Analysis from SuperData CEO, Joost van Dreunen, follows:

  • Kim Kardashian: Hollywood earns $51 million in four months.
  • Upcoming expansion adds 600,000 to World of Warcraft user base.
  • Activision asserts dominance as digital console totals $82 million.
  • Rovio layoffs signify maturing mobile games market, totaling $297 million.

Total spending on digital games came in at $873 million in September, up 8.6 percent compared to the same month a year ago. After a slowdown during the summer months, consumer spending is picking up momentum as we close in on the holiday season. Most notably, social gaming revenues were up month-over-month, and mobile gaming is approaching $300 million in monthly spending in the United States. Activision’s dominance across digital platforms was palpable this month, as several of its key titles produced surprising results, driving digital console revenues to $82 million in September, and offsetting recent criticism.

Celebrity branding the next frontier for mobile games
After its success with Kim Kardashian: Hollywood, which has generated a cumulative $51 million in revenues since its launch in June, Glu Mobile announced it is expanding the title to Facebook. Hoping to maximize its appeal to a female gamer demographic, the company also extended its licensing agreement, including Ms. Kardashian West’s continued support in promoting the game via both social media channels and real-life appearances. The title’s success is expected to trigger a run on celebrity-based mobile and social games. So far, publishers like Zynga have been aggressively licensing slots games that feature well-known television series and films, like Sex and the City and Terminator. Instead of this blanketed approach, however, a targeted strategy and support of a single celebrity is proving highly effective. As the mobile games market begins to saturate, marketing costs have increased. Celebrities play an increasingly important role both in terms of driving marketing and monetization for mobile games, and we expect more celebrities to lend their name and social media prowess to mobile titles in the foreseeable future.

World of Warcraft user base grows ahead of November expansion
Combined with the official cancellation of the long-awaited Titan, which was expected to ascend to the MMO throne once World of Warcraft reached obscurity, Activision has been under pressure to release a next generation role-playing title. In anticipation of its fifth expansion, Warlords of Draenor, the publisher reported a 600,000 increase in its subscriber base, which is expected to reach 8.2 million by the end of the year. Meanwhile, the publisher is gearing up for the imminent release of Heroes of the Storm, challenging the current dominance of League of Legends (Riot Games/Tencent) and Dota2 (Valve) in the MOBA space.

Digital console surges to $82 million following major releases
Two major releases dominated September’s digital console charts. Activision’s highly anticipated new sci-fi space shooter Destiny was initially met with enthusiasm by consumers. However, player sentiment soured in response to repetitive gameplay, casting doubt on the title’s ability to reach its lofty goal of becoming the company’s next billion dollar franchise. Meanwhile, rival Electronic Arts showed its strength in the sports category with the launch of FIFA 15, becoming the second best-selling title on digital console in September. Finally, after the dust settled following Microsoft’s decision to acquire Mojang, the developer’s cult-title Minecraft still claimed the number three spot on digital console, indicating that the change in management did not negatively affect its popularity.

Rovio layoffs signify maturing mobile games market
With an enviable 200 million active players, Angry Birds is still going strong. But the game has seen a 24% drop since its peak in 2012. Despite this, Rovio managed to keep year-over-year revenues roughly the same, with $192 million in 2012 and $197 million in 2013. We’ve seen similar trends before with companies like Zynga, where revenues initially stay at the same level even as its user base declines, because the non-payers generally are the first ones to cycle out and move on. Over the past two years, the mobile games market has also seen the emergence and dominance of several new mobile game companies, most notably Supercell. By comparison, Supercell manages to generate $892 million in 2013 with a total staff of 132, compared to Rovio’s $197 million with a headcount of 800. Suffice to say that Rovio, while at first the undisputed king of the mobile games market, no longer can claim this position.

[a]listdaily Analysis

The rise in digital games comes in contrast to the continued weakness of retail packaged games, and it’s not a coincidence. Not only are some of the physical retail sales going directly to digital, but increasingly the innovative, interesting and popular titles are coming out in digital form. It’s hard to imagine Kim Kardashian: Hollywood doing a good business on consoles or PC, though it should do well on Facebook. The title’s huge popularity shows there’s a largely untapped market for games made addressable by the increasingly widespread popularity of smart devices. Licenses are a great way to reach these blue oceans of new game players, but the success of Kim Kardashian: Hollywood will be hard to duplicate. Other celebrities may have large fan bases, but the nature of their fans may not connect so well to the nature of the gameplay as it has in this case.

Activision is seeing some good signs with the rising popularity of Blizzard properties, but there’s still plenty of work to be done with Destiny to make it into the property that Activision is really looking to create. Still, regular releases and patches for Destiny shows that Bungie isn’t sitting on its hands by any means. The game will no doubt be a substantially different (and hopefully better) game is six month’s time, and in a year the differences will likely be amazing. Of greater concern is the continuing erosion of Call of Duty, or at least the lower sales that each successive title has garnered in the last few years, despite Activision throwing some of its best studios at the task, and plenty of marketing dollars. Hopefully Call of Duty Online in China can provide a strong new market for the franchise.

Rovio’s retrenchment is inevitable, given that its expansion hasn’t led to a corresponding expansion in the number of hit games it produces. Making a hit game is hard, and making more than one puts you into legendary status. Still, as long as Rovio can keep its costs in line with its revenue, it should be a sustainable business for a long time — but certainly not the competitor to Disney it once boasted of aspiring to become.