Mobile Gaming – Everything to Play For
A brand new and increasingly popular category of business, Mobile Gaming, has taken the market by storm. Three interrelated components of the converged wireless world have given rise to its exponential growth and rapidly increasing popularity:
- Increased availability of wireless broadband on cellular and Wi-Fi
- Abundance of reasonably priced smartphones and tablets
- Easy accessibility to app stores that expand the functionality of mobile devices
Mobile Market Developments
Mobile gaming is a global phenomenon but because it is leading the world in 4G, LTE and smartphone penetration, the U.S. market is taking off more rapidly, as indicated by the following developments:
- Forecasts indicate that 4.3 billion smartphones and 1.2 billion tablets will be sold in the U.S. over the next 5 years. These devices have transformed daily habits, enabling mobile entertainment – and gaming in particular - to become an integral part of everyday life.
- ComScore saw gaming usage increase by 77% in 2011 in the U.S. where 31% of mobile users play games on their devices, and 27% in the 5 largest European countries. Gaming is the number one entertainment activity for tablet users in the U.S.
P.J. McNeally, of Digital World Research, concluded: "Gaming is now a 'need to have' category, not a 'nice to have' category for mobile devices, whether they be tablets or phones.”
Shifting Business Models
The impact of these developments is that the industry’s value chain and the way that games are sold are being forced to change with the adoption of the new “freemium” business model in the mobile environment. The “freemium” model provides the initial game for free but the user is then charged for subsequent in-game purchases. Currently incremental revenue is only generated by about 5 -10% of active game players and this will have to increase if existing games companies are to survive.Continued on the next page