Mobile game revenue will grow from $38.6 billion in 2016 to $65 billion in 2020, according to market research firm Newzoo. That represents a 66 percent growth rate.

Most of this growth will come from Asia-Pacific and the Middle East and Africa, while the more mature markets of North America and Europe will continue to grow at a lower but stable rate. By comparison, the overall total for global app store revenues will grow from $46.2 billion in 2016 to $85 billion by 2020. As non-game apps catch on, games will fall from 84 percent of total revenues in 2016 to 76 percent in 2020.

During 2017, revenues for mobile games will grow from $38.6 billion in 2016 to $46.2 billion in 2017, or up 19 percent. During 2016, mobile game revenues grew 26 percent.

During 2016, Niantic grew to become the No. 4 publisher on Google Play and No. 8 on iOS in global revenues, thanks to the fast growth of Pokémon Go. Meanwhile, Asian mobile game companies were well-represented in the top 10 global companies by revenue. MZ, formerly known as Machine Zone, was the No. 4 publisher on iOS.

On iOS and Google Play, Tencent was No. 1 in the world for mobile game revenues. NetEase was No. 2 on iOS, followed by Supercell, King, and MZ. Xflag was No. 6, followed by Epic War, Niantic, Bandai Namco, and Square Enix. On Google Play, Supercell was No. 1, followed by Netmarble, King, Niantic, Xflag, Bandai Namco, Elex Wireless, Square Enix, Colopl, and MZ.

Above: Newzoo’s estimates for smartphone growth.

Image Credit: Newzoo

At the end of 2016, 2.3 billion consumers actively used a smartphone, or 31 percent of the total population. In 2020, this will grow to 3.6 billion smartphone users, close to half of the world’s population.

Samsung is the leading smartphone manufacturer, with 859 million of all smartphones used. Apple ranks second with 704 million smartphones. Together, they are responsible for 56 percent of the world’s used smartphones.

Globally, there will be 2.6 billion smartphone users in 2017. More than half of these will come from the Asia-Pacific region, with 717.3 million smartphone users in China alone. Together, Asia-Pacific, Europe, and the Middle East and Africa will account for 80 percent of the global total this year.

In 2020, there will be 3.6 billion smartphone users, with Asia-Pacific as the biggest growth region thanks to countries such as India, Indonesia, and China. Asia-Pacific will have almost 2 billion smartphone users in 2020, while Europe, the Middle East and Africa, and North America together will have 1.3 billion.

Latin America will surpass North America in terms of smartphone users in the coming years. Developing countries, such as Nigeria, will grow fast in smartphone users compared to mature markets, such as Europe and North America.

Above: Samsung is the top smartphone brand.

Image Credit: Newzoo

Newzoo also looked at the virtual reality market. It noted that Sony’s PlayStation VR saw almost 1 million devices sold in its first four months on the market. The consumer interest for these devices will remain strong, Newzoo said, but they are unlikely to become mainstream until prices come down, more (non-gaming) content is available, and various practical issues are solved.

Samsung said it sold more than 5 million Gear VR headset for its smartphones, but that amounts to less than 3 percent penetration of a total addressable market of 180 million Samsung devices.

In China, mobile VR has been enthusiastically received. As VR arcades and “experience zones” mushroomed across cities and shopping malls, local manufacturers have been very quick to spot the mobile VR opportunity. Baofeng Mojing reported selling more than 1 million devices priced at around $30 each, and online retailer Alibaba reported sales of more than 300,000 mobile VR devices per month. These
are all manufactured domestically, based on the open-source Google Cardboard specs, by brands like RiTech, VirGlass, Pico VR, Baofeng Mojing, and Deepoon, as well as devices made by smartphone manufacturers, generally retailing for somewhere between $20 and $100.

Newzoo believes that mobile VR will get to mass adoption first, due to quality improvements and lower prices. But most smartphones still aren’t capable of running mobile VR apps.

Global app store revenues are poised for large growth in the coming years. As the number of smartphone users increases from 2.1 billion in 2015 to 3.6 billion in 2020, the potential for apps to monetize their experience on services through different app stores expands accordingly.