Mobile gaming is a big business, and mobile network operators (MNOs) can provide reliable, low latency data connections to player smartphones are in a prime position to benefit.
The latest calculations from research company Omdia 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.
Gaming focussed market intelligence company Newzoo estimates that global mobile game revenues grew over 13% year on year to exceed US$77bn in 2020. In its 2020 Global Mobile Market Report, the company concluded 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).
Elsewhere mobile data and analytics research firm App Annie calculated that for every US dollar spent on the App Store and Google Play, 71 cents funded a game-related purchase[i]. And of the estimated US$112bn spent on all mobile apps in 2020 (up 25% year on year), US$81bn went on games which also represented 40% of all mobile app downloads across both platforms (53bn of 130bn downloads).
A lot of that expansion was driven by the sheer volume of new titles coming into the market. Mobile games were the single highest category of new app releases across both the App Store (65k, representing 13% of the total) and Google Play (225k, 17% of the total) during the year, according to data compiled by SensorTower.
Hyper casual games took off during lockdowns
SensorTower provides a more detailed picture of how consumer appetites for mobile games changed in 2020 in its Mobile App Industry Trends 2021 report. It suggests that many people who usually don’t play games on their smartphones began to do so for the first time. That meant a boom in demand for simpler, hypercasual games, with the top-1000 hypercasual titles surpassing two billion quarterly downloads over four consecutive quarters, according to SensorTower, up 45% year on year.
InnerSloth’s hypergame title Among Us dominated mobile game downloads in the second half of 2020, for example, and was downloaded 282m more times over the year than in 2019. In doing so, it trumped Top Ten regulars and multiplayer action games like Garena Free Fire (276m additional downloads over 2019), Subway Surfers (245m) and PUGB Mobile (240m). A surge in the popularity of two other hypergames – Ruby Game Studio’s Hunter Assassin (207m more downloads than 2019) and AppLovin’s Save the Girl (153m) – was comparatively short-lived, having peaked in Q120 and Q220, respectively.
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.
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 ARPU.
Newzoo noted an evolution of hypercasual games into “hybrid casual” titles that see developers adding extra layers of complexity and meta-game elements, which lend themselves better to bundling and direct purchases as well as ad-based revenue. One example is GenShin Impact, the cross-platform action RPG released by miHoYo in September 2020 will also drive revenue, having grossed US$393m on Android and iOS devices within two months of its release.
Future growth assured
Market research companies predict that mobile games will continue to expand to account for an ever-larger share of total gaming revenue.
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, from US$167bn in 2021 to US$186bn by 2025. 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% in the process. Newzoo too predicts that global spending on mobile games will rise to US$103bn by 2023.
A lot more people will be spending many more hours playing games on their smartphones in the future. And that presents mobile network operators (MNOs), which deliver fourth (4G) and fifth-generation (5G) data connectivity to those devices with a significant opportunity to increase their revenue and ARPU if they can forge bundling, content and billing partnerships with games developers. More information can be found in our bundling whitepaper.
[i] App Annie: Mobile game and app spending will grow 25% to $112 billion in 2020, VentureBeat, 9th December 2020