There's a reason those mobile game ads are annoying: They're designed that way

Those annoying mobiles game adverts are designed that way for a reason, says Dr Simon McCallum from Victoria University of Wellington's school of engineering and computer science.

He's been working with video game developers for years, and is about to start teaching a course about the business models of video game development.

Most of these ads play inside other applications, he tells RNZ's Nights, and the application playing the ad wants you to pay a subscription to that service.

"If you're playing a mobile game, and it's free if you watch ads, or if you pay for the subscription, you don't get ads, they want their ads to be really annoying because then you'll pay for the subscription," he said.

"They're interested in having terribly, terribly annoying ads so you'll pay money to make them go away," he said.

The companies delivering the ad make a small amount of money from the ad itself, but they make more from the subscription, he said.

"So yes, they're annoying intentionally."

They are also casting a wide net, he explained.

"They might not be targeting you, because for mobile games, the industry has discovered that there's a range of people who sometimes have much more money than sense.

"And so, you can make a lot of money from a very small number of people. And in the industry, we call those whales, and they can be spending over $1000 a month on a mobile game."

Some companies, he said, will derive almost half of their income from such players.

"They talk about the blue whales and either elite users or sometimes they're called Kraken, which are up over $10,000 a month or larger. They can keep a company alive just by having a few of them."

The ads are designed to catch the eye of blue whale gamers, he said.

"Sometimes you're just collateral damage, they're looking for the whales. And if they catch a whole bunch of minnows, whatever, we're just hunting for those whales."

The gaming business runs on the "how do we extract money from people" model, he said.

"That's the problem with these mobile games, they'll make the ad for the mobile game and once they get an ad that they think people will click on, they then have to try and make a game that somehow complies with the cool ad they've made, because the company was hired to make a cool ad, and they spend all their money on the cool ad, and almost nothing on actually making a game."

There is such a bewildering array of choice out there that gaming companies have a discoverability problem, he said.

"There's a massive industry in what we call AB testing, where you don't make one ad, what you do is you keep making variations of the ads, and you play different versions and find which ones people click on more.

"It's like an evolutionary system, where there's an organism that are ads, and they're growing and multiplying based on what we click on."

Gaming companies also use chase micro-purchases, he said, that can add up to significant amounts.

"With these classic, free-to-play games, what they're looking for is the micro purchases. They talk about the depth that you can go to, in levelling up all your characters and buying all the equipment for the characters.

"When you do the analysis on some of these free-to-play games, those purchases can add up to over $5 million in depth. So, if you were to buy everything and pay for everything to be maximally upgraded, then you're in over $5 million worth for a single player."