According to a recent report from app analytics firm App Annie, global spending on mobile games is on course to exceed U$120bn this year. More than double the money was spent on games for PCs and consoles. App Annie’s prediction is significantly larger than forecasts from games research specialist Newzoo, which estimates mobile games (both smartphone and tablet-based) will make almost US$91bn for their developers in 2021.
The 2021 Mobile Gaming Tear Down calculates that consumers spent US$1.7bn per week on mobile games in the first six months of this year, with its figures based on App Annie Intelligence’s tracking of spend in Apple’s App Store and Google Play. Those numbers are up 40% on pre-pandemic levels, with mobile games spend having seen particularly sharp rises between two periods – January to August 2020 and October 2020 to February 2021 – coinciding with those when coronavirus lockdowns around the world were at their strictest.
Perhaps more significantly, spending levels that hit US$1.75bn a week in February this year have not tailed off but rather kept up the same momentum through to July (US$1.73bn a week). Seven games made more than US$100m in H121, and 810 more than US$1m, 25% more than did so in 2019 (610). Those numbers are even more interesting when considered alongside parallel declines in mobile game downloads and the number of hours spent playing them. That suggests that games developers are now reaching new demographics which are more ready and able to spend money on their titles rather than play for free compared to pre-pandemic.
India leads mobile games market
India is currently the world’s biggest mobile game market by downloads, with smartphone adoption amongst the country’s fast-growing, affluent middle class in a population of almost 1.4bn, a significant driver. GlobalWebIndex estimates that 96.3% of Internet users aged between 16 and 64 in India owned a smartphone in the third quarter of 2020, for example, with 57% using game apps. At that point, the top games by consumer spend ranked Free Fire in the first place, followed by PUBG Mobile, Coin Master, Teen Patti, Clash of Clans and Call of Duty Mobile.
App Annie credits the improvement in Internet infrastructure for the trend, with Ookla tests in January 2021 measuring average download speeds of mobile Internet connections in India at 12.9Mbit/s, almost 13% faster than a year earlier. Other mobile game markets poised for stellar growth over the next few years for precisely the same reasons (growing middle class, greater availability of higher specification smartphones, increased mobile bandwidth etc.) include Brazil, Indonesia, and Russia.
Carrier billing drives average monthly consumer spending
Many other countries worldwide saw increased opportunities in mobile app store monetisation, but heightened consumer demand was not the only driver. Broadening the range of payments options available to fund game and add-on purchases makes a difference.
App Annie noted that during the first half of 2021, the average monthly consumer spending per device population was highest in Japan (US$12.50, up from US$12 in H120). This country has long offered customers the convenience of making purchases instantly using direct carrier billing (DCB) without entering their card details online. In second place was another country with historically high levels of DCB engagement, South Korea, where the average monthly consumer spending per device population increased from US$5 in H120 to US$7.50 in H121.
Consumers in Japan and South Korea also strongly prefer role-playing games (RPGs), which are also the genre that generates the most revenue. On a global basis, RPGs accounted for around 32% of total mobile game revenue in the first half of 2021. However, that proportion has been shrinking steadily from 40% in the second half of 2028 as other genres (notably strategy, simulation and casino) have eroded their share.
Simulation title ROBLOX topped the rankings worldwide by consumer spending, for example, ahead of RPG Genshin Impact, first launched in September 2020 and by July had surpassed Pokémon Go as the top game by lifetime consumer spend. Genshin Impact is doubly notable because of the emphasis its developer (miHoYo) put into making the mobile version the same as its PC and console counterparts in terms of graphics, animation, music and voice dialogue quality alongside gameplay features, story and content. The new generation of RPG games like Genshin Impact offers a broader mix of engagement and monetisation features, including loot boxes, in-app purchase (IAP) bundles, in-game currencies, events, and battle passes.
All of those features are low-cost ad hoc or recurring purchases that can be quickly and conveniently funded from player smartphones using electronic payment methods like DCB and electronic wallets (eWallets). It looks like payment flexibility is proving central to their success.