the mobile gaming report: the future in our pockets

8/20/2019 The Mobile Gaming Report: The Future in Our Pockets

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Entertainment Everywhere:

The Past, Present, and Future of Mobile Gaming for Businesses andConsumers

Prepared By

Michael Gasiorek

Mike.Gasiorek[at]gmail.com

Undergraduate Student of International Business & Marketing

Northeastern Universit

Published nder Creative Commons ! CC B"#$C%

!ttri"ution # Non#$ommercial

% 1%

INTRODUCTION


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Michael Gasiorek M&B'(EG)M'$G ' *

Whether one is looking for nightlife in Shanghai, trying to navigate the subways of New York City, shoppingaround for local bargains in France, or hoping to kill some time from the comfort of a couch cushion, a classroom desk, or a plane seat (post takeoff!", there is now an app for that and not #ust one, but over half a million of them according to$pple%s &ctober ' )) press release* +ntroduced on uly ) th, ' - with the launch of the i.hone /0, against theinclinations of then $pple C1& Steve obs, the creation of the $pple $pp store has not only created over 2)* - billion of revenue in ' ) ($pple3s $pp Store", but more importantly redefined the very nature and accessibility of digital andmedia consumption*

+n the meantime, some strong competitors have risen to challenge $pple%s dominance in the mobile marketplace,including $ma4on, Windows, and 5lack5erry* None, however, are as well positioned to face $pple as the $ndroid6arketplace7 also available since ' -, the $ndroid storefront offers over 8 , apps of its own, surpassing ) billiondownloads (5onnington, ' ))"* 9owever, while the $ndroid 6arket and the $pple $pp store differ on aspects likestorefront:developer revenue distribution, percentage of free versus paid apps, and app approval processes, where thesetwo market behemoths converge is on their most popular offerings7 games*

0aming apps represent a uni;ue position in the digital market7 they possess wide appeal across many varieddemographic consumer groups, they offer a variety of options for moneti4ation of the product, and they do not historicallydemand a high degree of paid advertising to create initial success* 6ost importantly, mobile games offer a relatively low

barrier of entry to developers looking to create a compelling product and with the prevalence of free games and demos,a similarly low or even none


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Michael Gasiorek M&B'(EG)M'$G ' +

populari4ation, the game receiving positive press from critics, and then truly breaking out into the mass market* Nevertheless, even with the most engaging and well regarded of games, there is no success without the market to supportit*

$ccording to Nielsen Aesearch (Aise of Smartphones, $pps and the 6obile Web, ' ))", E' of smartphoneowners have download apps to their devices at least once a month, and games have consistently remained the topapplication category since ' G* +n $merica specifically, E8 of app downloaders consume games, and G/ of them are

willing to pay for these apps (more than any other app category"* When considering the average $pp Store app price of 2/*8), paid by hundreds of thousands of buyers, mobile game sales can and are a significant source of revenue7 the HSmobile gaming market created 2)*@/ billion of revenue in ' )) alone, and pro#ections e


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Michael Gasiorek M&B'(EG)M'$G 'culture7 while social interaction through Facebook, 0oogleM, and =witter dominates most M)- female smartphone use,$ngry 5irds is ranked e;ual in popularity among both men and women relative to other apps, and is again #oined by highusage rates of Words with Friends and $ngry 5irds Aio* &verall, while women in the sample tend to include gamingamongst primarily social and entertainment app use, men conversely seem to rely on shorter, more fre;uent gameplay in

between work related apps including uickoffice.ro and dictation software* 9owever, what%s truly made apparent in thestudy is that gaming has no clear age nor gender barriers*

While the type of app use and the demographics thereof paint the market as truly diverse, the final detail that presents a truly compelling audience is their level of commitment* $ccording to =he New York =imes (Hsing .hones,' ))", the average smartphone owner in the HS and HD spends EE? minutes a month using apps more than talking, or surfing the web* $mong users of i.hones, $ndroid, and Windows phones, Nielsen Aesearch (.lay 5efore Work, ' ))"asserts that no less than 8E- of these minutes are spent on games alone on average, with i.hone users specificallyaveraging a staggering --' gaming minutes per month and $ndroid owners clocking in at a no less impressive @@-minutes a month (Figure /, Nielsen"* For purposes of rough comparison, the )8*? hours average i.hone users spend onmobile games would be e;uated to almost two full - hour work days, about ) sit down family dinners, easily ? movienights, or 'G daily recommended / minute gym trips enough to go almost every day of the month* 9owever, thesecomparisons are more than #ust illustrative, but rather very literal7 in ' ) , while the monthly share of household spendingon movie viewing, =O subscriptions, music (in 6./, C , etc*", and subscriptions to books and maga4ines all shrunk almost ) compared to ' G, mobile entertainment went way up to ?*8 from @*/ (H*S* Oideo 0ame 5uyers, ' ))"*

