Elbert Perez, the creator of Impossible Shoota and many other popular Windows phone 7 games is reporting that there has been a recent earning reversal, with income from ads suddenly dropping massively. This is believed to affect most other developers.
He reports that the situation has been so bad that income in April is expected to be lower than in February, despite having more apps in the hands of users.
It appears Microsoft had initially set ad revenue artificially high, but now has dropped to real market values, which happen to be the same as Googleâ€™s Ad solution, and much lower than before.
Microsoft said on the issue:
Variation in ad CPM is expected behavior as the algorithm used in the Microsoft Advertising Exchange for Windows Phone 7 actively learns the performance of each ad-enabled application(s). In some cases, these are sweeping changes. The Mobile Ad Exchange takes into account many variables when determining how an ad impression is valued in real time. This can include, but is not limited to; ad unit categories, location of the device/user and active advertising campaigns.
Microsoft in a recent case study has touted a developer being able to make a living just from his ad-supported apps, but one wonders if this was based on the older figures, and if it is still possible today.
Of course ad-supported games are not the only game in town, and this correction may change the balance back to paid apps who must have been experiencing intense competition from free alternatives these last few months.