Five Trends In Mobile Gaming

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Eric Seufert, head of marketing at Wooga, gave a presentation at the Price Waterhouse Coopers Outlook conference in Amsterdam earlier this month on 5 Trends in Mobile Games. The Slideshare of the presentation is included here if you want to see all of the details of the presentation, including all of the charts.

Seufert led off by noting some salient facts about the current state of mobile games. Six out of the top 10 grossing apps are games, and four out of the top 10 top grossing apps (in the US) are published by two developers. These apps are, for the most part, not new — eight of the top 10 grossing apps were first published in 2012 or earlier, and Game of War and Farm Heroes Saga were first published in 2013. Part of this stickiness for the top apps may be explained by the fact that King Digital (publishers of Candy Crush Saga) and Supercell (publishers of Clash of Clans) are both said to be spending $1 million per day on marketing.

The growing footprint of major companies in the app space is a concern for Eufert. Four companies (Apple, Facebook, Google and Yahoo) own the apps responsible for generating 70 percent of the unique visitors to the top 25 mobile apps, Eufert pointed out, giving them an inordinate amount of sway in the app charts.

Eric Seufert – 5 Mobile Gaming Trends 2015 – PwC Outlook Conference October 2014 from Eric Seufert

 

One of the areas that should be of great concern for mobile game developers is the resistance of most of the user base to adding new apps. Eufert pointed to research showing that most smartphone users download zero new apps per month, and nearly half of all time spent in mobile apps is devoted to a user’s single favorite app. That makes the task of grabbing someone’s interest for a new game that much harder. The underlying implication here is that most users just aren’t actively looking for new games (or other apps), but only add them when they are prompted to do so for some reason. Figuring out a good reason for that is obviously a key task for game developers.

Some other aspects of the business for mobile game developers to consider, according to Eufert: Only 20 percent of brand advertiser’s budgets goes to mobile, and that is expected to hit 35 percent by 2018. Advertising opportunities are growing in low ARPU regions, Eufert pointed out, quoting Facebook as saying that the ARPU for an average user in the second quarter of 2014 in the U.S. and Canada is six times that of a user in Asia.

Overall, though, the mobile market is still growing, with mobile devices continuing to ship in huge number (1.5 billion in 2017, for instance). Mobile game revenues should exceed $22 billion in 2015, and growth is expected to continue strongly.

Acceptance of mobile advertising is also growing, opening up a significant revenue source for mobile games. It’s especially important for free-to-play games, which typically only monetize somewhere in the single digit percentages of their user base. Finding a way to monetize the other 98 percent of the audience would be a huge boost to the bottom line for game companies.

Here are the key trends Eufert highlighted in his talk:

1. Fundamental evolution of “App Install Ad” format
2. “App constellations” causing app store “chart position inflation”
3. Increasing overall monetization
4. Increasing platform lock-in
5. More franchise tie-ins

New verticals are beginning to move into mobile advertising, notes Seufert. He argues that improvements in technology like retargeting and deep linking will allow for better and more natural ad formats. Native ads are less intrusive, especially as they become more context-aware. Continued innovation in ad formats should improve the utility of advertising in games, and make them more acceptable to gamers.

Massive companies with several major apps (like Facebook or Google) are able to get their enormous audiences to download all of these apps, with these “app constellations” thereby causing “chart position inflation” and effectively moving most other apps down the chart. Where once those chart positions could potentially be acquired by advertising, that’s no longer an option at the highest levels.

Eufert notes that while tablet sales have been slipping, “phablet” shipments have been growing and may overtake both smartphone and tablet shipments eventually. This, Eufert argues, is a good trend for game developers, since gamers tend to spend more money on games that are played on bigger screens. Meanwhile, CPMs are trending upwards, which means more revenue from ads is in the future.

The trend towards platform lock-in, where operators are competing to keep developers in their proprietary tool chain, will continue, according to Eufert. Still, the way in which platform holders are competing is good for developers, since adding more tools and making platforms easier to use is a benefit for all.

Finally, Eufert sees the rising marketing costs and the chart position inflation trends as incentivizing developers to partner with existing, well-known IP to driver greater uptake on games. Examples include Kim Kardashian: Hollywood and The Simpsons: Tapped Out, which have both been highly successful due to the terrific audience base that the licensed IP brings to the game.

 

YouTube Stars Disappear For ‘Ouija’

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Universal and Fullscreen joined forces to give everyone the jitters before Oujia hits theaters on October 24. Leveraging an array of YouTubers like Kian Lawley, a member from O2L, Ricky Dillon, Jc Caylen and others, the campaign translated the suspense from Oujia onto YouTube while taking the YouTubers’ followers on a cross-social-network hunt for the wearabouts of a missing YouTuber.

It begins with  the YouTubers posting a video playing with an innocent oujia board. On October 5 some “found footage” was released on Kian Lawley’s YouTube channel showing he might be in dire straits. While usually active on all his Twitter and Snapchat, Lawley had practically disappeared.

