instead of the jury’s earlier $420M damages award, since Skillz can recover only once for the same injury. It also denied Papaya’s post-trial challenges and awarded Skillz approximately $10M in legal fees. Papaya says it is considering an appeal, while Skillz cautions that further proceedings could affect when or how much it ultimately collects.

• The judgment is a major warning to cash-prize mobile game operators that opponent matching is not merely a product-design choice. When players are told they are competing against people, undisclosed bots can expose the operator to substantial liability if they affect prize distribution or spending behavior. That makes clear disclosure and auditable matchmaking essential for any studio using simulated players in monetized competitions. The size of the award could also intensify scrutiny of the wider skill-gaming category, where trust is already central to acquisition and retention.

Other News Items

• $30M Fund for Turkish Mobile Game Studios by Drilo Ventures

• Unity adds dedicated engine support for Netflix Games

• Garena is developing Palworld Online, launching this year

• Arknights: Endfield surpasses $125m in six months on mobile

• Sega and Black White Orange partner to expand Angry Birds’ presence in India

Content Worth Consuming

• H1 2026 Gaming Digital Market Index (Sensor Tower): “The cross-platform snapshot shows the pattern clearly. Worldwide mobile IAP finished around $40B, down 2% year over year, while mobile playtime held at 221B hours. Downloads told a different story, falling 12% to 24B.”

• 5 Numbers Hiding in Plain Sight: Sensor Tower’s Ad Monetization Report (Deconstructor of Fun): “I spent half an hour with Sensor Tower’s Lead Analyst, Sam Aune, working through the charts. Five surprising numbers came out of it. Some are buried in the body copy. Some you only get by dividing two of Sensor Tower’s own figures together. Most importantly, none of them are on the summary slide.”

• GTA has made over $100m on mobile – and now Tencent, Garena and more are moving onto Rockstar’s turf (Mobilegamer.biz): “With the GTA 6 launch looming large over the entire games business, we’ve had a look at Rockstar’s own games and the wider ‘GTA-alike’ category on mobile to see which other studios are trying to ride the wave of hype coming our way this November.”

• The industry makes great games, but nobody can find them (gamesindustry.biz): “The workgroup found that the reason why the discoverability problem hasn’t been fixed is because the solution would be expensive, risky, and go against the short-term interests of almost every party involved. And there’s a deeper issue underneath the discoverability problem: the industry may simply be making too much, and too little of it matters.”

• How SayGames uses game analytics to balance difficulty in hybrid puzzle games (pocketgamer.biz): “In one case, we experimented with adjusting the balance of levels without redesigning them. By slightly softening parts of the difficulty curve, the overall pacing of the game improved. Levels felt less frustrating, and the progression through the game became smoother.”

More About Naavik

Naavik’s team of experts has helped over 300 companies — publishers, studios, tech companies, and investors — succeed across the video game industry. We’d love to work with you too! Here’s how we can help, spanning all platforms, genres, and regions:

• Strategy Consulting: Market research, corporate strategy, game and economy design, gamification, live-ops strategy, AI strategy, product management, brand and performance marketing, and more.

• M&A and Investment Advisory: Expert commercial due diligence for buyers, fundraising support for sellers, and fractional CFO/CSO services.

• Fractional Talent: The one-stop shop for top-tier fractional talent covering dozens of game industry roles — analytics, design, marketing, art, QA, and more.

Check out the links above to learn more. If you'd like to discuss how Naavik can support your team, click the box below or send us a note at consulting@naavik.co.

Today, we are launching our new biweekly newsletter focused on mobile F2P gaming! It will become Naavik’s primary hub for exploring the games, genres, companies, and trends shaping the future of mobile play.

A few quick details: This newsletter segment will be published via Substack under our Naavik publication hub, and it will come out every alternate Tuesday, between our AI x Gaming issues. We also plan to port Naavik Digest to Substack soon so that we can have all our newsletter content in one place. Stay tuned for that.

Lastly, we recognize that not everyone is interested in every aspect or platform of the gaming industry. If mobile F2P isn't for you, we’ve got you covered! Substack makes it easy to adjust which newsletter segments you receive. Here's how: go to Settings, click Naavik, and toggle which notifications you receive from our Substack.

