Analysis from SuperData CEO, Joost van Dreunen, follows:

  • The US digital games market grows to $1.1 billion in April.
  • Legacy publishers report $2 billion in combined digital revenues.
  • Top mobile publishers consolidate and raise barriers to entry.
  • League of Legends’ mid season invitational marks eSports growth momentum.
  • WEBINAR: Join our state-of-the-industry discussion as preparation for E3.


The US digital games market grows from $0.96B to $1.1B in April.
Overall, the digital games market in the United States performed well, growing well over 15 percent in April compared to the same month last year. In line with earlier expectations, the social games market further declined as the average spending per paying user dropped below $40 for the first time in over six months. Mobile broke a new record with more than 147 million Americans playing games on their smartphones or tablets in April, allowing monthly revenue to reach $380 million, up 13% from the same month last year. Pay-to-play MMO games showed a decline, too, as the overall US subscriber base dropped 18 percent since its peak late last year. Finally, the long-awaited release of the PC version for Grand Theft Auto V (NASDAQ: TTWO) improved the overall PC DLC market, selling 441k copies in the United States.

Top publishers consolidate and raise barriers to entry for mobile game development.
Following the announcement that Chinese gaming behemoth Tencent (OTCMKTS: TCEHY) had purchased a 15 percent stake in Glu Mobile (NASDAQ: GLUU) for $126 million, the latter’s shares jumped 23 percent. The news came just a few weeks after Glu Mobile signed an agreement with several new starlets, including Katy Perry. In particular, a celebrity’s ability to funnel traffic to the games has proven effective in offsetting user acquisition costs and improving retention by regularly posting updates on their Twitter feeds. To that end, it appears that the social media presence of singers, actors and other famous folk plays an increasingly important role in obtaining the lucrative agreements with content developers. Kim Kardashian, for example, receives 47.5 percent of earnings generated by Glu’s Kim Kardashian: Hollywood, according to company filings. The partnership with Tencent provides Glu Mobile the necessary capital as mobile game development has become more expensive. But it also gives it access to the growing mobile games market in China, which is on course to grow 19 percent year-over-year to $3.6 billion (2015E) and expected to soon reach 800 million monthly active users.

League of Legends’ mid season invitational marks eSports’ growth momentum.
Competitive gaming continues to be a flourishing marketing tool for publishers like Riot Games and Valve as a growing audience of eSports enthusiasts watches the matches online or attends them in real life. Following the success of its worldwide championship last year, Riot Games added a mid-season invitational this year, hosted in Tallahassee, Florida. The victory by Chinese team EDward Gaming over the powerful Koreans from SKTelecom T1 deserves mention as it meant a defeat for the long-standing favorites. As watching competitive gaming becomes a more common activity among consumers, participating teams are starting to build up a reputation and add a layer of friendly rivalry in and outside the game. In response, a growing number of other publishers have started to organize tournaments around their own games to increase their visibility and improve audience retention. Currently, the global market for eSports attracts 134 million viewers, and totals $612 million in spending across corporate sponsorships, advertising, publisher investments and direct consumer monetization.

Legacy publishers report $2 billion in combined digital revenues.
Judging from earnings reports released by several of the publicly-traded publishers, it is clear that their transition to digital is well underway and, in some cases, is keeping their traditional publishing business afloat. Activision (NASDAQ: ATVI) reported $538 million in digital revenue for the quarter, about 77 percent of the total, despite a disappointing slide in subscribership for World of Warcraft from 10 million to 7.1 million. The announcement of a June release date for its hotly-anticipated Heroes of the Storm leading to 11 million signups, the progress of its China-focused Call of Duty Online, and the announced stand-alone StarCraft expansion pack indicate that the publisher is looking to expand its current digital earnings. For Electronic Arts (NASDAQ: EA), digital grew 9 percent year-over-year and accounted for 67 percent of overall revenue, for a total of $602 million. Its most recent title, Battlefield: Hardline, performed well across platforms. As part of one of EA’s strongest franchises, the game presents an unproven innovation on the shooter game genre, but the initial signs are promising with well over $51 million in digital revenue in the first month of its release. It perhaps presents a first answer to the question of how Electronic Arts will offset its increasing reliance on licensed games, like the upcoming Star Wars title, which are financially far less interesting from a profit standpoint.

Square Enix (TYO: 9684) generated $933 million in digital revenues, representing roughly two-third of earnings for the quarter. Titles of note for Square Enix include Tomb Raider, Just Cause 3 and Deus Ex: Mankind Divided, each of which are expected to feature additional digital content. For Ubisoft (EPA: UBI), around 65 percent of Q4 earnings come from digital, for a total of $124 million. (At time of writing Take-Two Interactive (NASDAQ: TTWO) had not yet reported its earnings.)

WEBINAR: Join us as we preview this year’s E3 conference in Los Angeles.
On May 29th, SuperData CEO Joost van Dreunen will present his view on the current games market. Topics will include: digital console adoption, competitive gaming, mobile user acquisition, diversity, and East vs. West. Yes, it’s free, but seats are limited. Sign up is now open: