Mobile expected to drive game revenue to $100B by 2017
Asia fuels industry growth with nine of the top 10 game M&As of 2013
Consoles and handhelds may be heading into their eighth generation, but they’re no longer leading the charge with gamers. A new Digi-Capital report predicts game software revenues will reach $100 billion by 2017, with mobile and online games taking a 60% market share. That’s right: Roughly $60 billion in combined revenue given 23.6 percent compound annual growth.
Developing a mobile game? Look to Asia
Video games get a lot of press in the United States, but it’s Asia driving growth in mobile and online game sectors. The Digi-Capital report surmises Asia and Europe combined could take more than 80 percent of 2017 revenues if the following trends continue to gain momentum:
- 9 out of the top 10 game mergers and acquisitions (M&As) of 2013 had Asian buyers (up from 8 out of 10 in 2012)
- Mobile games and Asian activity drove $5.6 billion in M&As in 2013 (excluding Activision Blizzard buyback activity), up 29 percent YoY
- 13 out of 15 game IPOs from 2011-2013 were by Chinese, Japanese or South Korean companies
Shocked? Don’t be. It makes a lot of sense given the demand for mobile games in Asia-Pacific markets. Japan’s game publishers are masters of monetization, China is the world’s largest mobile market, and Chinese gamers pay to play. Consolidation means getting more games to these markets, more quickly, while building a stronger presence.
Domestically, Digi-Capital identifies Over-the-Top (OTT) messaging apps as a new disruption, “with Asian OTT platforms Kakao Talk, WeChat and LINE taking a significant share of top 100 app store rankings.”
Get your piece of the mobile game action
In 2014, there’s plenty of opportunity for mobile game developers to strike while the iron is hot. Last year alone games accounted for:
- 32 percent of mobile app usage
- 67 percent of tablet usage
- 72 percent of mobile app revenue
- 40 percent of mobile app downloads
However optimistic the picture, Digi-Capital managing director Tim Merel warns game developers to keep the long game in mind. “This is an elite marathon not a sprint, so long-term engagement performance is just as important as short-term success.”
Game devs will need to pay close attention to the game experience, pivoting when necessary and iterating quickly to retain players. Analytics and metrics will become increasingly important in driving game roadmaps for 2014 and in quantifying results for early stage capital pitches.
Think multiplayer when it comes to deployment
There are certain things you can control when taking a mobile app global. For example, ensuring proper localization of the game, app store descriptions and meta data, or using A/B testing to identify cultural preferences such as which graphical style gets the highest response.
You don’t even need to do the backend work. Game backend providers such as Kii provide full-blown feature sets, available in minutes through SDKs, so developers can focus on front-end gameplay and getting it in front of players. Scalability is built-in and no server code or maintenance is required.
Yet international marketplaces hold unique challenges, and distribution to China is particularly tricky. Latency for connections outside the country remain the biggest challenge, especially for the volume of API calls required by many games. Local cloud hosting is essential to ensure stability, and a local presence to handle app marketplace submissions, payment mediation and timely payouts doesn’t hurt, either. Larger game studios can explore expansion through physical offices. Indie developers and game startups may not have that luxury. Our advice: Scout out a partner to deal with the pain points and focus on making an awesome game.
Kii offers a full-featured, scalable game backend and is an official Unity partner for cross-platform mobile game development. Download the Unity SDK with a free Kii Cloud account at developer.kii.com