Enough preamble. In today's issue, we cover the biggest developments in mobile gaming over H1 2026. Plus, make sure to check out our latest interview, which dives into Subway Surfers' longevity with SYBO CEO Mathias Gredal Nørvig.

H1 2026: Mobile Gaming’s Stability Illusion

Written by Harshal Karvande (Principal Designer at Rovio) and Abhimanyu Kumar (Co-founder of Naavik)

Mobile gaming entered 2026 with a paradox. According to Sensor Tower data, global downloads fell to ~22B in H1 2026, a significant -3B YoY (-12% YoY) reduction in volume. On the other hand, revenue hit ~$28B, a relatively modest -$0.6B YoY (-2% YoY) decline in value. Specifically in Q2 2026, downloads fell to pre-IDFA and even pre-pandemic levels to ~10.8B (-12% YoY), while revenue was slightly less impacted, dropping to ~$13.3B (-5% YoY). The market is clearly losing downloads faster than it is losing revenue, which makes H1 2026’s revenue story look stable even though some of its foundations seem to be shifting underneath.

To understand what’s really happening, this article will dig deeper than the aggregate numbers above — analyzing movements across platforms, genres, subgenres, and games. Note that the data does not include DTC, China Android, or ad revenues. Also, the market size numbers come from Sensor Tower’s “Market Size” feature, which showcases a subset of the entire mobile gaming market. While the aggregate numbers look smaller than mobile gaming’s true market size, we’ve confirmed that analyzing this subset is representative of broader market trends.

Let’s dive in.

Downloads: -13% YoY, Android-driven

When splitting H1 2026’s download decline by platform, Android was the major culprit, declining at a -13% YoY rate and contributing to ~92% (~2.8B) of the entire decline. iOS drove the rest (~8%, ~0.2B, -6% YoY).

The geographic breakdown makes this concentration even clearer. Tier 2 and 3 markets accounted for ~88% of Android’s decline and ~80% of the combined decline across platforms. The top 5 contributing countries were India, Brazil, Indonesia, Mexico, and Turkey.

Given the above, it is not surprising to see that the typical high-volume genres that receive installs from Tier 2 and 3 countries were primarily responsible for Android’s H1 2026 download decline. The Arcade genre accounted for ~30% of the drop, followed by Simulation, which drove an additional ~22%. Lifestyle, Action, and Tabletop also dropped. Collectively, these five genres represented ~78% of Android’s decline.

Digging deeper, Android’s genre-specific declines were concentrated within certain subgenres that typically garner high volumes of Tier 2 and 3 region installs. For example, Arcade’s decline was driven by Platformer / Runners (~46% share), Other Arcade (~20% share), and Mini-game Hub (~12% share). Similarly, Simulation’s decline was mostly driven by Simulator (~38% share), Driving / Flight Simulator (~23% share), and Sandbox (~15% share).

That said, it should be noted that across most of these subgenres, the download decline was subgenre-wide (spread across multiple titles). This was primarily due to two simultaneous effects:

1. In certain subgenres, many short-lived game launches faded faster than newer releases could replace them. For example, Other Arcade, Mini-game Hub, Simulator, and Driving / Flight Simulator all followed this behavior, with “pop-and-drop” games contributing 50-60%+ of the subgenres’ decline.

2. In other subgenres, their weakness was primarily caused by older games fading. For example, in Platformer / Runners, mature titles drove ~85% of the subgenre’s download decline, while rapid decay in more recent launches drove the rest.

Overall, H1 2026’s 12% YoY download decline can be summarized as follows. Android experienced a much sharper contraction than iOS, generating ~92% of the combined platform decline. The correction was concentrated in high-volume Tier 2 and 3 countries and a small set of genres and subgenres that usually receive a large share of their installs from these territories. Within the largest declining subgenres, a mix of short-lived launches and aging titles saw their download volume fade faster than newer releases could replace them.

That said, what’s very striking to see in H1 2026’s results is that all genre downloads declined YoY at a combined platform level. Unfortunately, this seems to be part of a longer-term structural shift in mobile gaming’s top of the funnel that goes beyond post-COVID and post-ATT effects. It’s not only concentrated to Tier 2 and 3 markets but also seems to impact Tier 1 regions. We will explore a few hypotheses behind why this might be happening (and what it means for mobile gaming’s future) in the final section of the article.

