2. Market research
2.1. Mobile games market research
current situation and find a business opportunity therein.
2.1. Mobile games market research
The total revenue produced by the mobile games in 2014 was roughly 21 billion USD and is
expected to reach 28 billion this year. That makes it about one third of 75 billion worldwide
interactive entertainment market. In report called 2015, published by Newzoo (global market
research firm with a primary focus on games), it can be seen, that the mobile games market
has become the biggest one and surpassed the previous leader – console games market.
Apple's revenues from mobile games alone are estimated to be around 4 billion USD for the
last year, which is approximately double of what was estimated for Nintendo, one of the
biggest players in the console games industry. Thus, the mobile gaming has become one of the
most important sectors in the gaming industry as well and publishers and developers are
already realizing this new fact. New gaming giants have grown on the mobile games market
and some of the old giants are now turning their eyes in its direction.
Acording to Joost van Dreunen, co-founder and CEO of SuperData Research, the entry of big
players has also changed the competitive environment on the market in question. Audiences
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increased competition is also reflected in a fact, that 80% of 1.2 million apps available on the
App Store got no downloads at all. The average amount that people spend on mobile games is
already falling behind on the cost of production. This makes sense, since disposable income is
not infinite and mobile games compete for attention and wallet share with other platforms,
such as the new home consoles and various other forms of entertainment. This can be seen as
a sign of a possible market saturation. As can be observed from The Quarterly Global Games
Market Updates, from Newzoo the total value of mobile games continue to grow. Newzoo
believes it is not only because of fast developing markets like India, but also thanks to
continuous growth of markets like North America and Asia, which were expected by some
analysts to have already entered the stage of saturation.
Looking back, we may call 2014 a year of high-speed evolution in mobile and social games
that have penetrated into the mass culture so deeply that almost every each of the hundreds of
millions of web-connected smartphone holders is a gamer now. Games have become the core
revenue-generating product on the leading mobile platforms and Facebook. There is no doubt
that, in the nearby future, the ever growing game content consumption and the rising cost of
user engagement will encourage game developers and publishers to invent new creative ways
to promote their games and retain their users (Renatus Media, LLC, 2014).
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As can be seen from the figure 1 and as it can be observed from various game market analyses,
users are used to not pay for the applications they install, as 90% of revenue from the game
apps in 2014 was generated by free-to-play games (based on App Store data). This reflect
a trend in the applications market in general. According to Swrve, an international mobile
device marketing company) this revenue comes from a very small fraction of the users, since
only 2.2% of players of free-to-play game ever pay for one of the games paid features, around
0.15 percent of players of mobile games contribute 50 percent of all of the in-app purchases
generated in free-to-play games and 46% of the total revenue comes from just 0.22% of the
total amount of mobile users. Since vast majority of players has adopted a habit not to pay for
the game content, it is very important for the developers and publishers to attract and retain
the players who fall into the “paying” category. That is a hard task to accomplish, since the
users have a large selection to choose from and can find many similar interchangeable app
games.
There is no other way how to make revenue out of these users other than through in-app
advertising. Other way of monetizing these players was presented by Ninja Metrics chief
executive Dmitri Williams, that is, by getting these non-payers to influence other players to
pay. In his speech at Casual Connect Europe show, Williams refers to these players as “social
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whales” because they have an outsized impact on player behavior. Whale is a term used for
big spenders in relation to in-app purchases.
Reynolds said that only 1.5 percent of active players surveyed in January actually made
a purchase in that month. About 50 percent of revenue comes from the top 10 percent of the
players who do make purchases. Expressed as a percentage of players, this group of big
spenders represents just 0.15 percent of the total. It makes sense for game companies to
identify these spenders and target them with incentives, but they shouldn’t be the sole target
of campaigns. The problem is the whales or high rollers can only be seen in retrospect, so it is
necessary target a wider group and the high roller can be found there, Reynolds said.
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