 

It wasn’t until five days later when his worried followers finally heard from Lawley, but his followers still didn’t know where he was, but not without 17.3 million impressions of tweets to find him with #oujiawhereiskian:

Kian Lawley Oujia Chicago PartyFans gather for YouTubers and Oujia party.

The remaining YouTubers got together once more to hold a seance. The oujia led them to a haunted house in Chicago where 600 of their fans were gathered to celebrate his return.

The stunt generated over 5.6 milliion video views and more than 500,000 social engagements, crossing multiple social platforms like YouTube, Twitter and Snapchat to tell the same story. In speaking to [a]listdaily, an executive from Universal said “These platforms were leveraged because of their over indexing against the target millennial audience for Ouija.  Promotions on these sites help to drive interest and awareness in the film.”

Indeed, Snapchat’s first ever ad was a promotion for the film as we reported yesterday. The focus on mobile-centric platforms was not an accident. “Mobile presence was critical for this film due to the high use and penetration of mobile devices for the film’s target audience,” said a Universal representative.

As the film is targeting the 12-24 year-old female audience, the inclusion of Snapchat was key. In speaking to Variety, Doug McNeil, Universal’s EVP of digital marketing spoke about the campaign’s focus on influencers and their cross-platform fanbases:

“It absolutely met our expectations, and it was the right execution creatively.”

Programmatic, Meet Native

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As the mobile device becomes the defacto screen for media consumption, it is critical for marketers to have a plan of action to reach and engage mobile audiences. On one side of the continuum is programmatic, where ad serving decisions are made so quickly and with so much complexity of data that these decisions can only be made through the automation. On the complete opposite end of the spectrum is content the consumer chooses to watch; native ads, content marketing and influencer content. Programmatic advertising is low touch and high volume. Native is low volume and high touch.

At the upcoming [a]list summit on mobile marketing, panelists will discuss how to integrate these two seemingly disparate parts of the advertising spectrum. As the mobile device becomes the defacto screen for media consumption, it is critical for marketers to have a plan of action to reach and engage mobile audiences.

According to eMarketer the U.S. programmatic market is $10 billion in 2014, and that’s expected to grow to $20 billion by 2016. Today 45 percent of programmatic media appears on mobile devices.  By 2016 that will be 69 percent of all programmatic media.

It’s no surprise that programmatic media is the predominant way that digital display related advertising is bought these days. Significant infrastructure build-up for this type of buying, ease of use, accessibility by marketers and the ability to efficiently reorganize marketing activity has made the programmatic approach a key part of advertising’s future.

On the other side of things, an eMarketer study from earlier this year shows that native advertising on social channels is expected to reach $3.1 billion this year, and $5.1 billion by 2017.  While there aren’t definitive statistics on the growth of influencer marketing specifically, it is clear by the abundance of businesses and individuals in the space that influencer marketing is a growing and very important part of the marketing mix. Recent purchases of Fullscreen to AT&T, Maker to Disney and investment into Machinima by Warner Bros shows enthusiasm for this space.

For marketers the opportunity is connect the automation and data of the programmatic approach and pair it with the native gatekeepers of audience on the web.  These gatekeepers used to be publishers, app developers and ad networks.  While these entities still exist they compete with influencers who distribute content across the social web.

The programmatic and native ecosystems overlap when we see through to the audience influencers reach, connect them to unique device IDs, model for lookalike behavior, identify larger pools of similar users and market to them.

In other use cases, ION remarkets to campaign specific audiences based on mobile and desktop tracking capabilities available by third parties.  Finally, we use syndicated data tools to select a curated list of channels and serve influencer-created True View native ads across YouTube.  By bidding on a small selection of highly targeted YouTube channels (often the same channels who have created videos for the campaign), we are able to expand reach and scale on-demand video campaigns.

 

 

Creating the Hardcore Tablet Gamer

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While the mobile gaming market is already over $20 billion globally and growing rapidly, it’s achieved that level mostly with casual games, simple puzzles and action games. This is in precise opposition to the dominant games on consoles and PCs, where the vast bulk of the revenue is found in hardcore games like Call of Duty, FIFA, or League of Legends. Quite naturally, then, a number of publishers have been seeking to bring a deeper, more engaged style of gaming to mobile devices. Thus we see successful PC game publishers like Blizzard bringing their Hearthstone game to tablets as well as PCs, or Kabam making the transition from Facebook games to mobile with great success.

Bringing an established audience to a new and rapidly growing platform is not easy, but when you start with a large audience it’s not that hard to achieve at least moderate levels of success. When you try to tackle a genre that has not yet succeeded on mobile, and you’re a brand new company with no established audience, you are taking on a difficult mission.

CCO Stephan Sherman

Super Evil Megacorp is on that mission, and it’s one with daunting dangers and no guarantee of success. The stakes are high — a possible leading market position in the marketplace for mobile games among core gamers. The company’s first game, Vainglory, is an exploratory canary in a potentially vast and lucrative gold mine (not a coal mine, but grant me some metaphorical latitude). Amazing wealth could lie ahead, or a deadly gas that can fell the fledgling company.