Revenue: -2% YoY, But Not a Healthy Market

Given that H1 2026’s IAP revenue was relatively flat (-2% YoY) alongside downloads falling -12% YoY, the question becomes: What helped make up the difference?

The difference came from revenue per download, which rose +11% YoY and balanced out the significant downloads drop to result in relatively flat YoY revenue. In other words, applying H1 2025’s revenue per download to H1 2026’s downloads volume would’ve reduced its revenue by ~$3.3B. However, H1 2026’s increased revenue per download restored ~$2.8B of that, leaving the -$558M (-2% YoY) decline.

Yet, higher revenue per download math masks significant genre movement underneath. Some of mobile’s largest revenue-generating genres, like RPG, Casino, Strategy, and Action, lost a combined ~$1.6B YoY, while Puzzle and Shooter offset ~$1.3B of those losses. A closer look at those genre movements reveals several key observations.

Note that DTC revenue outflows, which are not tracked in Sensor Tower’s data yet, might also be contributing a bit to the genre IAP revenue movement discussed below. According to Appcharge, 2025’s global mobile DTC revenues were estimated at ~$17B, which accounts for ~15% of the $113.3 billion mobile gaming IAP market in the same year. And some subgenres are adopting DTC payment channels more aggressively than others — for example, RPGs (across multiple subgenres), Casino games (especially Slots), and Strategy titles (especially 4X Strategy ones). However, it likely doesn’t change the broader trends and takeaways noted through this analysis.

#1 — RPGs’ decline was severe and genre-wide: RPGs’ -$664M YoY decline fully explains mobile gaming’s H1 2026 revenue decline and was driven by multiple key revenue driving RPG subgenres:

• MMORPGs dropped by -$455M YoY (~69% of total genre decline), due to the portfolios of established Asian publishers seeing natural aging over time. For example, NC Corporation’s (formerly known as NCSoft) Lineage M, Lineage W, and Lineage 2M contributed to ~30% of RPGs’ decline, while other mature Korean MMORPGs also declined significantly. This is not uncommon for MMORPGs, but new major releases are necessary to make up for the gap to ensure overall subgenre stability.

• Turn-based RPGs dropped by -$266M YoY (~40% of total genre decline), primarily due to weakness in various mature titles like Honkai: Star Rail (-$69M), Fate/Grand Order (-$40M), and RAID: Shadow Legends (-$37M). Across the three titles, their declines were driven by either MAU erosion (natural to mature titles), underperforming ARPDAU (weaker live-ops roadmap), or a mix.

• Squad RPGs dropped by -$157M YoY (~24% of total genre decline), again due to declining established titles like CookieRun: Kingdom (MAU erosion), DC: Dark Legion (post-launch year decline), and Hero Wars (MAU erosion).

• Open World Adventure offset some portion of the above with a +$173M YoY bump, mainly due to Arknights: Endfield’s and Tencent’s Roco Kingdom’s strong launch performance in China.

#2 — Casino’s decline was Slots and Monopoly Go! driven: Casino saw a -$376M YoY decline in H1 2026, with two subgenres accounting for ~95% of the genre's decline:

• Slots was down by -$233M YoY, contributing to ~62% of Casino’s decline. It was spread across numerous incumbent games, such as Slotomania, House of Fun, DoubleDown Casino, Huuuge Casino, and more. While all these games face growing maturity-related declines (and DTC revenue outflows contributing a bit to the numbers too), most Slots game publishers also lost the ability to retarget lapsed payer cohorts post-ATT to help replenish churned cohorts and thereby keep the subgenre afloat. However, some Slots game publishers were able to navigate this UA hurdle better than others — see our interview with SciPlay.

• Coin Looters was down by -$125M YoY, contributing to an additional ~33% of Casino’s decline. Monopoly Go!’s slow downloads, DAU, and ARPDAU deterioration, likely due to a rapidly scaled game gradually maturing and normalizing, explained all of it.

