The lucrative mobile gaming industry and the new challenges it faces

Filipe Coutinho

4 min read time

The numbers

$3.9 billion. That’s the staggering number of smartphone users in 2021. It represents a growth of 6.1% in relation to 2020, and the trend is going nowhere but up. Going hand-in-hand with this rise in mobile gaming. According to an all-encompassing report by Newzoo, this industry is worth $91 billion, with $41.1 billion coming from the App Store, and $28.2 billion stemming from Google Play. The majority of these numbers come from China, Japan, and the United States. Combined, they corner almost 65% of a market expected to be worth $117 billion by 2024. 

Rupantar Guha, associate project manager at GlobalData attributes the growth to a number of factors. The growing maturity of streaming (supported by 5G), cloud gaming services, and mobile esports— combined with the fact that mobile platforms are close to technical parity with PCs and consoles— means most gamers will embrace mobile gaming in the next few years.” There’s no denying that mobile gaming has gone mainstream. The market is bigger, more lucrative, and more diverse than ever. However, the past year has shaken the industry’s foundations and brought new challenges to the fore.

The impact of new privacy policies

Much of the success of mobile gaming can be attributed to data-driven insight, which is often enabled through smart tracking and player targeting. New and rigorous privacy-based policies have created novel challenges for developers, publishers, marketers, and the tech industry in general, ultimately impacting all aspects of the mobile ecosystem. 

The most influential change has been implemented by Apple, with its App Tracking Transparency (ATT), which requires users to manually allow third-party companies to track their iOS devices (as of September of this year, opt-in rates for ATT were just 17%). This change directly impacts advertisers, as they now have limited spend on iOS, which means some will shift part of their ad spending to Android, the Google operating system. The Mountain View company isn’t quite going the Apple route, instead choosing to still feed ads to users but without exploiting access to their personal data. In other words, Google is trying to have it both ways. 

These opposing views may very well lead to two different Internets, depending on which smartphone you own. Apple wants its premium-paying iPhone users to have the right to block tracking entirely, while Android users may have to face highly-targeted promotions inside Google’s web. These stances on privacy are forcing a shift in mobile user acquisition and monetization. For now, companies are responding by doubling down on internal ad networks and also acquiring the competition (mergers and acquisitions may very well become the norm in the coming years). So what now?

Turning to tech giants & subscription-based models

As per the New York Times, companies that can no longer track people but still need to advertise are likely to drive money and attention to larger tech platforms like Google, Facebook, and Twitter, as they continue to have the most data on consumers. Still, at a time when Facebook reinvented itself as Meta and its stances on privacy are unclear, it’s safe to say that the future is looking very foggy. Instead, many app makers are looking to charge subscription fees for further monetization instead of using gamers’ personal data. Adding to this, we’ll see an increase in in-game advertisements (IAAs) and in-app purchases (IAPs). This combo is ripe for the continued rise of hybrid-casual games, a mix of two different genres to make one great game. Examples of this type of game include Cook to the Beat, Meteorfall: Journeys, and TaniNani.


3 trends for 2022

  • More emphasis on social features: According to Facebook, “Four in ten (38%) new gamers in the U.S. said they prefer chatting with others when playing games compared to three in ten (29%) existing gamers in the U.S. who said the same.” By social features, we’re talking about in-game chatting, social media connection, guilds, co-op modes, and PvP modes, to name a select few. Some games, like Call of Duty: Mobile, have even implemented hangout rooms, which are virtual places for players to interact and play adjacent games to the main game. It’s also worth noting that currently, two-thirds of the top 50 mobile games have at least one social feature. 
  • Mobile eSports will be a thing: As per Nielsen, 71% of millennial gamers watch gaming video content on platforms like YouTube and Twitch. Furthermore, Limelight reports that watching gamers play video games online is more popular than watching sports for 18-25-year-olds. Alexandria Ocasio-Cortez is living proof of this type of popularity. Last year, the U.S. representative played Among Us for charity, and more than 400k people watched the stream.
  • 5G will help consolidate the growth of mobile gaming: Newzoo reports that 43% of active smartphones will be 5G ready by 2023. Among the many advantages of 5G for mobile gaming are lower latency rates, an increase in capacity for a richer multiplayer experience, and greater streaming opportunities for cloud gaming. The ease and appeal of a better gaming experience will provide a big boost to the industry

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Filipe Coutinho

Filipe Coutinho is a writer, filmmaker, and a 2020 Black List Feature Lab alum. He also works as a freelance brand consultant and cultural forecaster, creating valuable insights on future trends and movements.

