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Report: Mobile to become gaming's biggest market by 2015

By Dan Pearson

Report: Mobile to become gaming's biggest market by 2015

Wed 22 Oct 2014 2:30pm GMT / 10:30am EDT / 7:30am PDT
MobileInsights

42% YoY rise in sector value will see it take console's crown, says Newzoo

Newzoo

Newzoo is the global leader in games, esports and mobile intelligence with offices in Amsterdam, Shanghai...

newzoo.com

A new report has named 2015 as the year in which the value of the mobile games market will exceed that of consoles, making it the industry's most lucrative sector.

The Quarterly Global Games Market Update, from Newzoo, pins the total estimated value of mobile games at $25 billion for the year, a huge leap of 42 per cent from the total value in 2013. That rise, the company believes, is not only thanks to the sudden rush of revenues from vast developing markets like India, but also the continuing performance of markets like North America and Asia, which some had predicted to have reached saturation point.

"With the public release of these new forecasts, Newzoo is deliberately countering the sentiment aired in recent months that the mobile gaming market is becoming saturated in mature Western markets, especially the US," said analyst Vincent van Deelen in a note accompanying the research.

"This is simply not the case. We are also emphasizing that the recent results of individual high profile companies such as Rovio, King, DeNA and GREE are not necessarily indicative of the state of the mobile market as a whole. It is not in our interest to inflate market figures, but the hard facts have forced us to adjust our estimates upward. We have maintained our year-on-year growth rates toward 2017, ultimately leading to a $40Bn+ market in 2017."

1

With its combination of both organic and cannibalistic market growth, mobile continues to represent both threats and opportunities to more traditional retail avenues. Whilst many publishers are making headway into mobile markets with separate publishing arms, acquisitions and companion apps, revenues for mobile's biggest players are already dwarfing their console and handheld counterparts. Apple's gaming revenues alone, for example, are predicted to total somewhere in the region of $4 billion for 2014 - somewhere around double that forecast for Nintendo.

For now, Apple remains the top dog in terms of mobile gaming income, edging out a predicted revenue total of $3 billion dollars for Google Play in 2014. That, says Newzoo's Peter Warman, is down to the edge provided by the company's tablet portfolio.

"In mature Western markets, we see the battle between iOS and Android shifting toward tablets," said the Newzoo CEO. "In most of these countries, including the US, Android smartphones gross more revenues than the iPhone, but the iPad keeps iOS ahead in overall mobile game spending. Android tablets seem to be in the same position its smartphones were in 4 years ago: fragmented in terms of device specs and a lower share of game and average spending. Amazon's Kindle Fire is an exception, scoring high on both KPIs, but for now the iPad maintains its lead, taking the lion's share of tablet game revenues."

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20 Comments

Andrew Ihegbu Studying Bsc Commercial Music, University of Westminster

490 219 0.4
I care so little about this, and yet I know that there is so much of the industry right now who are led by analytics and will take this to heart so deeply. I hope it doesn't trigger a decline in non-mobile games.

Posted:A year ago

#1

Nick Parker Consultant

351 241 0.7
I agree that mobile gaming will overtake console games (that's not news) but these forecasts seem extremely high (by as much as 25% in 2015 by my reckoning). Yesterday, DFC reported that mobile games would reach $26.2bn by 2017, $14.7bn less than the above report so which one would you quote? The primary driver to gaming growth is the up-take of smartphones and tablets not more people of the existing device base playing games. The mobile gaming experience is becoming cheaper for most users (80% of mobile games revenues come from free to play and less than 2% of those who transact within f2p actually pay for anything).

If the size of the mobile market is $40.9bn by 2017, what share of the total games software market will it hold? It would have to be close to 50% based on even the most optimistic forecasts for just software (some include console hardware in their forecasts).