#3 — Strategy suffered a Pokémon problem: Strategy experienced a -$319M YoY decline with the following taking place:

• Pokémon TCG Pocket fell by -$300M YoY, which accounted for ~94% of the genre’s decline. The game dropped sharply from its launch-period highs as downloads, DAU, and ARPDAU contracted during its second year of live-ops.

• 4X Strategy was up by +$193M YoY, but beneath that were approximately +$974M of gains and -$781M of declines. Kingshot and Last Z: Survival alone generated roughly +$576M of the gains. However, mature leaders such as Last War: Survival and Whiteout Survival (!) subsequently absorbed much of that growth.

#4 — Action witnessed four subgenre corrections: Action saw a -$250M YoY decline with four subgenres (and key titles within them) driving most of it:

• Shoot ‘em Up was down -$101M YoY (~40% genre decline contribution) with ~80% of it explained by weak performance from Habby’s Achero 2, Survivor.io, and Archero. This is not surprising since even the best hybridcasual games today haven’t yet figured out how to fully evolve out of hypercasual‘s typical UA-fueled front-loaded performance, and scale revenue beyond the first three to six launch months. Unfortunately, Habby’s portfolio performance also defines the subgenre trends due to its dominating revenue market share.

• Dungeon & Fighter Mobile/Origin lost around -$97M YoY, more than the Beat ’em Up subgenre’s net decline. Almost all of this came from the game’s post-China launch year decline.

• Zenless Zone Zero lost -$40M YoY, while Solo Leveling: ARISE lost -$18M YoY. Those two franchises explain most of Hack and Slash’s decline before new Bleach releases provided offsets. Hack and Slash‘s revenue performance has always been major launch-driven, as the subgenre’s stagnating audience volume buys into new-release hype before cycling through titles quickly.

• NetEase’s Identity V versions lost -$40M YoY due to a weaker live-ops roadmap, explaining Asymmetric Battle’s decline.

#5 — Puzzle’s rise was mobile’s MVP in H1 2026: Puzzle added +$915M YoY, with two subgenres accounting for nearly all of that growth (as we also previously covered here):

• Merge 2 was up +$640M YoY, primarily driven by the UA fuel behind Microfun’s Gossip Harbor (+$320M) and Century Games’ Tasty Travels (+$132M).

• Sort was up +$303M YoY, mainly driven by a newer cohort of games, such as Pixel Flow (+$125M), Magic Sort (+$33M), Yarn Loop (+$22M), Sand Loop (+$18M), Marble Sort (+$17M), and Gecko Out (+$16M). Most of them, except for Magic Sort, are relatively recent launches and continue to scale with heavy UA.

• Unfortunately, all other Puzzle subgenres collectively declined by ~$28M, including staples like Match Swap, Hidden Objects, and Merge 3.

#6 — Shooters transformed due to Tencent’s new China-release cohort: Shooters grew +$218M YoY, almost entirely because FPS / 3PS increased by +$225M YoY. This was driven by three Tencent-operated releases — Delta Force, Valorant Mobile, and Reverse War: The Future. Over H1 2026, Delta Force significantly grew in China, while Valorant Mobile and Reverse War brought new revenue to the genre as both launched after H1 2025. However, that single-publisher, single-geography growth hid large incumbent declines, including CrossFire Mobile and Call of Duty: Mobile.

Overall, H1 2026’s relatively flat -2% YoY revenue performance shouldn’t be interpreted as a sign of mobile gaming successfully extracting more value out of a dropping downloads base. Puzzle’s outperformance and the Shooter revenue bump masks a common thread across the various declining genres discussed above — growing incumbent weakness and new releases not always being able to make up for the gap in a sustainable long-term fashion. This is most notably seen in the RPG genre, which entered freefall from 2022 onwards as its incumbents weakened and new releases were unable to take their place. We’ll explore this common thread (and why it might be occurring) in the next and final section of the article.

What It Means for Mobile Gaming’s Future

In our eyes, H1 2026’s performance showcases the symptoms of two fundamental problems the mobile gaming industry is currently facing.

