Industry analysis: The global mobile game market 2012

Abstract

The purpose of this report is to provide an analysis on the market dynamics in mobile gaming industry and recognize the key factors to success. The smart phone market is an extremely rapidly growing market which is dominated by two platforms iOS and Android. The tablets are changing the mobile game industry and many experts believe that tablets will be the new black. Android has larger user base, but iOS users are willing to use more money on mobile games. Furthermore, costs associated with developing to Android are smaller. Due to, among other factors this, iOS has only slightly lower break-even time. One explanation why iOS users are willing to pay more for the mobile games can be found from the user demographics. On average iOS users are older people with higher education and disposable income than android users. Game developers have started to use psychology to “optimize” the gaming experience and increase their revenues. One of the best known frameworks is called the Skinner effect. The Skinner framework explains the optimal rewarding system to increase game playing time. Using this framework console and computer game industries are tapping into the mobile gaming market. Mobile gaming differs a lot from normal gaming in two dimensions. The device creates certain limitation for game developers but more importantly the context that it is played is very different. Mobile games are played only half an hour daily on average in short sessions with low concentration level. We believe that this is the reason why simple arcade and card games are the most popular mobile games. However, these are not the top grossing game categories. With innovative pricing methods, action is the top grossing game category. Game developers use basically four revenue models: In-App-Purchases (IAP), advertising, pay per download and freemium. A clear trend in the market is towards the IAP model. This allows game developers to have revenues on every part of the game life cycle. Most of the top grossing games at the moment use this revenue model. Mobile gaming market has exceptionally high competition as the barriers of entry are very small and getting funding at the moment is relatively easy. However, the largest players have almost unlimited resources compared to the one-man amateur game developers. The consumer has huge power over the game developers as it is crucial for game to get to the top 25 list to make it big. Consumers can use word of mouth, try games on friend’s mobile device and try the game before they make the decision to purchase. Designing a successful game is more of an art than science. However we were able to recognize that the mobile games should be quite simple and should not have too much text. In addition, most of the top 100 selling games use cartoonish style artwork. The storyline is not a good selling point as mobile gamers play games in short bursts. However, we see that the luck is one of the largest components in the success of a mobile game.