As the console industry becomes increasingly expensive, online and mobile games become increasingly attractive to publishers. Tim Merel, director at IBIS Capital, in fact sees revenue from mobile and online games surpassing consoles in five years.
The video games industry is big, getting bigger and changing, with console game costs, revenue and risks accelerating and online/mobile games growing and fragmenting the market. Investment dynamics are entering a new phase, with growth investment opportunities in online and mobile games, as pure console sector growth is flat (and risky). Today online/mobile games generate around 1/3 of all games software revenues globally. In 5 years time they are forecast to generate 50 percent of all games software revenue, or around 1/5 more revenue than pure console games! Whether you have faith in the forecasts or not, CEOs and senior execs from the major US, European and Asian publishers all tell me that this is what keeps them awake at night,” Merel commented.
“What excites me about the online/mobile games markets is that they are both high growth and profitable, which is pretty rare, he continued. The leading competitors are growing revenue 100 percent+ annually while also delivering 20-30 percent EBITDA margins. Coupled with a fragmented industry structure, no real market dominance and clear strategic exit options to the major video games and media companies, the time for investment is now.
He also notes that the business structure of traditional publishers isn’t well aligned with mobile and online publishing and that venture capital is increasingly spurning console companies for online and mobile.
Source: IndustryGamers
