Analyst firm Newzoo has released its annual Global Mobile Market Report, which details the current trends in the mobile hardware and gaming space. Both continue to grow with Asia being one of the biggest markets for both.
Most mobile game players are casual
The report states that the total number of smartphone users around the world will grow by 8.3% year-on-year to 3.2 billion this year, which China accounting for over a quarter of that figure. That means that the total number of active smartphones will reach 3.8 billion worldwide. Of these devices, Apple and Samsung will continue to be the most popular brands, but Newzoo notes that Chinese smartphone makers such as Oppo, Vivo, Huawei, Xiaomi, and OnePlus are steadily gaining global prominence.
Of these users, the number of mobile game players (those who played at least one game in the past six months) will grow to 2.4 billion in 2019, which is 128 million more than last year. However, Newzoo notes that these statistics measure the number of gamers in general, not the number of paying players.
Newzoo categorizes the majority of these players into the “Time Filler” persona, or those who play games to simply pass the time during a commute or some other activity, but don’t regard gaming as a major part of their lives. Half of all female mobile game players fit into the category while 30% of men fit into it.
Cloud Gamers, those who enjoy quality free-to-play or discount games, is the second most popular persona, which includes 21% of men and 16% of women. Newzoo notes that this category may grow in the coming years as cloud gaming platforms such as Google Stadia will make high-quality console and PC games playable on mobile devices. The lowest-indexing persona is the Conventional Player, who usually prefer to play PC and console games.
Global mobile game revenues in 2019
Mobile game revenues are expected to reach $68.5 billion this year, with almost half coming from the iOS App Store while Google Play will account for 35.8%. Third-party Android stores will account for 15.3% of the market, representing the remaining $10.5 billion.
About 19.4 billion games were downloaded during the first half of 2019 across the iOS and Google Play platforms. Role-playing titles being the most popular genre in terms of revenue, covering 35.5% of the total market. Tencent (OTCMKTS: TCEHY) was the top-grossing publisher, generating 9.4% of the total game revenues from both iOS and Google Play. It is followed by King (Activision; NASDAQ: ATVI) and NetEase (NASDAQ: NTES).
Newzoo states that mobile game revenues are on track to reach $95.4 billion in 2022. In that time, revenues generated by the iOS platform – which used to account for more than half of total global revenues – will shrink to around 44% as competing stores such as Google Play steadily grow. Google Play’s revenues are predicted to increase to $35.5 billion by 2022, or 37.2% of the market. Third-party stores will experience even higher growth, reaching $17.9 billion in 2022, mainly driven by China, where Google Play isn’t available.
The emergence of competitive games such as battle royale titles Fortnite and Playerunknown’s Battlegrounds, in addition to MOBAs and Auto Chess (aka Auto Battler) games are helping to drive in-app purchases.
The future of the mobile games market
The report states that the total number of smartphone users will reach 3.9 billion by 2022, with much of the growth driven by emerging markets such as the Middle East, Africa, Latin America, and Southeast Asia.
Additionally, given Asia’s mobile-first culture, the next big mobile game innovation is likely to come from the region. Although Western gamers are typically less engaged with mobile games than Eastern ones, Asian trends are likely to be adopted by Western gamers. Newzoo points to the success of games such as Puzzles & Dragons as an example. Western game publishers are already taking note of this, with Zynga (NASDAQ: ZNGA) acquiring 80% of shares in Small Giant Games in 2018.
Two technologies are likely to have major impacts on the mobile games market. The first is cloud gaming and the other is 5G connectivity.
With cloud gaming, mobile users will be able to play PC-quality games from their devices without having to purchase expensive hardware. This could lead to further demand for larger screens on mobile devices, with the recent trend of foldable phones being an example.
At the same time, 5G is one of the industry’s most exciting innovations. It will no doubt become the next standard for mobile networks, providing faster and more reliable wireless connections than current options. Major carriers are already in the process up upgrading their hardware and the first generation of 5G devices are available now.
Although 5G is still in its infancy, this technology should complement the rise of cloud gaming nicely. Google (NASDAQ: GOOGL) is entering the cloud gaming market this fall with its Stadia service while Microsoft (NASDAQ: MSFT) is developing Project xCloud. Cloud gaming services may end up becoming an existential threat to video game consoles, marked by how console platform rivals Microsoft and Sony (NYSE: SNE) signed a Memorandum of Understanding in May 2019, vowing to work together in developing cloud gaming solutions.