First, H1 2026 saw a universal top-of-the-funnel decline across all genres, and it is unfortunately the continuation of a multi-year structural decline in install volume across platforms, with Android being the key contributor. The image below illustrates two downloads market phases:

1. 2020-2023 Plateau: Annual downloads plateaued between ~55-56B, post-pandemic normalization. However, while iOS faced a double whammy post-pandemic and post-ATT download decline, Android’s Tier 2 and 3 markets grew enough to keep the combined platform view broadly flat.

2. 2023-2026 Structural Decline: While iOS downloads continued to decline, Android’s Tier 2 and 3 download engine also began to weaken, after peaking in late 2023. Rolling-four-quarter downloads fell from ~56B in Q3 2023 to ~46B in Q2 2026, a -17% contraction, ~94% of which was Android-driven. This essentially made Android the center of gravity for mobile gaming’s downloads downturn, with weakness in Tier 2 and 3 downloads driving ~80% of it.

Given that Tier 2 and 3 inorganic install share remained relatively flat during a period of significant downloads loss, a mix of two effects could be accelerating this volume decline:

• External factors like the attention wars could be driving low mobile gaming intent install volume to other forms of entertainment — an effect that would even extend to high-value Tier 1 market installs.

• Inorganic install spending pullbacks could be occurring due to rising CPIs, which in turn create a poor ROAS environment. According to Sensor Tower’s Gaming Digital Market Index report, over H1 2026, gaming digital ad spend was up +8% YoY (~$7B), and ad impressions were up +14% (~1.4T). Taking those numbers within the context of ad network market share increasingly consolidating and download volumes dropping would indicate CPIs rising at a faster rate than product LTVs can improve to maintain healthy ROAS results across key downloads (Tier 2 and 3) and revenue (Tier 1) markets.

Second, H1 2026’s revenue results tend to showcase a sobering reality about mobile gaming’s mature state:

• The market has become increasingly dependent on an aging base of long-standing incumbents. Games five years or older now generate ~57% of the revenue among the top 200 grossing titles — roughly 70% of total mobile gaming revenue. That share has risen rapidly over the years, underscoring the aforementioned market dependence.

• However, the above doesn’t mean the revenue impact of younger hit games has disappeared. In H1 2026, games less than two years old added roughly $2.3B YoY, replacing 99% of the roughly $2.4B lost by incumbents five years or older. The bigger concern is how rarely successful new launches mature into enduring incumbents. Roughly one in four young top 200 grossing entrants remain on that list long-term and eventually become an incumbent five years or older.

Simply put, while mobile gaming can still generate commercially meaningful launches, few become the durable next-generation incumbents. This raises the dependence of market health on existing incumbents, while increasing the incumbent replacement burden for new games.

All the above reminds us of Supercell CEO’s words from his recent annual letter: “It’s an industry coasting… getting very good at optimizing what already exists… but here’s the reality: live game excellence alone doesn’t grow an industry. It maintains one. For the market to truly expand, we need to bring new players in… And that requires innovation. New genres. New ways to play… That’s what Clash Royale did in 2016. That’s what Pokémon GO did that same summer. The industry needs more of those moments.”

His annual letter is titled “The Best Games Haven’t Been Made Yet”. While we can understand a mobile gaming entrepreneur wanting to hold an optimistic stance, this analysis makes us think about the opposite — have the best games already been made? That’s, of course, a very pessimistic view for an industry that rests on creative foundations that inherently have no design ceiling. However, mobile gamers (new or old) have one important ceiling — dedicatable daily time to mobile gaming. That means they have to make two choices: whether to spend their limited time on mobile games instead of other forms of entertainment, and, if so, which games earn that time. If those games remain long-time incumbents, then natural churn eventually takes over — and there is a chance the mobile gaming industry loses those players entirely, unless a new game takes the incumbent’s place and wins the lost players’ time back.

In other words, Ilkka is broadly right, even though what he’s rallying the industry towards is one of the hardest things to achieve in gaming. At the same time, it doesn’t look like the alternative path is getting mobile gaming anywhere healthy either. So current and future mobile game developers who care about returning mobile gaming to healthy growth (and creating highly durable long-term mobile gaming businesses while at it) may as well be ambitious and solve the harder problem. Mobile gamers are likely eager to experience another market-defining game like Clash Royale for the first time too.

