Gaming is in its golden age, and big and small players alike are maneuvering like kings and queens in A Game of Thrones. Register now for our GamesBeat 2015
event, Oct. 12-Oct.13, where we'll explore strategies in the new world of gaming.
The statistics around mobile gaming are becoming staggering. At the Casual Connect Europe in Hamburg, Germany, the move toward mobile games was evident among the 1,600 attendees. The numbers suggest that a sweeping shift is happening in the industry.
Of the 7.1 billion people on the planet, about 4.3 billion have mobile phones, according to the TomiAhonen Almanac 2013. About 1.3 billion of those are using smartphones. There are an estimated 1.2 billion mobile gamers, or 18 percent of total mobile subscribers. By comparison, there are about 1.2 billion computer users in the world.
Much of the excitement is, of course, focused on the growth of iPhones and iPads and their Android counterparts. The app economy is creating jobs for small studio developers at a time when the big console game companies are hurting. On the iOS iTunes app store, there are 792,398 active apps, including 132,963 active games, according to 148apps.biz.
In 2012, revenue earned from apps will approach $10 billion, with games taking over 80 percent of the pie, Flurry reported. The free-to-play business model (aka freemium), where consumers download and play the “core loop” of a game for free but then pay for virtual goods and currency through microtransactions, is the the best business model in the era of digital distribution. When it comes to app consumption on iOS and Android smart devices, consumers spend over 40 percent of all their time using games.
And their favorite business model is free-to-play. Of the top free-to-play games, about 47 percent have average revenue per daily active user at more than 25 cents. The average cost per install is $4. And while Android has lots of users, iOS generates 3.5 times more revenue.
On the charts, the No. 10 top-grossing game makes about 10 times the revenue of the No. 100 game, said Chris Williams, a vice president at Big Fish Games.
Forrester Research found that 46 percent of mobile users use games on a daily basis, and most users prefer apps that include ads instead of paying a purchase fee.
Magid Associates found in a survey for Tapjoy that four out of five smartphone users and nine out of ten tablet users have played a mobile game. Kids ages four to 14 play mobile games more regularly on handheld game devices than on tablets, but the gap is closing.
Smartphone gaming is no longer just a U.S. business. Mobile chat networks have soared in Asia, with Tencent’s We Chat reaching 300 million users, Japan’s Line getting 100 million, and Korea’s Kakao Talk hitting 70 million. On Kakao, the viral spread of a game can boost it into the top 10 lists on Google Play on a worldwide basis — sometimes generating $1 million a day, according to market researcher App Annie and industry sources.
Thanks to Kakao, the Google Play app store in Korea generates 95 percent of its revenue from games, compared to 76 percent in the U.S. In the worldwide Google Play app store, several Kakao-based games are on the top 10 grossing list at any given time. Apple generates more game revenue than Google Play in the United Kingdom, China, Australia, Canada, German, France, Russia, and Italy. Still, Google Play earns a higher percentage of its revenue from games compared to the Apple iOS app store.
When looking for apps, consumers do about 80 percent of their searches by interest, such as golf or racing games. About 10 percent of the searches are by inspiration, 5 percent function, and 5 percent brands, according to consumer app search engine Xyologic.
For games, the top three countries generating revenue in the Google Play store are Japan, South Korea, and the U.S. In data from the month of December, South Korea’s Google Play app revenues are 95 percent based on games. Japan’s Google Play app revenues are about 88 percent based on games, and the figure for the U.S. is 76 percent, App Annie said.
On the worldwide market, the success of the Asian chat platforms has remade the top rankings of the most popular developers. For games, the top revenue generators on Google Play in December were GungHo Online’s Puzzle & Dragons, DragonFlight for Kakao by NextFloor, NHN’s Line Pope, Anipang for Kakao by Sundaytoz, and a casual title from Patistudio. Of these top five, all were from Japan and South Korea.
App Annie found that the U.S. and Japan contributed over half of the total revenue for the iOS app store in December. Asian countries lead the way in percent of revenue coming from games on the iOS app store. China has more than 80 percent of its iOS app store revenue coming from games. It is followed by Japan, Macau, Singapore, and Canada.
Japan has the highest games revenue-to-download ratio on the iOS app store, followed by Switzerland, Australia, and Singapore. It’s no surprise then that Japan’s Gree and DeNA, two multibillion-dollar makers of rival mobile gaming social network companies.
And in the U.S., the top revenue generators among games in the iOS app store were Supercell’s Clash of Clans, Electronic Art’s The Simpsons: Tapped Out, Supercell’s Hay Day, Backflip Studios’ DragonVale, and Kabam’s Kingdoms of Camelot: Battle for the North.
The arrival of social features is remaking the ranks of which games are popular. In Big Fish Games’ Casino app, more than 100,000 players have more than 10 friends. One popular player has 13,000 friends, Williams said.
“Five to 10 percent of your users will be responsible for 50 percent of your revenue,” Williams said. “Some players in the free-to-play casino game are spending more than $5,000 a month.”
Peter Warman, an analyst at Newzoo, said that 33 percent more people in America are spending more on mobile games than a year ago. Sixty-nine percent are spending more time. And Anil Dharni, an executive at Gree, said that revenues from mobile games are four times bigger than they were just a year ago.
Zynga has more than 50 percent of its developers working on mobile games as of the start of the year, according to our interview with David Ko, the company’s chief operations officer. That’s impressive, considering that Zynga has more than 3,000 employees. Wooga, with just 280 employees, hit the same milestone in June 2012.
Disclosure: The organizers of Casual Connect paid for my trip to Hamburg, where I moderated a panel. Our coverage of the event remains objective.
VB's research team is studying mobile user acquisition...
Chime in here, and we’ll share the results