$338 BILLION DOLLARS? Where’s My Money?
The global mobile gaming market is going to be worth more than $150 billion USD in 2023. It’s expected to reach USD 338 billion by 2030. By far surpassing other forms of entertainment as the most profitable sector.
Increasing mobile device penetration, rapidly urbanising (read commuting) populations, device technological advancements, 5G connectivity, diversified gaming experiences, a player base of people (85%) who don’t consider themselves gamers, and evolving monetisation models. It’s easy to see why the optimism and potential growth are so high.
But before we continue, it is important to understand how much money $338B actually is. People don’t really understand how big a billion dollars is, a million sure. A nice house in Canada sells for a million dollars. But a billion? I mean, we all hear about billionaires and they are (maybe not) normal people so a billion dollars seems like a thing that (extravagantly) wealthy people could have. So let’s break it down.
If you spent $1 per second it would take you:
10,708 years.
insert expletive here.
I don’t know about your company’s burn rate but that is something else. This is mindbogglingly incredible! What's my point?
My point is, as a publisher, you have to be asking yourself —
Where’s the money?
Era of Challenges
Despite the optimistic outlook for the mobile gaming industry, many companies are encountering significant challenges, from difficult to downright near impossible. Studio closures, mass layoffs, the majority of games not making it to market. Indie game developers, in particular, face an uphill battle in the mobile game industry, despite their creative potential and innovative ideas breaking into the market is exceedingly challenging.
One of the most significant challenges facing mobile game development companies is the saturation of the market. With millions of games available on various app stores, standing out from the crowd has become a daunting task. The sheer volume of games released daily makes it difficult for new titles to gain visibility and traction among players.
As the mobile gaming industry grows, so do the costs associated with game development. Creating high-quality, visually stunning games with engaging gameplay now requires substantial financial investments. This puts pressure on smaller development studios, making it harder for them to compete with larger, more well-funded companies.
Regulatory changes and increased scrutiny of the mobile gaming industry by privacy regulators have posed additional challenges. Some governments have imposed restrictions on in-game purchases, loot boxes, and advertising to protect younger players. Navigating these evolving regulations while maintaining revenue streams has become a complex issue for developers. The pressure to monetize games has led to a sometimes negative player experience. Frequent ads, pay-to-win mechanics, and loot boxes have sparked controversies and, in some cases, alienated players.
‘At (redacted) we are spending over $1 million a month on UA…’
Acquiring new players through advertising and marketing campaigns has become more expensive and less effective. As competition for user attention intensifies, game development companies must allocate a substantial portion of their budget to user acquisition, making it challenging to achieve a positive return on investment.
So to sum it all up. Where’s the money?
Yes, things are tough and costs are historically and prohibitively high but… $338B.
Where’s the money?
Is it all going into UA? Marketing? Marketplace fees? We know where it’s not going.
领英推荐
Monetization Evolution
While we may not know where the money is going, we know where we can get some. Monetization is a central issue in the mobile game industry and the key to survival and growth. It's crucial for developers to earn revenue, but the approach needs refinement and balance.
Game companies must balance between monetization and user experience. Frequent ads and aggressive in-app purchases can deter players. Finding unobtrusive ways to monetize games without compromising enjoyment is essential. In-app purchases are a potent revenue stream when executed properly. Developers should focus on providing value to players through these purchases rather than forcing them to buy items to progress in the game.
The industry needs to continue exploring innovative monetization models, such as subscription services that offer premium content or ad-free experiences. This can provide a steady stream of income and improve player satisfaction.
Another exciting avenue of monetisation is using first-party data to deliver a more personalised experience to your gamers. Utilizing first-party data can enhance the effectiveness of monetization strategies. Understanding player behaviour, preferences, and spending patterns can help tailor in-game advertising, delivering more relevant adverts to audiences more likely to click and install.
Admittedly there are some significant challenges to using first-party data. How do you collect it? How do you model it? Once you've modeled it, how can you monetise it?
Nefta has a solution if you are interested.
By continuing to refine monetization approaches, game companies can improve their chances of not only survival but also prosperity in this rapidly changing industry. The key to success lies in staying attuned to player behavior and preferences while embracing creative monetization strategies.
Conclusion
Somebody is getting rich. Which is great, it would be nice if it was spread around a bit more.
$150B in 2023 is a lot of money in a year marked with multiple studio closures, the biggest round of industry layoffs on record, and even big studios holding their breath.
From intense competition to rising development costs and regulatory hurdles, game development companies face a multifaceted landscape that demands innovation and adaptability. Success in this industry requires a deep understanding of players, a commitment to quality, and a strategic approach to monetization and user acquisition. As the mobile gaming industry continues to evolve, companies must navigate these challenges to thrive in this dynamic and ever-changing environment.
Then maybe, just maybe, someone will show you the money.
Nefta's innovative ad network monetises first-party data to unlock the value of your IOS opt-out users. Publishers can increase ARPDAU by generating higher eCPMs and marketers can get more installs and a higher ROAS by delivering their campaigns to users more likely to click. If you'd like to know more visit nefta.io or reach out in a DM.
More From Nefta