Super Evil is attempting to create a multiplayer online battle arena (MOBA) game, the same type of game as the hugely successful League of Legends, on tablets and larger smartphones. “We’re here to help build a future where every tablet is perceived by players as a portable next-gen console,” says Super Evil on their website. Super Evil is packed with talent from top firms like Blizzard and Riot Games, Rockstar and Playfish, and the company has solid venture capital funding. Despite all the advantages, though, success is far from assured.

Stephan Sherman, co-founder and CCO of Super Evil Megacorp, and Kristian Segerstrale, COO and executive director, have been bringing journalists into the offices to try out their game Vainglory. After playing a couple of close-fought matches, it’s clear that Super Evil has captured the essence of the MOBA. The game’s engine is fluid, the graphics are top-notch, the basic design and gameplay loop is solid with a good range of strategies available to you. It’s also easy to pick up and play, with simple controls that are well-suited to the touch interface. What will take time to learn is the deeper strategies, the pros and the cons of all the choices available for different characters, how to adjust your strategy as a game unfolds in different directions. The process of doing that promises to be engaging enough to keep people around for a long time, which is the fundamental thing any free-to-play game must accomplish to get a reasonable amount of money out of players.

Super Evil is still polishing the game, refining the game play and adding more characters. Meanwhile, Vainglory has soft launched in Southeast Asia, beginning the hard work of the next phase of the successful game launch: Building an audience. For all the difficulty involved in creating a first-class, visually stunning, fast-paced mobile game, it’s matched or exceeded by the difficulties in creating a large, thoroughly engaged audience that’s willing to spend money on your game.

COO Kristian Segerstrale

For some reason, many mobile companies seem to treat the process of building and sustaining a community as something optional. It’s true that some communities have built themselves up with very little assistance from the developers of the game. Leaving that to chance, though, is akin to the all-too-often heard marketing strategy of “oh, it’ll spread virally” for mobile games. True, that might happen… and you could also purchase a winning lottery ticket, too.

Vainglory is developing its fan base, with some 25,000 posts in its forums already, and groups of dedicated players honing their skills. “The best teams out there can already beat our best players in house,” admits Sherman. That’s a good sign, speaking to the dedication of the still-new player base. Super Evil is working to create a welcoming atmosphere around the game, and keep toxic gameplayers from making the game’s community an unpleasant place. That’s a tall order, and one the company will need to continue working on for as long as the game exists.

One of the players in our test voiced the essential problem Super Evil faces: “They are creating a fun game for a market that doesn’t exist yet.” By which he meant that hardcore gamers, by and large, own consoles and PCs, but not tablets. Super Evil must either convince hardcore gamers to buy tablets, or find tablet owners willing to try a deeper game than the usual fare. A MOBA on mobile is also a difficult game to attract an audience for in that it’s a synchronous game —  you have to have six people ready, willing, and able to spend 15 or 20 minutes playing the game all at the same time. (Though not necessarily in the same place — the game will match you with other players of the appropriate skill level.) “We want to revive the LAN party,” said Segerstrale. It’s certainly fun playing the game around a table with other players, but that’s not going to be the default play session. Still, having the sort of exuberant in-person play could be a good marketing tool — imagine seeing three people at a table in a college dorm lounge having a terrific time. Wouldn’t you wander over to find out what all the laughing and shouting was about

Super Evil is looking to be in the right place at the right time. There’s about 200 million iPads in the market that can play Vainglory; the game also plays pretty well on the new iPhone 6 and 6 Plus, and in just a month there’s already about 30 million of those devices out there. It’s not hard to imagine in a year or two that Vainglory could be playable on 400 million iOS devices, and when (at some point) we see the seemingly inevitable Android version those numbers will probably double.

The history of electronic games shows that new platforms usually begin with simple games, and as the platform matures we get more complex games that tend to engage audiences more deeply. Mobile devices are undergoing this evolution now, and savvy game publishers are trying to find ways to create deep engagement on mobile while still attracting the broadest possible audience.

We have seen some successes with deeper gameplay on mobile already — Clash of Clans is the #1 top-grossing title on both iOS and Android, and Machine Zone’s Game of War: Fire Age is #3 on both platforms. Both of these games, while arguably not that hardcore, still offer deeper gameplay than the simple puzzle and casual action games that populate the rest of the top-grossing lists. These games have compelling gameplay that has managed to keep players engaged and throwing money at the game, and that’s a triumph of game design, not marketing. Once you’ve reached a high position on the charts, there’s not much need to spend more on marketing — companies are better off putting the resources into the gameplay.

Yet there are plenty of good games out there, and it’s certainly true that you’ll get the best sales when you combine a great game with great marketing. Super Evil is right to focus on gameplay first, but as that part of the puzzle is refined, marketing will become more important to the game’s overall success. Super Evil needs to find creative ways to bring in new players and keep them engaged for a long time, while it attempts to create a market for a genre that hasn’t gotten much traction yet on mobile. Keep an eye on Super Evil Megacorp as a harbinger of core gaming on mobile, and we’ll find out if the company’s efforts to find glory will be in vain or not.

