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Friday, August 05, 2011

Mobile Gaming Upside to Reach $16 Billion by 2016

The mobile gaming phenomenon is already established in the online marketplace as a form of interactive entertainment, appealing to a diverse group of consumers across the world.

The growth in this application software is driven on one hand by the emergence of modern touchscreen smartphones as a suitable gaming platform, and on the other hand by innovation in casual games that attract users from both genders and from all age groups.

According to the latest market study by ABI Research, this is also reflected in the gaming industry's revenue base -- which will grow from less than $5 billion revenue in 2011 to more than a $16 billion upside opportunity by 2016.

"An ever-larger share of mobile gaming revenue is coming from virtual goods and other purchases that take place within the game," said Aapo Markkanen, senior analyst at ABI.

These in-app payments will account for about one-third of the 2011 revenue base, but by the end of 2016 their share will increase to almost half of the total. Also, the in-game advertising revenue will increase considerably, as more advertisers take advantage of the mass-media potential for mobile games.

Because online distribution of game content is the norm, barriers to entering the mobile gaming sector are low.

That said, the dynamics of both casual gaming and the discovery of new content make it a somewhat risky hit-and-miss business, though good content is still definitely more important than luck.

Angry Birds from Rovio is an early example of the adoption that the most successful titles will be able to achieve. Yet for every hit game title, there will be scores of failed attempts to engage with consumers.

It's likely that there will also be further consolidation among independent mobile game software developers, such as the recent acquisitions made by gaming industry giants Electronic Arts and Zynga.