Matthew Ball Interview: Can New Stores and D2C Turn the Tide on High UA Costs?

Why It Matters

Reducing UA expenses is critical for restoring profitability in a market where development costs and platform fees already strain margins. Alternative stores and D2C strategies could reshape the cost dynamics of user growth.

Key Takeaways

• Global UA costs near $25B for 2025 (outside China)
• Publishers spend ~32% of net revenue on user acquisition
• Alternative app stores could lower UA expenses
• Direct-to-consumer strategies shift costs to one‑time acquisition
• Ad‑exchange fees may surpass UA costs by 2027

Pulse Analysis

User acquisition has become the dominant expense for mobile‑game publishers, eclipsing even platform fees. Matthew Ball’s latest forecast puts global UA outlays at just under $25 billion for 2025, a slight decline from the 2021 peak but still a massive slice of industry revenue. The squeeze is amplified by ad‑exchange commissions, which are projected to overtake traditional UA spend by 2027, and by soaring development budgets that erode profit margins despite a 40 % rise in consumer spending. This cost structure forces studios to rethink growth levers.

One emerging lever is the proliferation of alternative app stores in Western markets. Legal settlements such as Epic’s agreement with Google and antitrust actions against Apple have opened pathways for curated marketplaces that can pre‑filter audiences. When a store aligns its incentives with a publisher’s install goals, the cost of reaching a user drops because the discovery funnel shortens. Early pilots suggest that targeted distribution can improve acquisition efficiency, offering a partial hedge against the loss of IDFA data and inflated ad‑network rates.

Simultaneously, publishers are investing in direct‑to‑consumer (D2C) ecosystems, building brand communities that bypass traditional channels. Although D2C campaigns raise short‑term UA spend, they generate a one‑time acquisition that later yields lower marginal costs as users migrate to owned platforms. Ball estimates a 2.5‑year payback horizon, after which loyalty incentives and reduced reliance on third‑party ads boost lifetime value. If the industry can scale these owned channels while leveraging alternative stores, the combined effect could restore profitability and temper the relentless UA price spiral.