Top News Items

Written by Max Abrahamsen, Consultant at Naavik

3rd Party App Stores Can Launch Inside Google Play

• Google and Epic Games have withdrawn their request to replace a U.S. court injunction with a negotiated settlement, clearing the way for rival Android app stores to be distributed through Google Play from July 22. The injunction follows Epic’s antitrust victory, which found that Google had maintained an illegal monopoly over Android app distribution. Google is also opening access to its Play catalog, meaning eligible third-party stores can list apps and games already available on Google Play unless developers opt out. Participating stores must pay a $5,000 annual review fee, operate only in the US, remain open to eligible developers, publish trust and safety policies, and keep malware install attempts below 1%.

• The ruling creates a materially easier route for alternative game stores to reach U.S. Android users. For mobile game companies, distribution through Google Play is the most important part of the ruling, because it gives rival stores access where users already search for apps. That could make stores from Epic and other publishers easier to install, while creating more competition over fees, discovery, payments, and developer terms. The withdrawal also preserves developers’ right to link users from Play-distributed apps to external downloads. However, it does not settle whether Google can charge fees on those link-outs, leaving a potentially important DTC economics dispute unresolved. Broad adoption of alternative stores still looks unlikely since most consumers have little reason to leave Google Play. The more probable outcome is a small number of publisher-led stores building meaningful but niche audiences around exclusive content rather than a fragmented mass market.

Tencent in Talks to Acquire Playtika's SuperPlay in Deal Worth up to $1.5B

• Tencent is currently in negotiations to acquire mobile game developer SuperPlay from Playtika in a deal valued between $1B and $1.5B. Playtika originally purchased the studio behind Dice Dreams and Domino Dreams in November 2024 for $690M in cash. That initial deal included a performance-based earnout structure worth up to $1.25B tied to the studio’s financial targets between 2025 and 2027. SuperPlay subsequently launched the highly successful Disney Solitaire, which helped the studio generate $573M in revenue in 2025, beating the baseline earnout target by 67 percent. Under the proposed terms, Tencent would assume responsibility for the ongoing earnout payments to SuperPlay’s founders, removing a major financial liability from Playtika’s balance sheet.

• This transaction highlights a rare scenario where a subsidiary’s rapid success has become a financial burden for its parent company. Playtika is facing $2.3B in debt maturities over the next few years and has suspended its dividend to preserve cash. Selling one of its most valuable assets marks a significant strategic reversal, as the SuperPlay acquisition was originally intended to diversify Playtika away from its declining social casino titles and into the growing casual games market. For Tencent, the deal represents an opportunity to strengthen its portfolio outside of midcore and strategy genres, capturing a proven developer in the casual space. Regardless of the transaction outcome, the deal shows how heavy debt can reduce a company’s flexibility, even when it owns valuable assets.

Vgames Launches $500M Growth Financing Platform for Games Companies

• Israeli gaming fund Vgames has secured $500M, backed by Phoenix, to launch a growth financing platform for gaming and consumer companies. The model is designed for businesses that have moved beyond product development and need capital to fund user acquisition and international expansion without selling more equity. Instead of following a fixed repayment schedule, repayments are tied to revenue generated by the user cohorts financed through the platform. Vgames, which has invested in more than 50 companies since 2020, is working with General Catalyst to identify and assess potential recipients and plans to provide more than $500M in additional financing over the coming years.

• Revenue-linked financing gives established studios another way to scale profitable campaigns while preserving ownership, although it still depends on reliable forecasting and disciplined unit economics. Vgames’ move also reflects a broader shift toward specialized financing products for mature games businesses that need growth capital rather than another traditional venture round. Keep in mind that traditional venture funding in video games has plummeted as investors have found better-fitting (and more risk-controlled) ways to invest in games rather than the equity of the companies that make them. Although we expect game financing to continue growing, increasing competition for top-tier opportunities will likely compress margins, push funds beyond gaming, and gradually loosen underwriting standards.

