Mobile and portable gaming revenue to hit $12B by 2014: report
Business models focused around in-application payments will contribute to significant growth for mobile and portable gaming, according to a new report from App Annie and IDC.
App Annie and IDC E3?s ?The Future of Mobile & Portable Gaming? special edition report looks at which devices and business models will fuel the gaming industry in the next 18 months. The report also dives into particular areas that will see the strongest growth.
?With freemium as a model, there has been this general industry feeling that it is how you are going to make money, and in the past few years the numbers have really verified that,? said Marcos Sanchez, vice president of global corporate communications at App Annie.
?Freemium is becoming the way to monetize mobile apps and we have seen that well,? he said.
?If you?re going to monetize, you want to monetize in-app purchases in a way to engage with the storylines and the brand experience and then along the way you can add in the in-app purchases.?
Mobile growth
Not surprisingly, Android and iOS are the two mobile operating systems that will see the most growth in installed mobile devices for gaming.
Android in particular will grow by an estimated 10 percentage points between 2012 and 2014. IOS devices will grow by 2 percentage points.
Other smartphone and tablet operating systems will decrease by 1 percentage point.
Gaming-optimized handhelds, including devices such as Nintendo?s DS or Sony?s Playstation Vita will decrease in share by 11 percentage points.
Overall, the installed base of mobile and portable devices used for gaming will hit 1.2 billion in 2014, which is a 55 percent growth from 800 million in 2012.
Monetization challenges
When it comes to monetization models, 51 percent of revenue is predicted to come from microtransactions such as in-app purchases or currencies in 2013.
Forty-four percent of the revenue will come from prepaid apps and games.
However, the report shows that there is still a ways to go with in-app mobile advertising for marketers, which will only represent 5 percent of revenue this year.
One of the challenges with advertising in games in particular for marketers is creating ads that do not disrupt the actual game and finding ways to keep the advertising content native to the experience.
The top revenue-grossing iOS app genre was role playing apps, which includes titles such as Puzzle and Dragons DragonVale.
Another popular genre will be stimulation apps, followed by action, strategy and adventure games.
Android users on the other hand prefer arcade and action, casual, brain and puzzle, cards and casino and sports games.
Apple?s App Store continues to outperform Google Play for in-game revenue and earned 2.3 times more than Google Play during the first-quarter of 2013.
However, Google Play?s game revenues do show signs that monetization efforts are improving. Revenue doubled from the fourth-quarter of 2012 to the first-quarter of 2013.
According to the report, the average revenue per smartphone or tablet user will remain slightly above $10 from 2012 ? 2014.
The United States, Japan, Britain, China and Australia were the top grossing countries for iOS games. For Google Play, Japan, South Korea, the U.S., Britain and Germany were the top grossing regions.
The average revenue per gaming-optimized handhelds on the other hand will slump slightly from roughly $15 in 2012 to below $15 in 2013. By 2014 though, the average revenue per user will increase to just less than $20.
?What we see happening is over the next few years, mobile and portable gaming is poised to take over,? Mr. Sanchez said.
?In the mobile space, there were a few surprises,? he said.
?What we didn?t see coming in Google Play is that Japan and South Korea are getting higher revenues than the U.S., which tells us on that Android [users] in those countries are taking the rein with driving into mobile gaming and their users spend quite a bit more money than the U.S.?
Final Take
Lauren Johnson is associate reporter on Mobile Marketer, New York