BLOG

Mobile gaming looks like the biggest bet in the Metaverse

January 21, 2022

Group of friends having fun at living room and looking at smart phone

2022 began with Take-two announcing the acquisition of the makers of some of the most popular mobile gaming titles – Zynga (full article here). In less than a week, the gaming industry was shaken with one the biggest acquisitions in history. Microsoft announced the acquisition of Activision Blizzard for nearly $69 billion dollars. The common thread in both these deals is cited to be the synergies around mobile gaming specifically. Mobile gaming is the biggest and the fastest growing category in the gaming world, and set to become even bigger with the coming in of 5G networks and the Metaverse. Let us looks at some facts.

Analysis from investment bank Drake Star Partners totted-up US$23bn of investment in the first six months of 2021 alone. Notable deals included Microsoft’s deal for ZeniMax (US$7.5bn), ByteDance buying Moonton (US$4bn), Embracer buying both Asmodee (US$3.1bn) and Gearbox Software (US$1.3bn), and EA’s triple acquisition of Glu (US$2.4bn), Playdemic (US$1.4bn) and Codemasters (US$1.2bn).

Omdia has forecast that the overall games market will expand at a modest annual compound annual growth rate (CAGR) of 2.2% over the next five years. But the value of mobile games specifically will expand at over double that rate (4.6% CAGR) to be worth US$129bn, increasing their share of the total from around 62% to 69%. The latest predictions suggest that global end-user spending on games spiked sharply during the worst months of the coronavirus pandemic. Market revenues jumped almost 16% from US$140bn in 2019 to US$162bn in 2020 as billions of consumers around the world sought alternative forms of accessible entertainment.

Mobile games specifically commanded an increasingly more significant portion of that spend at the expense of console and PC titles. Their value increased almost 19% from US$79bn to US$94bn between 2019 and 2020, growing their share from 56% to 58% of the market total. In terms of regions, China remains the largest market for mobile games in the world. The country is forecast to generate US$31.4bn of revenue in 2021, US$11.4bn of which will be sourced from Apple’s App Store and a further US$20bn from the third-party platforms offering Android apps in the absence of Google Play in China (including those provided by Tencent, Huawei, Baidu, and Xiaomi for example).

playing game on Android mobile phone on dark background

In its 2020 Global Mobile Market Report, Newzoo stated that just over half of that 2020 total (US$38.8bn) was generated by games played on Apple iOS platforms, with Google Play accounting for 36% (US$28bn) and third-party Android stores 14% (US$10.6bn).

Ranked by turnover across the App Store and Google Play, two Tencent titles- PUBG Mobile (US$2.7bn) and Honor of Kings (US$2.6bn) – stayed way out front in terms of gross revenue; however (Pokémon GO came in a distant third with US$1.3bn). Besides those two titles, another six out of the top-fifteen highest-grossing games in 2020 also adopted in-app subscriptions as a monetisation model, with subscription-based games again seeing marginally higher long term retention rates than non-subscription equivalents over the year. many mobile apps make more money for their developers than movies make for their producers, with 20% more (233) making over US$100m in 2021 compared to 2020. Thirteen apps made over US$1bn, up from eight in 2020, primarily multiplayer combat games like Fortnite, Garena Free Fire, and Player Unknown Battleground (PUBG). That contributed to an additional US$16bn spent on mobile games in 2021, estimates App Annie in its latest report, taking the total to US$116bn, 68% of total app spend.

Casino games were a case in point, 39% of which utilised in-app subscriptions ahead of strategy titles (35%), role-playing games (RPGs, 33%) and sports (26%). SensorTower noted that designing a subscription product and rewards based on demographics, genre and gameplay features while accurately customising them to player needs was essential to optimising the average revenue per user (ARPU).

Mobile carriers are keen to forge partnerships with mobile gaming brands as a way to monetize their investments in 5G infrastructure and spectrum. Most carriers realise that consumers seek better gaming experiences than the java games of the VAS world. With the rapid growth of massive multiplayer online gaming and proliferation of smartphones with improved graphics, consumers are seeking mobile games as part of their social experiences too in the post-pandemic world. Mobile carriers can drive higher engagement and customer lifetime value by bringing gaming titles bundled with mobile tariff plans. Games publishers win too as they do not need to invest marketing dollars in user acquisition. Buying game titles or in-game collectibles becomes a breeze with an added direct carrier billing integration.

Related Posts