I wonder what the "revenue" means when the article says that Apple edged out the $3bn for Google Play in 2014. If its the 30% on net retail prices then maybe it fits with the $25bn forecast for this year but if its total spend on Google Play at $3bn and Apple edging it at, let's say, $4bn (gives a combined total of both platforms at $7bn) where is the remaining revenue coming from? If it is the 30% then total net retail would be $23.3bn from the $7bn going to the Apple and Google app stores. That only leaves $1.7bn for everybody else and where would VAT/local taxes fit in?

Sorry, got a bit carried away.

Posted:A year ago

#2

Paul Johnson Managing Director / Lead code monkey, Rubicon Development

1,219 2,667 2.2
This is fun. Been saying it for a long time and getting laughed at. And all we'll hear this time is more smoke and mirrors and dodging. "It's not real gamers", "It's all based on mass hallucination because nobody wants F2P" etc.

@Nick. It probably is inflated - there's bias in everything, especially these sorts of things. But the trend itself cannot be ignored and if it doesn't happen to the reported schedule, it'll happen soon enough after.

For each individual mobile developer though, things are getting worse so there's no smugness here about it.

Posted:A year ago

#3

Carlos Bordeu Game Designer / Studio Co-Founder, ACE Team

78 115 1.5
Hi Paul. If things are getting worse for individual developers (I've read some of your comments about paid apps doing 10x worse in just the lapse of a year despite staying stable on the charts - yikes!), doesn't this make you think that mobile might be headed into a pretty dark spot? I mean - I doubt all the studios can survive if everyone ends up doing nothing but F2P (especially given how many new developers are entering the market)... I just don't see it possible. Don't you think that many will realize that the market isn't viable?

Posted:A year ago

#4

Paul Johnson Managing Director / Lead code monkey, Rubicon Development

1,219 2,667 2.2
doesn't this make you think that mobile might be headed into a pretty dark spot?
Absolutely. We'd love to switch to Steam first, but you can't run a business on hoping to get votes from people you don't know either. Then again, Steam seems to have the same illness, but with less advanced symptoms.

I've been thinking the mass herd onto mobile has to end soon for a couple of years now, and tbh it doesn't look like it's going to happen. It's an easy route to market for hobbyists hoping to get lucky, as well as the lowest risk option for startup profressional teams. That means there's an endless supply of new apps sucking up all the shelf space / eyeballs and visibility is virtually impossible. I'm planning an in-depth piece on all this in the near future.

Basically, yes it's grim. :(

Posted:A year ago

#5

Rafa Ferrer Localisation Manager, Red Comet Media

92 170 1.8
@Paul, correct me if I'm wrong, but as I understand it, that's merely a marketplace problem (Google Play, App Store, Amazon...) and not something that's inherent to the mobile games market. Shouldn't it be up to the marketplace owners to take any steps to help with this, or are they completely OK with how things are right now regarding visibility?

The way I see it, user votes are anything but reliable and curation is much needed there, but of course that's a double-edged sword.

Posted:A year ago

#6

Carlos Bordeu Game Designer / Studio Co-Founder, ACE Team

78 115 1.5
that's merely a marketplace problem (Google Play, App Store, Amazon...) and not something that's inherent to the mobile games market
Is there any other relevant platforms in the mobiles game market? Doesn't everything else make a fraction of what those do? I would say that Google Play and the App Store are pretty much the mobile games industry.

Unfortunately I don't think any kind of curation can completely solve how crowded these stores are becoming. Maybe help... but Steam already has like 10 new games per day. I can only imagine how scary the number must be on mobile...

Posted:A year ago

#7

Paul Johnson Managing Director / Lead code monkey, Rubicon Development

1,219 2,667 2.2
It's 1000+ a day. Feel free to do a cartoon double-take.

One answer is to put a big subscription cost on the front end. That won't happen though as all the gatekeepers seem fixated on simply having a brazillion apps/games available rather than many thousands of good ones with a thriving, sustainable economy for the contributors.

Posted:A year ago

#8
Big guys on mobile are spending tens and hundreds of millions per year to promote and market their games in one way or another. Itīs obvious that little guys may feel the squeeze. Just another way to block any accidental discovery of other games.