Unity 7 Is Coming Q1 2027

• Unity will release Unity 7 in Q1 2027, following an early beta in December 2026. Unity promises that the new engine will serve as a direct continuation of Unity 6, ensuring no project rebuilds, new programming languages, or breaking transitions. Built on a modernized CoreCLR foundation, it will deliver near-instant Play Mode, reload only modified code, and decrease shader build times by up to 90%. Unity 7 will also introduce real-time global illumination that scales from high-end PCs to mobile, alongside a new command-line interface, public API, and free MCP server that lets external tools and coding agents interact more directly with Unity projects.

• For mobile developers, Unity 7 combines production improvements with a more integrated growth stack. Native direct-to-consumer purchases, no-code webshops, and unified product catalogs will feed transaction data into Vector, Unity’s AI-driven advertising system. This could make it easier for studios to operate web stores and use first-party purchase data to improve user acquisition, while reducing dependence on platform payments. The faster Editor and agent integrations may also shorten iteration cycles for smaller teams, but much will depend on whether Unity delivers these features reliably and maintains compatibility across existing projects. After several years of product and pricing disruption, a smooth upgrade may matter as much as the technical improvements.

EU fines Google $1B over Play Store restrictions and search practices

• The European Commission has fined Google €890M for two breaches of the Digital Markets Act. A €430M penalty covers Play Store rules that restricted developers from promoting cheaper purchases on websites or alternative app stores, while a separate €460M fine addresses Google’s favoring its own shopping, hotel, transport, and sports services in Search. The Commission found that Google’s steering fees were too high and lasted too long to comply with the DMA, although platforms may charge for helping developers acquire new customers. Google has been ordered to end both breaches and has 60 days to comply before risking recurring penalties of up to 5% of its worldwide turnover.

• For mobile game publishers, the important outcome is the EU finding that Google restricted app developers from promoting cheaper offers and completing transactions through web stores or alternative app stores. This directly affects mobile gaming publishers because games generate substantial in-app spending and increasingly use direct-to-consumer stores to reduce platform fees and own the customer relationship. The likely outcome is a narrower fee structure that makes webstore purchases more attractive, although Google will probably continue seeking compensation for users acquired through Play.

Other News Items

• Roblox Brings Prompt-Based Game Creation to Mobile

• Ukie welcomes UK government’s IP-backed lending plans for games studios

• MTG reports strong Q2 results driven by D2C growth

• Wemade controlling stake sold for $593m

• Pokémon Go revenue skyrockets towards a record high during Go Fest 2026: Global

• Royal Kingdom surpasses $750m with 42% of all revenue made in H1 2026

• Netflix kids’ mobile engagement rises 600%

Content Worth Consuming

• India’s State of Play (Naavik, MIXI): “India has emerged as one of the world’s most compelling gaming markets. Its gaming market is maturing, with mobile gaming alone (excluding Real Money Gaming) generating $1.1B through 2025 and projected to reach $2.4B by 2029. India’s long-established scale is now being matched by rising player spending and a widening mix of genres”

• Gaming Deep Dive: Ad Monetization Report (Sensor Tower): “Navigating this market requires understanding its uneven distribution. Mobile ad revenue is highly concentrated across a few specific genres, networks, and product strategies. Puzzle games remain the primary driver of the ad economy, and your choice of ad network can dictate your genre’s access to the right audience. For hybrid-casual titles, deciding to prioritize ads versus in-app purchases (IAP) is a fundamental business decision that defines your ultimate revenue potential.”

• The Winning Portfolio Strategies of 2026 With Two and a Half Gamers (PocketGamer.biz): “At PGC Barcelona, Jakub Remiar broke down the portfolio strategies quietly winning the casual market, from templatisation to knowing exactly when to copy.”

• Google on its new Play Store fees and that new Level Up program (Mobilegamer.biz): “As we’ve said before, the policy changes aren’t the decisive victory Epic claims they are, but they still represent progress. Developers can now claw back a little more of what was a flat 30% IAP cut if they use another payment provider, and from players making installs from now onwards. Devs can get further discounts if they join Google’s Level Up program, though that requires developers to jump through a new set of compliance and technical hoops.”

• Learn all about China’s games industry in our free region report (Pocketgamer.biz): “The report is free to download with insights from industry experts on the state of the sector, data exploring consumer spending in the mobile games space, as well as our newly unveiled Top 30 China Game Makers 2026 list.”

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