Friday, March 01, 2013

Mobile Games Market to Reach $3+ Billion by 2016

The gaming industry has changed dramatically over the past decade. A new study of the mobile games market has highlighted the pivotal role of media tablets in the future growth prospects of this fast moving and evolving industry.

The rapid adoption of tablets, combined with the growing acceptance of in-game purchasing and virtual currencies, will result in an estimated $3.03 billion of sales by 2016 -- reaching over ten times the $301 million figure calculated for 2012.

According to the latest assessment by Juniper Research, which studied the impact of mobile games on the wider video games industry, found that there had been a clear migration of users from dedicated portable gaming devices across to tablets, and to some extent, smartphones.

The freemium model, which is being embraced by many tablet users, cannot be implemented as easily on portable gaming devices, because games must be purchased upfront and the devices themselves often do not allow for a 3G or 4G cellular network connection.

Increasingly, game developers are using virtual currencies to monetize their handset or tablet software app, rather than offering in-game items or pay-per-download titles. This can increase user engagement with the game, as once the virtual currency is purchased, it can only be spent within that game.


Developers are now beginning to focus more on the continued engagement of their game, as they realize that creating a high-quality game is typically not enough to guarantee a return on investment.

"When we consider that only a small amount of gamers actually make in-game purchases, and those that do typically only spend a few dollars, it becomes apparent that there are a small proportion of consumers spending thousands annually on these virtual currencies, who subsidize the game for everyone else," said Siân Rowlands, analyst at Juniper Research.

Furthermore, it's now believed that free-to-play casino style games were beginning to see increased profits from in-app purchases, even though users are not playing for real money stakes.

Games such as Slotomania, Poker by Zynga and Texas Poker were seeing a sharp increase in the number of users buying chips and other in-game items -- in some instances spending as much as $100 in one transaction, to allow for a lengthy, uninterrupted gameplay session.

Other key findings from the market study include:
  • The majority of in-game purchase revenue on tablets will be made in the Far East & China and North America, which will account for over 86 percent of user spend in 2016.
  • Smartphones will remain the primary device which users make in-app purchases on, with more than $6 billion spent on them in 2016 -- that's over double the amount spent on tablets.

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