Razer Founder Explains How To Capitalize On eSports Global Audience

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ESports events like Riot Games’ League of Legends Championship have been able to sell out World Cup soccer stadiums in Korea. With thriving leagues like ESL and MLG, and strong independent developers like Valve, Riot and Wargaming pushing pro gaming forward; there are more opportunities than ever before for brands to connect with elusive Millennials. Even with more mainstream brands like Coke, American Express and Papa John’s getting involved in eSports, there remain huge opportunities for core PC gaming companies to reach their audience.

Razer co-founder and CEO Min-Liang Tan has watched the evolution of eSports over the past decade. He explains why he prefers engaging with athletes on a grassroots level over advertising, and how the brand’s mice, keyboards and headsets have benefited from pro gamer sponsorships in this exclusive interview.

How did Razer first get involved with eSports?

We’ve been a pioneering supporter of eSports at Razer, and we passionately want to see it grow and succeed. Back in 2000 we sponsored the Cyberathlete Professional League with an unprecedented $100,000. We wanted to reward those people excelling in their field, and nurture a solid base on which eSports could grow. Since then, we’ve been a major partner with players and leagues all over the world and still continue to set the standard for eSports sponsorships in the industry.

How have you seen eSports evolve?

The best way to frame the evolution of eSports is to look at its incredible growth. eSports has evolved from local community events held at chain hotel ballrooms to massive global spectacles. In 2013, viewership across all eSports titles doubled, peaking at over 71 million people at the end of 2013. Prize money increased exponentially, with Valve’s The International 4 Dota 2 tournament prize pool reaching almost $11 million.

Because of the money involved, more individuals can consume eSports content on a wider scale, thanks to companies like TwitchTV and tournaments like Riot’s League of Legends Championship Series and DreamHack which create engaging, exciting content for the eSports fan. There are infinitely more opportunities today for sponsors (endemic and non-endemic), aspiring entrepreneurs, and content creators.

Looking to the future, a Super Data Research paper recently predicted that League of Legends will see a monthly active user base of 94 million individuals by 2015, and that in the same period developer Wargaming would reach a revenue of $590 million. Hundreds of eSports teams continue to spring up every month, driven by companies like Razer which look to support and develop the industry from the ground up through careful sponsorship and support. In short, all the numbers point to the continued growth and evolution of the eSports industry moving forward, and we fully expect more companies to jump on board for a slice of the pie.

What opportunities has livestreaming opened up for Razer and other sponsors?

The emergence of companies like Twitch has greatly contributed to the way we all view and interact with eSports on a daily basis, and like us they’re starting to invest significantly in the future of the industry. There are all kinds of content available at our fingertips now which enables players to make a name for themselves and show their value to potential sponsors. Likewise, tournament directors who previously attracted the attendance of people a few towns across, now reach millions across the globe.

What have you learned about the power of working with eSports teams and players?

Right now Team Razer consists of over 300 players spread across 28 teams and 20 countries, so it can be a challenge at times, but ultimately, it helps us create better products that help our millions of fans enjoy their games more. We have a beta program for unreleased Razer devices that gets them in the hands of some of the best players in the world first. We solicit feedback from those players, and ultimately, we’re able to create a better final product. We’ve had all kinds of suggestions for product improvements from this program. It’s a great way to bond with some of the teams, and it helps us to work with them and the video game industry as a whole.

What opportunities have the transition of eSports from LANs and hotel ballrooms 10 years ago to selling out NBA and World Cup stadiums today opened up for brands?

While still a relatively young industry, eSports has shown incredible growth the last few years and provides potential sponsors a number of great opportunities to get involved from the ground up. New research by Super Data Research shows a monthly figure of 70 million unique individuals watching eSports across the world each month, rivalling even the most popular sports in the world. In terms of prize money, this year’s The International 4”saw a vast prize pool of $10.93 million, so there’s plenty to play for.

For us, eSports is in our history.  We’ve been supporting competitions in the industry for many years now, since the earliest tournaments started offering significant prize money to competitive gamers. Teams are interesting because of the personalities that resonate with other players – people like Peter “Doublelift” Peng from Counter Logic Gaming, or Lee “Flash” Young Ho from KTRolster. These guys are hugely famous in their own right and command the respect of hundreds of thousands of fans across the world.

With the popularity of livestreaming, what positive impact would you see with more eSports on TV in the U.S.?

Channels like ESPN have already started showing live eSports for events like The International 4, which is awesome to see. By entering TV, eSports would have a chance to reach more people, which we see as an eventuality given the enormity of the gaming community. There are already dedicated video games channels in other parts of the world that are insanely popular. That being said, eSports doesn’t have to migrate to conventional TV in the U.S. to be popular. It’s a quickly growing industry with a vibrant audience that’s captured online.

ESports is global. How has that helped your company reach a worldwide audience?

Pro gaming is absolutely integral to what we do here at Razer so we’ve been actively partnering with and supporting numerous tournaments and players – from small LAN-Parties up to top international events like the DreamHack Open, the Intel Extreme Masters, the World Cyber Games and many more since 2005. We strongly believe that the gear we currently make, which has undergone extensive testing from our professional players, is of such a high standard that both professionals and casual players can equally benefit from the advantages our hardware provides.

