Games are big business. Mobile games in the App Store and the Play Store have consistently been the most popular and profitable categories. People love to play games on their smartphones, even though they may not necessarily describe themselves as “gamers”. Pew Research discovered that half of Americans play games in some form, but only 10 percent consider themselves “gamers”. However, they’re all spending time, and sometimes money, on gaming.
If we take a look at the iOS App Store, we find that games account for 23 percent of all apps, according to Statista. Yet, they account for 74 percent of revenue, according to App Annie. Games may dominate the mobile scene, but how do they fit into the wider games market?
Is mobile the top category?
Gamers worldwide are set to generate a staggering $99.6 billion this year, according to Newzoo’s illuminating Global Games Market Report. That’s an 8.5 percent increase on 2015. But how does it break down by category?
The top category is TV/Console with a 29 percent. Tied for second is Smartphones and PC/MMO with a 27 percent share each. The remaining categories show 10 percent for Tablets, 5 percent for Casual Webgames, and just 2 percent for Handheld.
Newzoo is forecasting increases for the next three years, taking the total market up to $118.6 billion by 2019. It also predicts that mobile’s share, combining smartphones and tablets, will increase to 45 percent, making it worth $52.5 billion in 2019, up from $36.9 billion this year. The whole market is growing, but mobile gaming is growing the fastest.
Around the world
The Newzoo report also takes a look at the global scene, dividing the revenue by region. Asia-Pacific claims the lion’s share at 47 percent, followed by North America at 25 percent. Year-on-year (YoY) growth in North America was 4.1 percent, and it was 4.4 percent in Western Europe, with increases largely driven by mobile.
As the sales of smartphones have slowed in saturated markets, attention has turned elsewhere and that trend is partially mirrored by mobile game revenue. The mobile games market has been growing at a much faster rate in Latin America, for example, going from $900 million last year to $1.4 billion this year.
On the other hand, spending in China hasn’t been as high as many people expected, growing from $7.1 billion last year to around $10 billion this year. It’s predicted to creep up quite slowly in the next few years, only hitting $13.9 billion in 2019.
Smartphone set to be dominant screen
Another way to slice the figures is to look at the revenue by screen type. Newzoo expects the “Personal screen”, otherwise known as the smartphone, to take the lead by 2018 with a YoY growth rate of 23.7 percent. Tablets and handhelds, lumped together as the “Floating screen” appear to be in serious decline.
The smartphone may be set to dominate gaming revenue, but it’s worth remembering that the mobile game scene is very different from traditional gaming markets. When we asked whether indie developers can still find success with mobile games, we discovered that the top ten games account for 25 percent of all the revenue.
Drilling deeper, we find that the dominant freemium model is supported by a relatively small number of big spenders or “whales”. The market for mobile games appears to be very big, and growing bigger all the time, but the path to profitability for game developers may prove to be quite narrow.