With Activision’s massive King acquisition and the stellar success of Bethesda’s Fallout Shelter this year, traditional game publishers are making mobile a priority. Couple that with the continued global growth of the smartphone audience and we’re looking at an exciting, if unpredictable, 2016.
This means it’s a perfect time to go out on a limb and make seven mobile game-related forecasts (a couple of which will also impact console and PC games) for the new year:
Google Play goes back to China, and Android games thrive
Google recently announced plans to expand in China, and while the company is so far scant on details, this likely means a return of its Google Play store there. For mobile game developers, this move would be a godsend: China’s Android market is horribly fragmented, requiring them to integrate with the nation’s top 10 or more app stores, or distribute their games through a major publisher like Kabam or a local Chinese partner. The return of Google Play to China would be a huge boon to game developers everywhere, while also helping the country become Asia’s top market. (It currently trails about a billion dollars behind Japan.) With Google back, expect to see more West-to-China crossovers of great content on mobile, as we saw with Tencent streaming Game of Thrones and NBA games through its WeChat and QQ apps.
For similar reasons, expect consoles to continue floundering in China — which takes me to my next trend:
Hampered by mobile, global console sales less than expected
While consoles are outperforming their previous generation significantly, they will underperform sales projections for 2016 and beyond — as much as 40 percent more than the drop Gartner predicted. This isn’t because the PlayStation 4 and Xbox One are bad (they’re actually pretty awesome for hardware that stays in one place and were designed in 2010), so much as they’re being eclipsed by so many other, much cheaper and more flexible options. Smart TVs already have docking stations for your smartphone, effectively turning them into a console, while Apple TV and Android TV are likely to exert even further competitive pressure. (This is why, by the way, Activision was so smart to buy King, a move that instantly vaults it to the top of the mobile market — while also giving them an edge in the war for our attention in the living room.) To be sure, there’s always going to be a market for hardcore console gamers — but next year, even many of them will begin moving toward VR headgear for their phones and PCs, and in the process, consoles will wind up getting squeezed.
Boosted by mobile, PC game sales fail to decline
Last October at Casual Connect Tel Aviv, Facebook’s Sean Ryan said a fascinating thing, echoing a common sentiment among many in the industry: “There’s no question that desktop gaming has entered the long slow goodbye.” I respectfully disagree. Steam continues to go great guns, reaching well over 125 million active users and 12.5 million concurrent users this year. (Unsurprisingly, JPR Research forecasts sales of PC gaming hardware continually growing into 2018.) Beyond that, we’re seeing the ability to stream games from phone to laptop, and the popularity of cross-platform apps, all of which suggests PC games aren’t going away any time soon.
Mobile game revenue goes (more) global
The U.S. will continue to be mobile gaming’s No. 1 market in 2016, but my forecast is that it drops to taking just 15 percent of the overall global revenue. This won’t be due to waning interest here — it’s because of snowballing enthusiasm for mobile games everywhere else, with China growing strongly (as explained above), joined by growing revenue from Eastern Europe, South America, and India. I expect India in particular to make a strong showing in 2016, with Apple and Google Play both dropping their minimum in-app purchase pricing tiers to a reasonable level there. It’s already possible to make IAPs as low as 10 rupees — roughly 15 to 16 cents USD. India’s smartphone market is expected to overtake the U.S. by 2017, and smartphone game revenue will parallel that strong growth.
And India is only the beginning: With smartphones boasting the power of an iPhone 3G now selling for as little as $10, the entire world will join the market for mobile games in the next five-ten years.
Evolution toward refreshable & extendable mobile games
Updates are no longer just about fixing bugs and adding optional content — they’re becoming massive expansions, aimed at greatly extending engagement and acquisition. The version of Clash of Clans that gamers play now looks quite different from the original 2012 version, and that’s more or less true of every mobile game in the top 10. (Consequently, some titles are supported by hundreds of developers.) This trend will continue to grow into 2016, and as it does, the mobile monetization curve will change, moving us away from whale-based revenue, nudging developers to focus on all their long-term players, no matter how much they pay. As this happens, we’ll see a growing need for “feeder apps” — simple, free, viral games explicitly designed to cross-promote the developer’s key revenue-generating game.
Rapidly rising CPIs for high-ARPU Genres
The cost to find players in mobile games that attract high revenue (strategy, social casino, RPG, etc.) is already high, sometimes approaching up to $20 per install for mature titles, but with growing competition, those costs will keep rising. Even games associated with an extremely well known franchise will have to pay a steep cost to find and keep players.
“In order to succeed in 2016 and beyond,” as my colleague Steve Sadin, a product lead at Turbine, recently put it to me, “new mobile titles will need to innovate significantly to stand out from the pack, and/or be optimized to within an inch of their lives to afford to acquire users at scale profitably.”
Which brings us to a directly related trend:
Preorder provokes rise of traditional marketing on mobile
As the cost of installs reach unsustainable heights, we’re almost certain to see the industry search for solutions. This year, Google quietly rolled out the capability to preregister for games in selected markets, as has Apple. As developers and consumers become aware of this feature, we should expect to see it utterly change how mobile games launch and acquire users. At the moment, user acquisition is a complex mess, forcing developers and their vendors to deal with real-time bidding, attribution tracking, and outright buying user installs in the hope they lead to actual players, let alone payers.
With the preorder function, these dynamics will change. In 2016, the feature will probably be embraced only by the major publishers with big budget prelaunch commercials and marketing campaigns pushing a message we once only saw with console and PC games: “Preorder your copy today!” As this happens, expect growing adoption of this strategy by the middle tier, and force major changes to the way we do cross-promotion, attribution, and long-term value projections.
However these predictions play out in 2016, one overarching trend is already well established: The days of treating mobile gaming as a sideshow to the triple-A console/PC main event are over — with every passing year, it becomes ever more impossible to deny that mobile games have not just matured, but are central to the game industry as a whole.