How much room do you see for new eSports beyond the popular games out there today?

We’re always really excited to see new competitive titles come through and we work regularly with developers on new games to try to gauge their competitive viability, in both how the games are played, and how they may be received by an eSports audience. We’re always looking to bring in fresh talent to Team Razer and grow the ranks – we don’t just focus on the most mainstream games. There’s a ton of interesting content coming out of the indie development community so we like to keep an open mind and grow and support newly emerging communities that might become the next big thing.

What role do you see leagues like ESL and MLG playing moving forward?

Leagues of this nature are the bread and butter of our community in many ways: they drive the competitive environment for amateur and professional players, and having this structure is crucial to the growth and development as eSports as a whole. Aside from these two specific leagues there are dozens of others of tournaments throughout the year to keep eSports athletes on their toes, with a whole heap of prize money up for grabs. Tournaments like this continually improve their production quality, and therefore the number of fans consuming their content. It’s an upward trend, and we’re excited to be involved from the ground level and on up with regards to eSports as a whole.

Facebook Now Calls Itself A ‘Video Platform,’ Pushes Atlas, Mobile

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by Jocelyn Johnson

Facebook kicked off IAB UK Upfront week with a 100 attendees. A modest presentation, Facebook began the morning with an agenda to push mobile and demonstrate the value it provides in enhancing television programming. But the focal point of the event was actually on how Facebook, and its owned properties like Oculus Rift, WhatsApp, LiveRail, and Instagram, as well as native Facebook video, present a large opportunity for brands.

To start, Facebook’s managing director of the UK and Ireland, Steve Hatch, was bullish about Facebook’s future growth in the UK market on the heels of expanding the regional team to more than 500 employees. Eighty of those are engineers dedicated to building advertising products for not only the UK market, but for global application as well. Hatch also noted how the UK is leading in digital, calling it the “most sophisticated market in the world.”

As we reported earlier in the week, a study from the IAB UK notes that in the first half of 2014 alone, there’s been a 16.6 percent  increase in digital ad spend in UK with  mobile video ad spend alone rising 196 percent year-over-year. Video advertising on the web and mobile grew by 59 percent year-over-year to £202 million.

For Facebook to compete with ad giant Google, developing an ad product that spans its recent product acquisitions, and provides data for digital marketers has been an essential focus. Atlas, which Facebook acquired from Microsoft, does exactly that and helps Facebook close in on Google’s monopoly on the ad market.

Tap into the mobile surge and Facebook’s ability to help virality (see: “Ice Bucket Challenge”) much in the way YouTube does, Facebook, with the help of Atlas, now has a competitive ad product.

While video was not as front and center as I’d anticipated, Facebook did promote its native video-ad unit. That said, the company made a weak differentiation between a standard video ad and the new “premium video” ad unit that simply includes a carousel of recommended content below the video.

And when prompted about the future of Instagram video ads, Instagram’s head of marketing science for Doug Fraser was terse, stating that the main focus right now is to ensure the strong rollout of the static (photo) ads in the UK and other markets — though he did note that Instagram is testing a video ad product in the U.S.

Facebook’s overall delivery lacked the big-bang Hollywood feel but drove home its message well.

The biggest surprise, however, hit the audience toward the end of the presentation when Claire Valoti ended Facebook’s presentation by reiterating, firmly: “We are a video platform, so please remember that when doing your video planning.”

Facebook’s pieces seem to be falling nicely into place to be able to take on Google and YouTube.

—

For more of Jocelyn’s thoughts on the inaugural IAB UK Upfronts, click here.

This article was originally posted on VideoInk and is reposted on [a]listdaily via a partnership with the news publication, which is the online video industry’s go-to source for breaking news, features, and industry analysis. Follow VideoInk on Twitter @VideoInkNews, or subscribe via thevideoink.com for the latest news and stories, delivered right to your inbox.

NPD Retail September 2014: Hardware In High Gear

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The pattern is repeating itself once again, but this time the numbers are bigger: In North American retail stores, console sales rose by 136% (from $183.4 million to $432.7 million), but software sales sank by 36 percent (from $754 million down to $481.2 million this year). Granted, September 2013 was an exceptional month when you think about the massive sales of Grand Theft Auto V, so it’s logical that September 2014 would suffer by comparison. Still, it’s worth remembering that there’s not much profit in those game console sales, and the real profits come from the software sales.

The information that Wedbush Securities analyst Michael Pachter provided earlier in the week, that Microsoft beat out Sony in terms of console sales, turned out not to be true, at least according to Sony.

“PlayStation led the month for next generation software, including selling the most copies of Madden NFL 15, NHL 15, and FIFA 15,” Sony Computer Entertainment America brand boss Guy Longworth said. “Thanks to the support from fans and the overwhelming popularity of the limited-edition Destiny PS4 bundle, PlayStation 4 won the month of September, with PS4 nearly tripling its August sales,” said Longworth. Estimates are that the PS4 sold close to 550,000 units in September.

