Smartphones/Tablets – Sky is the limit?
Most people remember the first game on a mobile phone; Tetris, and probably still play it from time to time. Three years later Nokia followed up with Snake, which also became an instant success and is one of the most-played video games and can be found on more than 350 million devices worldwide. Now, twenty years later, you have more than 1.30bn mobile gamers worldwide and the expected growth rate for the next three years are 18% for Western mature markets and 42% for Asia, Eastern Europe, MEA and LATAM combined. If we look at the gaming market in general, including Console/PC Games, Tablets and Smartphones is the only segment that is prospected to increase during the next three years. It’s forecasted that the Global Game Revenues will exceed $102bn by 2017 (Source: Newzoo).
The Free-to-play (FTP) business model allows consumers to spend more time on games, and it’s more accessible than within the Console Game segment for example. In the end this is the only way to get non-paying gamers to open their wallets and start their spending. Tablets and Smartphones are quickly becoming a necessity for global consumers giving the developers a potential global mass audience. By using this business model the developers are allowing users to try the product (game) before investing money in it. Additionally it’s the most dominant business model for mobile, occupying over 90% of global revenues. (Source: Newzoo)
Time- and money spending
Various reports show that users keep playing games because of rewards that they obtain throughout the game. It gives them an inner positive emotional response, which the Developers try to trigger when making the game. These reward systems that they create encourage users to repeat this behavior, the feeling of having achieved something.A determine factor for further growth in the gaming industry is the time that a consumer is spending playing the games on his/her Smartphone/Tablet. This is what ultimately represents the entertainment value that the game has. If a consumer is spending a lot of time playing the game the chances of them spending money and dedicate even more time on it is higher. (Source: Newzoo)
Business Model Approach
From a developer’s point of view, there are various approaches of entry to take into account when rolling out the game in question. It would be necessary to take a decision for whether they should charge for the game or go for the FTP model and target non-paying users. In order to go for the first option there would be necessary to already have a brand name for the users to recognize the game and be willing to pay for it. Otherwise it would be wisely to build up a user base and climb up the charts. When launching version two, if you have the right acknowledgement by the users, you can change business model.
Business Opportunities for Advertisers
If you look at this market from an Advertisers point of view there is without a doubt big opportunities within this Gaming market, with more than 1.30bn gamers worldwide. With the FTP business model being the most common one, the developers needs to earn their money somewhere else and that’s either through in-App purchases or in-App advertisement. This would mean that each game or application that gets released is a potential new traffic source for the Marketers. There are various methods that a Marketer can use when doing mobile advertising. More information can be found here.
With Smartphones and Tablets increasing importance in our lives, other industries will naturally also be affected by this, such as the Retail industry. In 2013, only in the US, the mobile commerce sales grew 63% year over year to $34.2billion. The consumers find Applications more convenient. When visiting sites like Amazon and eBay on Mobile Devices, 80% of the time it’s through an Application (Source: Comscore).
Statistics provided by Digital Strategy Consulting shows that over two-thirds of all mobile users worldwide have spent money via their mobile phone over the last year. Smartphones and Tablets have emerged as an influential channel that affects the consumer decision process of the user from the beginning to the end. Mobile Advertising has had a major impact on the consumer behavior, and reached the same purchase power as normal TV Advertising.