Charles Xi is the Senior Vice President, Mobvista overseeing the US office. Charles works closely with app creators and publishers, as well as FMCG brands, to help them optimize their mobile advertising strategies. Charles has been instrumental to Mobvista’s rapid growth in the industry, which he continues to lead.
Prior to joining Mobvista, Charles worked at Huawei Technologies, China’s biggest mobile technology company. In his role he led the launch of mobile networks across five markets.
Ten years ago, Steve Ballmer, then Microsoft CEO, said “There’s no chance that the iPhone is going to get any significant market share. No chance.” The same year, the mobile game market was worth a reported $3.9 billion, and set to keep growing, according to Gartner.
One of those predictions was a lot, lot better than the other. But they both proved that a lot can change in 10 years.
2017, it turns out, has been a very good year for game developers. This year, the global games market will generate $116 billion in software sales. That’s a healthy 11% compared to 2016, according to Newzoo. In fact, it’s been such a good year, that Newzoo had to revise its estimates $7.1 billion higher from its predictions back in January.
The biggest driver of that change? Mobile games.
This year, Newzoo estimates that mobile will earn $50.4 billion for publishers.
That’s a lot of money going to the top games, but also a lot of new games hitting the app stores – 75 new games are submitted every day, according to PocketGamer.
So it should come as no surprise that a recent survey by PocketGamer.biz and Mobvista found that developers and publishers were broadly optimistic about 2018. But the volume of new games – and therefore competition for time, eyeballs and wallets – was also their biggest concern.
A big trend for 2018 and beyond is that developers are increasingly looking further afield to help fuel their growth. This also reflects that as smartphones have penetrated emerging markets, mobile games have a bigger potential audience than ever before. Markets like Brazil, Russia, India and China, are seen as the biggest opportunities for growth.
Companies are also optimistic about new technologies, especially Augmented Reality (AR). Whilst VR may currently be out of favor (the result of two years of rampant over-hype, and the massive acquisition of Oculus Rift by Facebook), AR and mixed reality don’t need special headsets or fancy sensors. While Pokemon Go is still the only AR-based game to become a major success, the introduction of Apple’s ARkit and Google’s ARcore in 2017 has reignited excitement for the technology among developers.
New monetization methods, like turning games into longer lasting ‘Games as a Service’ also seem to be exciting developers. Hugely successful games like Hearthstone, Honor of Kings and Candy Crush Saga are prime examples of this. Developers are able to drive ongoing monetization by offering additional levels at additional cost, or building out vast content strategies, helping them extend the life of titles.
On the advertising side, interactive and playable ads were seen as an even bigger opportunity than rewarded ad videos – signaling that developers believe they’ll get better rewards from these newer ad formats.
So while there is positive news for developers, Average Revenue Per Paying User (ARPPU) has only grown slightly for the majority of games. However, when looking at top performing titles, we find the gap between the top performing, and average performing, has increased by more than 60% since the beginning of 2016.
To put this into context, the best performing games had an ARPPU of $50, against poor performing games with an ARPPU of only $1. The average was $7, according to GameAnalytics.
Unfortunately, what this means for smaller, Indie developers they are not only battling a never ending influx of new titles – but also battling for a smaller share of revenue against larger developers. As Newzoo found, “the highest-grossing companies accounting for an ever-greater share of the global games market. Public companies will represent more than 80% of global game revenues this year, up from around 75% in 2016.”
Standing out from the crowd is a challenge that many developers face, resulting in rising user acquisition and marketing costs. This sets the scene for more experimentation with advertising and acquisition, and a heightened emphasis on how games are marketed over the long term. With the very biggest players now becoming more vertically integrated (Tencent is both a games publisher, media platform and UA channel) the challenge is how other ad tech companies will meet this demand for ever-more effective approaches to UA.
To get a free copy of the 2017 PocketGamer Mobile Games Developer Trends Report, click here.