That’s good news for Sony, which likely has Microsoft gritting its collective teeth and vowing to try harder. Still, the news is good for hardware manufacturers all around. “Since February 2014, monthly sales across hardware, software, and accessories have increased each month versus the prior 2013 monthly sales,” said NPD’s Liam Callahan. Year-to-date sales of hardware, software and accessories are up 7 percent vs. the same time period last year (January – September).”

The rise in hardware sales was given some detail by NPD, while of course staying away from precise numbers. “Hardware growth of 136 percent vs. September 2013 is the highest growth rate seen this year and, as seen in previous months, was driven by new console hardware sales of PS4 and Xbox One,” noted Callahan. “Console hardware, specifically, was up over 200 percent versus September 2013.”

The hardware sales were primarily that of the latest consoles. “Eighth generation console hardware represented over 85 percent of overall hardware sales in September, which is the highest percentage seen in a single month since the PS4 and Xbox One launched in November 2013,” Callahan pointed out. Which merely points part of the major decline in software – with fewer people buying or playing older consoles, games which had once been reliable sellers are slowing down.

Still, when it comes to the software, Callahan tried to sugarcoat the bad news. “It is important to note that September 2013 was the best performing September on record for new physical video game software sales, driven by the launch of Grand Theft Auto V, therefore making for difficult comparisons for this September to last;” Callahan said. Sure, but publishers are still unhappy with the way last-generation software sales have slowed, and that the new crop of consoles isn’t creating a software boom yet to go with the impressive hardware sales.

The biggest event in software for the month was clearly the launch of Destiny, even though the critics and fans have been somewhat disappointed so far given the reviews. “The launch of Activision-published and Bungie-developed Destiny in September 2014 proved successful in a number of ways,” said Callahan. “Year-to-date through September data it is the top-selling video game on a unit basis, making it the most successful launch of the year so far as well. But an even more prestigious feat was the fact that Destiny had the best launch month of all-time for any new IP in video game software.” Of course, the sell-in was not coupled with an equally impressive sell-through. But Bungie is hard at work rolling out changes to the game along with more content, and the game should be getting better from hear. How Destiny responds sales-wise over time is another question, and it will be interesting to see how the product fares on the bes-seller lists over the next few months.

Callahan provided a more detailed comparison of last year’s sales versus this years. “Demonstrating the size of Grand Theft Auto V’s success last year, the total units across the top 10 games this September totaled only 59 percent of the top 10 games last year,” Callahan noted. “Interestingly, when taking out Grand Theft Auto V and Destiny, sales increased when looking at top 2 through 9 games only. This is an indication that sales decline this year were rooted in a poor comparison to last September’s behemoth, Grand Theft Auto V.”

Callahan also noted one particular PC title had a good month:“The launch of EA’s Sims 4 ranked ninth across new physical game sales and helped improve physical PC Game sales by over 40 percent over last September.” And, throwing a bone to Nintendo, Callahan tried to say the best he could about one of the company’s key titles: “Hyrule Warriors would make the top ten software list when ranked on an SKU basis, and ranked number 11 when ranking by top titles.” Yes, but we can also see that Nintendo is having a hard time cracking the top ten without stronger Wii U sales, though Super Smash Bros. for the 3DS handily made the #4 position.

The Accessories category also fared well in September, driven no doubt by strong console sales. “Video Game Accessory growth rate of 33 percent in September 2014 was the largest year-over-year growth so far in 2014, and was driven by strong double-digit increases across four accessory types: Point & Subscription Cards, Gamepads, Headsets/Headphones, and Power Supplies,” said Callahan.

September 2014 Top 10 Games (New Physical Retail)
1. Destiny (XBO, PS4, 360, PS3)** Activision Blizzard
2. Madden NFL 15 (360, PS4, PS3, XBO)** Electronic Arts
3. FIFA 15 (PS4, 360, PS3, XBO, Wii, PSV, 3DS)** Electronic Arts
4. Super Smash Bros. (3DS) Nintendo
5. Middle Earth: Shadow Of Mordor (PS4, XBO, PC) Warner Bros. Interactive
6. NHL 15 (PS4, XBO, 360, PS3)** Electronic Arts
7. Minecraft (360, PS3) Microsoft / Sony
8. The Sims 4 (PC)** Electronic Arts
9. Disney Infinity 2.0 (360, PS3, NWU, PS4, XBO)** Disney Interactive Studios
10. Diablo III: Reaper of Souls (PS4, 360, PS3, XBO, PC)** Activision Blizzard
**(includes CE, GOTY editions, bundles, etc. but not those bundled with hardware)

SuperData September 2014 Report: Digital’s Strong Growth

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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.