Posted:A year ago

#9

Shane Sweeney Academic

494 585 1.2
I'm more interested in the break down between paid apps and Free to Play within the mobile sector. Anyone have any information on this?

Is it as drastic as say maybe 80% of the Mobile industry revenue is F2P? Is most of this coming from whales? I just don't have enough data to have a proper opinion on any of this.

Edited 1 times. Last edit by Shane Sweeney on 24th October 2014 1:26am

Posted:A year ago

#10

Paul Johnson Managing Director / Lead code monkey, Rubicon Development

1,219 2,667 2.2
Anecdotally, I'd say it was pretty much all F2P. (Apart from ours. We made one F2P game and it bombed despite decent reviews)

Paid games suck now, on all mobile formats, and we make more money through adware than sales. Just a sample of one, but I think it's indicative. I never hear anyone contradict me.

I don't get it either.

Posted:A year ago

#11

Klaus Preisinger Freelance Writing

1,431 1,763 1.2
In my opinion, mobile is taking the lead is due to being able to employ operative conditioning for the sake of aggressive monetization unchecked. This provides a competitive edge and since 2011 we have seen quite the shift from paid apps to "free" apps. An accelerated market should surprise nobody, but I reckon that if you want to profit from it, you really need to be able to walk over the corpses of your customers Las Vegas style.

At the same time, the predictions might be wrong. Because as soon as smartphones receive a few scaremongering media articles about being the thread to in your pocket, exploiting urges and endangering your wallet, Apple and Google will take steps to ensure the positive image of their products. The gold rush ends there.

Posted:A year ago

#12

Craig Burkey Software Engineer

250 507 2.0
Mobile gaming complements Console gaming, it doesn't replace it IMO. Personally crossword, word-search and Sudoku puzzles in the daily newspaper, are more under threat by the rise of mobile gaming. I think mobile gaming could be a gateway to console gaming giving somebody who has played a game on the phone a more richer experience.

Perhaps the AAA studios should take that approach, as most AAA companion mobile apps are designed for people who already have the console edition, if they were designed more as a first taste/lite version of its bigger console brother, it may drive some mobile gamers to take the plunge and get the console product

Posted:A year ago

#13

Paul Johnson Managing Director / Lead code monkey, Rubicon Development

1,219 2,667 2.2
I do resent this idea that some have that mobile only becomes legit when used as some crappy support app for a console game.

There is a lot of shite on the app stores, but that's more about the customers and the developers. The form factor itself is ideal for hosting meatier games, and we're trying to sit in that space. Our own strategy titles for example play at their best on tablet because the touch interface could've been made for them.

Console is shit for RTS games due to a completely unsuitable input interface. Desktop PC is much better due to the mouse. Touchscreen tablet is perfect.

Maybe this thing would seem less polarised if "console game" wasn't practically synonymous with "first person running around 90 trillion polygons game". Yes, you can actually get other types of game on mobile.

Edited 1 times. Last edit by Paul Johnson on 25th October 2014 2:46pm

Posted:A year ago

#14

Carlos Bordeu Game Designer / Studio Co-Founder, ACE Team

78 115 1.5
Maybe this thing would seem less polarised if "console game" wasn't practically synonymous with "first person running around 90 trillion polygons game".
I agree that RTS can be better suited for touch controls and that some meatier games can be made on mobile, but Paul... your suggestion that console gaming is synonymous with first person games while excluding the ton of other genres that are perfect for gamepads is not being honest about consoles. Of all the the existing game genres I would bet the ones that work better with a gamepad compared to the ones that work better on a touch screen is probably more extreme than 20 to 1. That touch screens are just as good as gamepads for gaming in general is not debatable. Gamepads were created as input devices for gaming - touch screens were not.

Just look at the WiiU. Not even the best game designers of the planet (like Shigeru Miyamoto) have been able to craft awesome games specific for the WiiU gamepad (which basically sports a touch screen as its only unique feature). That example alone - that Nintendo has failed to be able to do anything substantial with the touch screen and that all games are better played with the analog sticks and buttons (the gamepad part of that controller) is another example that touch controls seem to be limited for gaming. (Though I do understand that the touch screen of the WiiU is worse than the one of tablets).

