The largest segment of the gaming market, mobile games, had another banner year in 2016. Overall, worldwide revenues for mobile games topped $36 billion according to analyst firm, Newzoo, which was 82 percent of the overall app market. A number of trends arose this year that are of great importance for marketers to succeed in an increasingly crowded market.
Mobile Games Growth Continues
Mobile represents the largest sector for gaming, and it’s a strong market, which is normally something that helps all related companies. However, mobile games are much more geographically diverse than other types of games, which makes the growth picture more complex. Overall, growth in mobile games has slowed in the US, and Newzoo predicts this growth will continue to slow in the coming years, leading games to become a lower overall share of the total app market revenue, dropping from 82 percent in 2016 to 72 percent in 2020.
Growth in mobile games has slowed in mature markets like Japan, Korea, and the US, while there’s continued strong growth in China and Southeast Asia. China overtook the US in total app revenues in 2015, and that share continued its expansion in 2016.
The two leading operating systems (OSs) in mobile, iOS and Android, continued to show divergence. Apple’s iOS saw decreased market share as smartphone sales slowed in mature markets, while the strongest growth in emerging markets was in low-end Android smartphones. Still, Apple has the highest market share of all mobile devices with 34.8 percent, Samsung is #2 with 23.3 percent, followed by Huawei, Xiaomi, and Lenovo. Apple devices are the most-used in North America, the Middle East and Africa, while Samsung leads in Latin America and Europe.
Game revenues continue to be strong on iOS, despite the lower market share. Android users are far more numerous but don’t seem to spend as much. Additionally, the fragmentation of the Android market continues to hamper app developers.
Brand Extensions Rule
Brand extensions prove to be a very compelling strategy for mobile games in 2016, as some of the top brands continued their time among top-grossing apps by extending their brands. King Digital’s mega-hit Candy Crush Saga was extended with Candy Crush Soda Saga, and now Candy Crush Jelly Saga. The brand extensions have proven to be solid performers for King Digital, and the Candy Crush line continues to provide the bulk of the company’s revenues.
Supercell used a different tactic in extending its huge Clash of Clans brand. It took the characters and setting and used it as the backdrop for an entirely different game with Clash Royale, which is a card battle game similar to Hearthstone. Interestingly, Clash Royale has been consistently ahead of Clash of Clans in revenue, with some analysts speculating that Clash Royale has cannibalized some of the Clash of Clans audience. Still, the revenues of the two games put together are massive, and they are more than Clash of Clans produced alone.
Machine Zone’s approach toward extending Game of War: Fire Age was to launch Mobile Strike, a strategy game that uses Arnold Schwarzenegger as its celebrity spokesperson. In reality, it’s essentially a reskinned version of Game of War: Fire Age, set in a modern battlefield. While that may have taken away some users from Game of War: Fire Age, the two games together are doing quite well. Another successful example of brand extension, though in this case, it shows that game mechanics and gameplay can be an important part of your game brand.
Pokémon GO Shocks Mobile Gaming
The biggest surprise of 2016 in mobile games is clear: Pokémon GO. It launched to great fanfare over the summer, garnered over 500 million downloads in two months, and over $600 million in its first 90 days. Despite a big drop in users since releasing, the game continues to perform, occupying the #1 position in October for mobile game revenues, according to SuperData.
Marketing Mobile Games Gets Harder
Overall, the relentless advance of user acquisition costs continues. As Michael Chang, SVP of corporate development for NCsoft said recently, he expects developers to budget “$20 to $40 million in first year user acquisition marketing.” Absent that sort of budget, marketing has to get creative in order to find the necessary audience for a mobile game, and creative, powerful marketing strategy is at least as important as a great game design.