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The global game market grew 19.6% to $174.9 billion in 2020, and the lion’s share is now mobile gaming, according to Newzoo. And the research firm has now revealed the top trends to watch in 2021.
The market could grow to $217.9 billion by 2023, but first the industry will have to get through what is still a challenging market. Here’s Newzoo’s top five trends for mobile games.
1. The removal of Apple’s Identifier for Advertisers (IDFA) may change the face of mobile marketing
Apple’s iOS 14 changes have the potential to disrupt app publishers’ capability to market themselves effectively and monetize through advertising, Newzoo said. The removal of the IDFA will make it tougher to do targeting advertising, but Apple says that it needs to protect user privacy.
This is a sweeping change that will ripple throughout the mobile ecosystem, even beyond gaming. IDFA shaped current user-acquisition processes and mobile advertising platforms, so its removal will have varying impacts on publishers and other advertising stakeholders, Newzoo said.
Notably, Google has not announced a similar change for Android and is not expected to in 2021 (though it may take more moderate steps to protect user privacy).
While it is too early to determine the changes’ exact impact, Newzoo expects a short-term lower spend on user acquisition across iOS in 2021. Instead, this spend may flow into Android, web, or other channels while the industry attempts to regain its footing.
IDFA’s removal will impact all mobile genres, casual and core alike, in some way, and Newzoo expects it to spark a revival of traditional forms of creative advertising, which are currently more common to see among PC and console campaigns. Offline channels may also play a greater role, and marketing creatives and ad innovation will become even more important.
To that end, Newzoo expects publishers will learn from more traditional brand marketers, such as strategies found in consumer goods. Newzoo also expects marketers to build innovative new campaign structures from the ground up and diversify the channel mix beyond Google and Facebook.
And Newzoo expects more cross-team integrations between data science, engineering, product, and creative teams.
Above all, Newzoo foresees a more aggressive approach to FTUE (First Time User Experience) and early user flow optimization. Optimal user-registration funnels and onboarding processes will be paramount, as iOS 14’s new advertising framework (SKAdNetwork) contains complex mechanisms that will drive developers to maximize high-value event signals within the first few game sessions.
2. 5G penetration will begin to spike
The pandemic has impeded the rollout of 5G, especially in the West (though carriers will be adding more coverage this year). And while 2021 will not be the year for 5G, it will pave the way for the mobile technology.
This year will see continued improvements to network infrastructure and increased government support. What’s more, all leading smartphone manufacturers will have launched their 5G handsets. The iPhone 12 series is expected to be a major driving force for 5G adoption in Apple’s key markets such as the U.S., Japan, and China.
In fact, Newzoo said its Global Mobile Market Report shows that 16% (more than 700 million) of all active smartphones will be 5G-ready by the end of this year, up from just 5% in 2020. By 2023, the share will skyrocket to 43% — or, 2.1 billion 5G-ready active smartphones.
3. Genshin Impact will catalyze more triple-A experiences on mobile from Chinese studios
The success of MiHoYo’s Genshin Impact will inspire more to follow. The Chinese game studio made a high-end game for hardcore players, and it’s been a wild success on mobile, console, and PC worldwide. It’s also performing well on streaming platforms.
Owing to the strict government restrictions on game licenses in China and heavy domestic competition, Chinese publishers have sought to target audiences outside of their home market. Genshin Impact, with its smart mix of game mechanics, monetization, and themes that appeal to many markets, is a successful fruit of that labor.
Simply put, Genshin Impact successfully brought immersive and single-player mechanics from triple-A console and PC games to the mobile platform. In a similar vein, Newzoo expects to see Chinese developers continuing to expand overseas with more triple-A immersive, competitive content not only on mobile, but also console and PC. A notable example is the reported Lilith battle royale title for PC and mobile.
4. App store distribution will face challengers on all fronts
Games have the power to disrupt distribution. In the West, the Epic and Apple case highlights just how much impact individual titles like Fortnite can have, Newzoo said.
As a response, Apple introduced the App Store Small Business Program, reducing its revenue cut from 30% to 15% for developers earning less than $1 million annually from the App Store.