The Winner Of The Console Wars

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The news that Wedbush Securities analyst Michael Pachter broke earlier this week was stunning: Apparently Microsoft sold 325,000 Xbox Ones in September, beating out Sony’s 250,000 units of PS4’s sold (both numbers are for U.S. retail sales only). Sony has beaten Microsoft every single month since the two consoles launched last year, and the upset is stunning. Is this a fluke, or will Sony come back to #1 Can dark horse Nintendo ride on the back of Super Smash Bros. to retake the #1 slot Who will win the console wars this holiday season

Before you start placing bets, it’s important to realize that we already know who the winner will be, if you’re counting numbers of units. The answer isn’t Sony, Microsoft or Nintendo. It’s Apple, followed by Amazon, Google, Samsung and a few others — because tablets will be outselling any of the traditional game consoles by at least an order of magnitude (that’s 10x for those who don’t normally deal in astronomical numbers).

Wait a minute — tablets aren’t consoles! Maybe not in the traditional form factor, but in the minds of consumers who will be buying hardware this holiday, tablets will be considered right alongside of consoles. And most families will be buying one or the other — not everyone has the money or the desire to buy two pieces of hardware that can easily run into hundreds of dollars. Parents especially will be weighing consoles against tablets when making holiday hardware purchases, and traditional consoles have a number of disadvantages.

In order to understand how this might be the case, let’s look at the cost comparisons first, because that’s often where people start. In the $99 to $150 range, we have microconsoles like the Amazon FireTV and the new PlayStation TV, as well as other Android-based consoles like the Ouya. The PlayStation TV can play nearly any PS Vita game, plus with PlayStation Now it will have available a large number of old PlayStation games. Certainly in terms of deep games the PS TV has it all over its microconsole rivals — except for price. Games for the PS TV are going to be in the range of $20 to $40, for the most part. Meanwhile, the FireTV is getting an increasing number of interesting games, many of which are free or somewhere in the $3 to $7 range.

Compare either of those to Amazon’s new Kindle Fire tablets, which start at $99 for a 6″ tablet at $139 for a 7″ tablet, both of which have pretty nice screens and an excellent array of not just games, but books, movies, TV and music, along with parental controls. Or the FireHD Kid’s Version, which somes with added case protection and an unlimited 2 year if-it-breaks-we’ll-replace-it warranty. Of course, there are plenty of lesser known brand names in the same price range. Yes, these tablet consoles don’t have the same game, but there are thousands to choose from (mostly free or nearly so), and these things are portable, too. Handheld consoles like the 2DS for $130 or the 3DS for $150 have a good selection of great games, but again those games are going to run you $20 or $30.

Parents who aren’t terribly familiar with the types of games available may well choose tablets, based on the availability of low-cost games and the much broader utility and portability offered by tablets.

When you get into the $200 to $300 price range, you start comparing more premium tablets (like an iPad Mini or a Samsung Galaxy or a Google Nexus 7) with last-gen consoles like the Xbox 360, the PS3, and the Wii or even the Wii U. Again, the tablets have greater general utility and portability, while the consoles have the hardcore (but expensive) games.

At the high end of $400 to $500, you get into the top end of tablets like the iPad Air and begin comparing that purchase to an Xbox One or a PS4. The difference in games is stark – but an iPad is a go-anywhere, do almost anything kind of tool that will be a much easier sell to a dubious, non-game-playing spouse. And if you’re serious about gaming, what about Nvidia’s new Shield tablet and controller, designed for the hardcore gamer and also a great tablet

While the games seem to be a key differentiation, even that is eroding. You can now find older console games like the Final Fantasy series or BioShock on consoles, and more will be coming. Blizzard’s hot card game Hearthstone is racking up amazing numbers on mobile, and converting many hardcore gamers to that new form of console. Check out this list of 21 great games for iOS, and this list of 87 great games for Android — you’ll find plenty of familiar names there, as well as some terrific new ones. Great gaming experiences are right in front of you, even for hardcore gamers. Try Kingdom Rush out for some simple tower defense fun, but the strategy gets very interesting.

Even new games like Skylanders: Trap Team now have a tablet version identical to the console version, complete with Bluetooth controller — at the same price as the traditional console version of the game. Minecraft Yeah, mobile’s got a version of that. If you have kids in the right age range, the idea of a tablet where they can be off in their room playing Skylanders, liberating your TV for your usage, may be a killer app.

When we’re talking about winning the console wars, it’s really about numbers. Apple sold over 26 million iPads in the fourth quarter of last year, and it will likely do that again with new iPad models on the way. Xbox One or PS4 sales will probably be in the 2 million range, so Apple has them beat by ten times. Amazon will probably sell 10 million Fire tablets over the holidays, though it’s hard to tell since they never release numbers. But in any case, it’s clear that tablets will easily conquer hardware sales numbers.

Sure, but are tablets really gameplaying devices When Digi-Capital reports that 67 percent of tablet time is devoted to playing games on them, and it’s by far the most popular app category, I think we can say the answer is yes. And since 75 percent of all app revenue is coming from games, the billions of dollars in mobile gaming is looking pretty competitive to consoles. While tablet game revenue won’t be passing console game revenues for a while, the gap is closing.

The console wars are pretty much decided, and tablets are the winners. The only question for game publishers now is how they’re going to take advantage of it, and how fast they can move over.