1ven more strikingly, while mobile gaming grew traditional video game spending actually receded in the same time period by *- , at least partially cannibali4ed by the Bscreen shiftB the increasing move of entertainment consumptionfrom fully featured at home systems to the small but portable (and most importantly widespread" mobile screen* =o addinsult to in#ury, mobile analytics firm Flurry (Farago, ' ))" pro#ected i&S and $ndroid overtaking Nintendo%s S andSony%s .S. platforms combined by ' )), with an e


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Michael Gasiorek M&B'(EG)M'$G ' .his employment with Lynga on favorable terms confirmed some of the practices that make the games as successful as theyare (+$m$ Former Full=ime Lynga 1ngineer, ' )'", which revolve around unprecedented data mining aimed atmoneti4ing every given variable to its ma


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Michael Gasiorek M&B'(EG)M'$G ' /vested interest in the product as their own doing, +nnovators are not only directly responsible for the game%s success, butalso directly benefit from any success it attains, which serves as greater motivation to e


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Michael Gasiorek M&B'(EG)M'$G ' 0O!erating on t e Margins: Creating Profits from Mobile Gaming

+n a market that has produced as much profit as mobile gaming, the revenue streams have become widelydiversified since the days of strictly paid versus free, with developers always innovating on ways to generate revenuesfrom their works* 9owever, given the intense competition and the comple< economics that create an environment inwhich even a 2) increase may cost the loss of half of the app%s consumer base, they must carefully balance profits against

their capacity to attract customers* With this in mind, prepaid apps in ' ) comprising G'*@ of HS mobile gamingrevenues (1mpson, ' ))" are slowly becoming a thing of the past, and the market is moving into the direction in gameadvertising, paid virtual goods, and in app transactions, which 6i


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Michael Gasiorek M&B'(EG)M'$G ' 1advertisers% total ad spend is directed towards mobile (=sotsis, ' ))" thereby capitali4ing only on a tiny sliver, or about2E@*/6 currently (6obile Oideo .rovides, ' )'" on what is estimated to be a 2' 5 marketing opportunity* 9owever,marketers are already moving towards greater saturation, with e


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Michael Gasiorek M&B'(EG)M'$G ' 23to conduct itself ethically in delivering content that is entertaining without becoming profiteering, that rewards both thecustomer and the developer fairly for their respective contribution, and that continues to give consumers meaningfulchoices in how to spend their free time rather than providing them with a deluge of low ;uality filler* +t will ultimately bethe consumers that will dictate the terms of success in the mobile gaming space, and while these ;ualities may currentlystand as well designed and well polished but not overwhelmingly feature filled games with well structured venues of access to customers depending on their purchasing preferences (that is, advertising based, transaction supported, or

prepaid", these ;ualities may not forever dictate success*

Certain changes are coming that will irrevocably alter the state of the mobile gaming industry, from moneti4ation,to the rise (and if Lynga%s critics have their way, the eventual fall" of uni;ue market drivers with differing values anddesign principles, to the further increasingly globali4ation of mobile gaming which will attract not only foreign players

but also talented foreign developers with innovative ideas and graceful e


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Michael Gasiorek M&B'(EG)M'$G ' 22

$ppendi<

Figure #: $!!le $!! Store Statistics %Gro&t of Do&nloads ' $!! $(ailabilit)*Source7 $pple3s $pp Store ownloads =op )@ 5illion* ( uly ' ))"

Figure +: US Smart! one Gamers, +-#-.+-#/Source7 e6arketer* ( ecember ' ))"


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Michael Gasiorek M&B'(EG)M'$G ' 2*

Figure 0: $(erage Time S!ent Pla)ing Mobile Games $cross Smart! one PlatformsSource7 .lay 5efore Work7 0ames 6ost .opular 6obile $pp Category in HS* ( uly ' ))"* +ielsen *

Figure 1: $d.Su!!orted S are of US Mobile Content Re(enues, b) Segment, +-##.+-#/ %!ro2ected*Source7 6obile Oideo .rovides 5iggest 0rowth for $d Support* ( anuary ' )'"* eMar$eter *


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Michael Gasiorek M&B'(EG)M'$G ' 2+