The lucrative mobile gaming industry and the new challenges it faces

Filipe Coutinho

11/10/21

The numbers

$3.9 billion. That’s the staggering number of smartphone users in 2021. It represents a growth of 6.1% in relation to 2020, and the trend is going nowhere but up. Going hand-in-hand with this rise in mobile gaming. According to an all-encompassing report by Newzoo, this industry is worth $91 billion, with $41.1 billion coming from the App Store, and $28.2 billion stemming from Google Play. The majority of these numbers come from China, Japan, and the United States. Combined, they corner almost 65% of a market expected to be worth $117 billion by 2024. 

Rupantar Guha, associate project manager at GlobalData attributes the growth to a number of factors. The growing maturity of streaming (supported by 5G), cloud gaming services, and mobile esports— combined with the fact that mobile platforms are close to technical parity with PCs and consoles— means most gamers will embrace mobile gaming in the next few years.” There’s no denying that mobile gaming has gone mainstream. The market is bigger, more lucrative, and more diverse than ever. However, the past year has shaken the industry’s foundations and brought new challenges to the fore.

The impact of new privacy policies

Much of the success of mobile gaming can be attributed to data-driven insight, which is often enabled through smart tracking and player targeting. New and rigorous privacy-based policies have created novel challenges for developers, publishers, marketers, and the tech industry in general, ultimately impacting all aspects of the mobile ecosystem. 

The most influential change has been implemented by Apple, with its App Tracking Transparency (ATT), which requires users to manually allow third-party companies to track their iOS devices (as of September of this year, opt-in rates for ATT were just 17%). This change directly impacts advertisers, as they now have limited spend on iOS, which means some will shift part of their ad spending to Android, the Google operating system. The Mountain View company isn’t quite going the Apple route, instead choosing to still feed ads to users but without exploiting access to their personal data. In other words, Google is trying to have it both ways. 

These opposing views may very well lead to two different Internets, depending on which smartphone you own. Apple wants its premium-paying iPhone users to have the right to block tracking entirely, while Android users may have to face highly-targeted promotions inside Google’s web. These stances on privacy are forcing a shift in mobile user acquisition and monetization. For now, companies are responding by doubling down on internal ad networks and also acquiring the competition (mergers and acquisitions may very well become the norm in the coming years). So what now?

Turning to tech giants & subscription-based models

As per the New York Times, companies that can no longer track people but still need to advertise are likely to drive money and attention to larger tech platforms like Google, Facebook, and Twitter, as they continue to have the most data on consumers. Still, at a time when Facebook reinvented itself as Meta and its stances on privacy are unclear, it’s safe to say that the future is looking very foggy. Instead, many app makers are looking to charge subscription fees for further monetization instead of using gamers’ personal data. Adding to this, we’ll see an increase in in-game advertisements (IAAs) and in-app purchases (IAPs). This combo is ripe for the continued rise of hybrid-casual games, a mix of two different genres to make one great game. Examples of this type of game include Cook to the Beat, Meteorfall: Journeys, and TaniNani.


3 trends for 2022

  • More emphasis on social features: According to Facebook, “Four in ten (38%) new gamers in the U.S. said they prefer chatting with others when playing games compared to three in ten (29%) existing gamers in the U.S. who said the same.” By social features, we’re talking about in-game chatting, social media connection, guilds, co-op modes, and PvP modes, to name a select few. Some games, like Call of Duty: Mobile, have even implemented hangout rooms, which are virtual places for players to interact and play adjacent games to the main game. It’s also worth noting that currently, two-thirds of the top 50 mobile games have at least one social feature. 
  • Mobile eSports will be a thing: As per Nielsen, 71% of millennial gamers watch gaming video content on platforms like YouTube and Twitch. Furthermore, Limelight reports that watching gamers play video games online is more popular than watching sports for 18-25-year-olds. Alexandria Ocasio-Cortez is living proof of this type of popularity. Last year, the U.S. representative played Among Us for charity, and more than 400k people watched the stream.
  • 5G will help consolidate the growth of mobile gaming: Newzoo reports that 43% of active smartphones will be 5G ready by 2023. Among the many advantages of 5G for mobile gaming are lower latency rates, an increase in capacity for a richer multiplayer experience, and greater streaming opportunities for cloud gaming. The ease and appeal of a better gaming experience will provide a big boost to the industry

Filipe Coutinho

Website
Filipe Coutinho is a writer, filmmaker, and a 2020 Black List Feature Lab alum. He also works as a freelance brand consultant and cultural forecaster, creating valuable insights on future trends and movements.

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