Mozilla And Humble Bundle Bring Indie Games To Browsers

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The potential of games to run in any browser, anywhere, has been a dream for many years in the gaming industry. What if there were no massive downloads, finicky installation procedures, or demanding ports to different platforms? Developers could have an unparalleled reach for their games if anyone could play it just by going to the right web address.

Of course, the practical difficulties to implementing this dream were massive. The performance of browsers would mean that few games beyond a simple solitaire would be playable, and where’s the market for that these days? Fortunately, many people have been hard at work finding solutions, and the advent of the new WebGL announced earlier this year promised near-native speeds for browser-based games. Still, we’d have to see all the major browsers support that, and then more work on the part of game developers. And even if all the technical problems were solved, how would potential players find out about this?

 

Enter Mozilla, acting in concert with Humble Bundle, offering a package of indie games that will run right in your Firefox or other WebGL compliant browser (including Chrome) on Windows, Mac and Linux. The Humble Mozilla Bundle is powered by asm.js, and gamers can pay what they want, support non-profit organizations and seamlessly play games right in their browser.

If you haven’t been following the amazing success of the Humble Bundle, the site started as a way to generate some sales for indie game developers as well as raise money for charity by offering a bundle of games for a price picked by the buyer. The buyer can also pick the charity being supported, and vary the ratio of how the money is allocated between developers and charity. The concept proved to be a viral marketing smash, and continues today with bundles every couple of weeks, now having extended into multiple platforms and even other product categories. The Humble Bundle has raised well over $50 million in its four years, with over $20 million to charity.

As a marketing tool, the Humble Bundle has been a terrific way for indie developers to get exposure for games and generate some added sales. Now the technology is making it even easier to play these games. The [a]listdaily spoke with Humble co-founder John Graham and Mozilla director of product management Bill Maggs about the Humble Mozilla Bundle and what it portends for games.

[a]listdaily: Tell me about what the Humble Mozilla Bundle accomplishes.

John Graham: We are now able to take eight awesome indie games into the browser and make them playable right there. We’ve always wondered when that time would come. For other types of media, you just go there and the browser just handles it. You’re viewing or listening or watching right there. For gaming there’s been no real precedent for that, not when it comes to hardcore, accelerated PC gaming. This is an opportunity to really bring that same ease of use and make playing a game as easy as watching a video. That’s what gets us really excited. Mozilla has been working really hard creating the asm.js library that’s really making it all possible, so games can be recompiled for this system and run really nicely at near-native speeds right in the browser.

Bill Maggs: Mozilla has wanted to do this for a long time, the technology base has been coming together, and now WebGl is running everywhere, even on iOS 8. That’s a really important step. Now we can take the code that developers write in C++ and compile it directly into Javascript that runs in every browser, but is optimized to run in Firefox as well as other major browsers. It makes for the first-class hardware -accelerated experience that gamers really want.

[a]listdaily: The promise of WebGL is finally being delivered, isn’t it?

John Graham: We’re certainly excited about it, and this is only the beginning. We wanted to create that base level, and evangelize that base level of customer experience where you show up and you’re playing games in the browser, but there’s a whole wealth of features that’ll be very exciting for the future. In the future, the same way a video knows which device is accessing it across computers and types of hardware, to do things like detect resolution and give you what you want, there’s no reason games couldn’t do that to.

[a]listdaily: Potentially, then, you could have a game that’s playable on mobile platforms as well as PC by detecting the platform and changing the controls available, couldn’t you?

Bill Maggs: One thing that Humble has done that’s really pretty good is they’ve worked with a lot of their developers to get a standard approach that works for PC games that essentially abstracts the hardware in a pretty standard way. There are projects under way that we’ve done at Mozilla to make it possible for anybody with a game controller to just plug that controller into their computer and just have it work. A lot of these controllers are popular on console, it would be neat to have them usable in your browser too.

[a]listdaily: What are developers looking forward to with this technology and the Humble Bundle?

John Graham: We’ve found in the past when we do something new that shakes up the model a little bit, we tend to generate a lot of natural buzz around the promotion that we’re doing, and that’s something developers are interested in. We’ve built up some good will in general around cultivating new platforms. We’ve got nearly 100 games ported to Linux now, but this is a frontier that’s kind of like Linux but even larger in terms of the potential and ease of access for everybody. It really feels like the precipice is something huge, when you think about how many people really use a browser versus what really big user bases there are in the industry. Browsers are just so much bigger. We’re talking hundreds of millions of users, maybe billions versus less than a hundred million Steam users. How many of these would be gamers that would get into all this beautiful content that’s out there but just haven’t wanted to deal with the existing ecosystem

Bill Maggs: The technology is there, and innovative companies like Humble Bundle have figured out ways to build viral marketing events around great content that people just literally didn’t know was available for PC. We thought, what a great opportunity to take every single person who opens a home page on a browser to be able to identify what part of this big audience out there wants to play games this way. We thought it would be a novel idea to take one of the game developers in this bundle to make a playable game for us that we can put in the snippet. The entire 3D game, with all the assets and everything, only takes up 180K. When it comes out we think a lot of people will be blown away by it.