Figure /: Percentages of $!! Do&nloaders Consuming Content b) Categor) and Price StructureSource7 Consumers &D with $dsQ if the $pps are Free* ( anuary ' )'"* +ielsen *


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Michael Gasiorek M&B'(EG)M'$G ' 2

Aeferences


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Michael Gasiorek M&B'(EG)M'$G ' 2-$dweek%s ' )) 5rand 0enius $wards* (' ))"* Adwee$ , 01(/?", '' /'* Aetrieved from http7::

search*ebscohost*com*ilsprod*lib*neu*edu:login*aspdbRbth>$NRE? ?G/->siteRbsi live

$le


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Michael Gasiorek M&B'(EG)M'$G ' 2.0raser, 6* ($ugust ' ) "* %$ngry 5irds% flies with 9ollywood* ariety * Aetrieved from

http7::www*variety*com:article:OA)))- '/''8JrefCat+dR)/

9anslip, * ( anuary ' )'"* .ress Aelease7 +n 0ame .urchase Aevenues on Smartphones to Aeach 28*-bn in' )E, up from 2'*)bn in ' ))* 5uniper esearch * Aetrieved from

http7::#uniperresearch*com:viewpressrelease*phpJprR'-)

+$m$ Former Full=ime Lynga 1ngineer RT ;uit E months ago, Not a contractor (February ' )'"* eddit *Aetrieved fromhttp7::www*reddit*com:r:+$m$:comments:pcE#G:iama former fulltime 4ynga engineer ;uit E months

Dafka, .* ($pril ' ) "* 6eet the $pp Store 6illionaires7 =he 5rothers 5ehind oodle ump* All#hings( *Aetrieved from http7::allthingsd*com:' ) 8 @:meet the app store millionaires the brothers behind doodle #ump:

PiveCycle* (February ' )'"* Apple i#unes Store * Aetrieved fromhttp7::itunes*apple*com:us:app:livecycle:id/GGE)))--JmtR-

6cWhertor, 6* (6arch ' ))"* ) 6illion Sales Pater, oodle ump +s 6aking =he Peap =o Kbo< /E ($nd5eyond"* 6ota$u * Aetrieved from http7::uk*kotaku*com:@?-'/?):) million sales later doodle #ump is making the leap to


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Michael Gasiorek M&B'(EG)M'$G ' 2/&pportunities $bound as $d Support +ncreases Aole in 6obile Content elivery* ( anuary ' )'"* eMar$eter *

Aetrieved from http7::www*emarketer*com:$rticle*aspecidRaE@ E //E?@d8?f--)E@)G8/c')c@ed8

.eterson, S* ( ecember ' ))"* .opCap Aelaunches 5e#eweled for i.hone, 0oes Freemium*

IndustryGamers * Aetrieved from http7::www*industrygamers*com:news:popcap relaunches be#eweled for iphone goes freemium:

Aaice, S* (February ' )'"* =he Facebook +.&7 Facebook and Lynga7 Sharing Aiches +sn%t $lways 1asy* WallStreet 5ournal * &+7 ' )' ' /e-'/ /i

Aapid 0rowth $head for 6obile 0ame $d Spending* ( anuary ' ))"* eMar$eter * Aetrieved fromhttp7::www*emarketer*com:$rticle*aspAR) -)@G

Aise of Smartphones, $pps and the 6obile Web* ( ecember ' ))"* +ielsenWire * Aetrieved fromhttp7::blog*nielsen*com:nielsenwire:online mobile:report the rise of smartphones apps and the mobile web:

Aovio7 $bout Hs* (February ' )'"* o!io Mobile * Aetrieved from http7::www*rovio*com:en:about us:Company

Ausli, 1* 6* ( ecember ' ))"* For Lynga%s +*.*&*, .omp and a Slump* +ew 7or$ #imes * &+7 NY=F ' )))')?e?ch Ef

Shaer, 6* (November ' ) "* $ngry 5irds bound for Kbo


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Michael Gasiorek M&B'(EG)M'$G ' 20Williams, 6*9* ( anuary ' )'"* =iny =ower evs Strike &ut at Lynga &ver Clone* IndustryGamers * Aetrieved

from http7::www*industrygamers*com:news:tiny tower devs strikes out at 4ynga over clone:

Wingfield, N* ($ugust ' )'"* %$ngry 5irds% Spreads Wings* Wall Street 5ournal3 &+7' )) -) e?-a /m

World of .ocket 0od7 1pisode 0uide* (February ' )'"* Worldof8oc$etGod3 Aetrieved fromhttp7::www*worldofpocketgod*com:category:episode guide:page:@

the mobile gaming report: the future in our pockets

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