Similarly, cloud gaming platforms have managed to sidestep strict iOS App Store restrictions in the West, with Amazon releasing its Luna cloud gaming service via a web app on iOS. Microsoft and GeForce Now are following suit with Safari-based apps for their cloud gaming services as well.
A similar trend is unfolding in China: Individual games are challenging the country’s third-party app stores to release independently, reportedly due to publishers and platforms failing to reach a mutual agreement on revenue shares (similar to the Apple and Epic situation).
For example, Lilith Games and MiHoYo chose not to release their newest titles — Rise of Kingdoms and Genshin Impact, respectively — on China’s mainstream Android app stores. These stores include Huawei AppGallery and Xiaomi’s Mi Store.
In the West, many developers and publishers are rejecting Apple and Google’s 30% revenue cut. In China, however, the third-party Android app stores typically take a 50% cut.
Recently, Huawei removed all Tencent games from its app stores in China — again, reportedly due to a revenue-share dispute between them. However, Tencent apps returned to the store shortly afterward.
While the industry might not see such extreme measures in 2021, one thing is for sure: Individual games, publishers, and services will continue to change the face of game distribution on mobile — in the East, West, and everywhere in between, Newzoo said.
5. More IP-based games will come to mobile, and will expand their reach
IP-based licensed games can be traced all the way back to the original Atari console. Yet, the relatively shorter development time frames and lower investment costs of mobile development mean mobile is the platform of choice for modern-day IP-holders looking to bring their franchises to gaming platforms, Newzoo said.
As mobile continues to be the fastest-growing and most-prevalent gaming platform, more and more IP holders across various entertainment divisions are vying for a slice of the opportunity pie. Newzoo has identified over 230 entertainment-based (from movies, TV, or books) IP games currently available on app stores, and over 900 IP-based games released across all platforms in the last two decades alone.
In China, leading game companies like Tencent, Yoozoo Games, and Perfect World all have set up entertainment businesses in areas like movies, TV shows, and literature, aiming to build giant IP powerhouses around gaming, movies, TV, and more. Eight-out-of-the-top 20 grossing iOS games in 2020 were based on non-gaming entertainment IP (mostly literature), Newzoo said.
In the West, several IP-based games, including Marvel: Contest of Champions had a great year on mobile; however, there are still relatively few entertainment-based IP-based games cracking the top 20 (by revenues).
Once relegated to medium- or lower-budget attempts to quickly capitalize on the popularity of the underlying franchises, IP games today are increasingly complex, top-rated, and sometimes even surpass the original formats in terms of engagement.
Newzoo expects this trend to continue, and IP specialist Scopely has soft-launched an Avatar game while an Aliens game is currently in development. Meanwhile, Dragon Ball Z: Dokkan Battle has already generated over $2 billion in lifetime revenue.
IP recognition provides a strong organic pathway to user acquisition, which will become even more important in a post-IDFA world, thus motivating publishers to seek out these types of advantages. And it’s not just TV, movie, and literature IP holders which are coming to the mobile platform.
In recent years, the largest PC and console publishers are also ensuring their mega franchises find a home on mobile. Notably, Blizzard’s Diablo Immortal entered the technical alpha base last month, and Riot Games released League of Legends spinoff Wild Rift in October 2020.
Advances in mobile phone technology, the rise of 5G and cloud gaming, and platform agnosticism trends are leading PC/console publishers to ensure the mobile platform plays a strong role, whether through native mobile experiences or streamed mobile experiences, Newzoo said.
On the other hand, game franchises that got popular on mobile are expanding their reach outside of the gaming ecosystem. Tencent introduced the Infinite Kings — a virtual men’s group featuring five game characters from the publisher’s leading mobile title Honor of Kings — more than a year ago.
The virtual idol group has accumulated over 2.3 million followers on Weibo and collaborated with several consumer brands, such as M.A.C and Nivea in China. What’s more, The Infinite Kings has even released music singles in China and performed on stage with a Chinese idol using AR technology at Honor of Kings’ 5th anniversary celebration event, Newzoo said.
It is not just the boundaries between PC, console, and mobile gaming that are blending into each other. Newzoo expects to see more and more entertainment-based IPs (including gaming) flourishing across all industries, appealing to audiences around the globe.
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