Posted:A year ago

#15

Paul Johnson Managing Director / Lead code monkey, Rubicon Development

1,219 2,667 2.2
Gamepads are crap for most types of game, FPS being pretty much the worst. Are you serious?

Wherever a game plays well on a joypad, it'd be better still with either a mouse or a proper joystick. Gamepads were invented because joysticks and mice were harder to use on a couch. They're not actually the ideal input device for ANY sort of game, they're simply a best fit kludge to fit the typical useage, like touchscreen is on tablets. Developers work around these limitations and the players get used to them.

I have a Wii. I have a Wii U. I have a couple of tablets and a desktop pc. I have no consoles anymore purely because gamepads suck ass. There are plenty of arguments for consoles being better game machines than tablets, and I'd probably not have or want a counter to them. But gamepads isn't doing it.

Posted:A year ago

#16

Todd Weidner Founder, Big Daddy Game Studio

499 1,241 2.5
its interesting since obviously this has to do with the huge market penetration of the smart phones etc which world wide is in the billions now. So yes, with so many people walking around with this tech, its a nice target audience, but it can also be an exhausting and frustrating audience to try to reach.

Think of it as if it was a retail shop, would you rather have 1000 customers spending 100 bucks a year at your store, or 10,000 spending 10 bucks a year. Same revenue, but one is much harder and more expensive and more difficult to deal with than the other.

Now Im not saying the mobile market is a bad thing, but rather just a difficult to reach, capture, maintain, and capitalize thing.

It really is like the old gold rush days, there is gold there, but rushing out there to mine the gold isnt as easy as it sounds, and now that the early days are over, now you have to deal with an over saturated market, some big players,and to be honest, the losers will greatly out number the winners.

Best of luck to those that dare chase the gold in dem dare phones.

Posted:A year ago

#17

Carlos Bordeu Game Designer / Studio Co-Founder, ACE Team

78 115 1.5
Gamepads are crap for most types of game, FPS being pretty much the worst. Are you serious?
I guess we're just in a huge disagreement here. And I wasn't comparing gamepads with mouse + keyboard... I was comparing to touch screens. I agree FPS play better on Mouse+KB than gamepads, but if you would try to convince me that FPSs play better on touch screens then I would think you are joking.

Sorry, but I wouldn't prefer playing Street Fighter, God of War, GTA, Mario Kart, basically any platformer, Super Smash Bros, etc, etc on anything else rather than a gamepad. Those games are playable on Mouse+KB, but some pretty awfully. Gamepads are better for some games. Of those none of them are decently playable on a touch screen.

Again, I was comparing consoles to tablets/mobile phones, not to PCs... so I don't understand your answer.

Posted:A year ago

#18

Paul Johnson Managing Director / Lead code monkey, Rubicon Development

1,219 2,667 2.2
I don't understand yours :) You seem to be making the point that gamepads are best for games and I simply disagree. For me they're a complete turn off.

But surely the point here, re the headline, is that we don't all want the kind of games you listed. There are also many styles of game that fit tablet and phone better and they seem to go down well with the players else mobile gaming would not be thriving.

The additional point I was trying to make is that the predominant mobile games don't need much in the way of controls because they're fairly shallow, but that doesn't mean they have to be. So there's lots more room left for growth and some already larger games available.

And just as personal flavour, I'd rather put up with inferior controls (in some game types) for the superior benefit of having my own personal screen right on my lap. And apparently I'm not the only one.

Posted:A year ago

#19

Carlos Bordeu Game Designer / Studio Co-Founder, ACE Team

78 115 1.5
The additional point I was trying to make is that the predominant mobile games don't need much in the way of controls because they're fairly shallow, but that doesn't mean they have to be. So there's lots more room left for growth and some already larger games available.
And on this I totally agree. I certainly think there is room for growth and new ideas in the mobile space.

Posted:A year ago

#20

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