Increasing competition in mobile games

September 15, 2015

The mobile games market is experiencing extraordinary gains with  growth in smartphone and tablet usage over the past two years exceeding all expectations. Total mobile gaming revenue is forecast to be US$23 billion for calendar year 2015 and expected to double by 2018.  Income generated by a best-selling game app is phenomenal, with  ‘Clash of Clans’ and ‘Candy Crush Saga’ each estimated to produce revenue of over one million US dollars a day. With such attractive financial rewards, the globalisation of the games market is accelerating as platforms and business models become more aligned across all regions of the world.

Although mobile gaming has become a standard part of modern culture for many, the average user is reluctant to pay to install or play a game.  Only 2-3% of mobile gamers who initially play for free will go on to make purchases that can extend their gameplay, provide quick advancement or unlock new content. Even though a small fraction of users go on to purchase enhanced features and new content for free-to-play games, it is estimated that over 90% of the revenue from mobile games apps comes from these free-to-play titles.

With mobile game apps generating income from a very small percentage of users, in-app advertising is now evolving quickly to increase revenue and monetize players who are otherwise resistant to paying for downloads. Game developers and mobile network providers are now merging consumer insight tools and advanced ad-tracking technology into game metrics attempting to fully optimize advertising campaigns. In an industry laden with high technical development and user acquisition costs with over 750 new games being launched per day, survival for the vast number of game manufacturers without ‘blockbuster’ games will be dependent on attracting third party advertisers to an increasingly crowded and highly competitive market.