US and China Mobile Games Markets Brief

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1 Mobile Games Brief, May 2014 | Copyright © 2014 SuperData Research. All rights reserved. | www.superdataresearch.com Mobile Games Brief Digital Games Market Brief: United States & China May, 2014

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These report details the massive US and Chinese mobile game markets and the factors that are driving revenues in each. Major findings: The Chinese mobile games market reaches $3B in 2014E and is shortly expected to overtake the U.S. ($3.2B). China’s average revenue per paying user (ARPPU) and conversion rate both grow more than 20% since last year as ARPPU in the U.S. hits $21. An increase in spending confidence as well as new mid-core and core mobile games help boost both markets’ Q1 2014 spending. Compared to the same time last year, January marketing costs more than double in China and U.S. CPI (cost per install) grows 36% in response to market saturation. In the following months of Q1, spending in China has risen to meet high CPI costs while the average revenue per American user comes up short. Developers in both markets will need to focus on researching effective monetization mechanics and their most lucrative audiences in order to conquer an increasingly competitive and ubiquitously free-to-play market.

Transcript of US and China Mobile Games Markets Brief

Page 1: US and China Mobile Games Markets Brief

1Mobile Games Brief, May 2014 | Copyright © 2014 SuperData Research. All rights reserved. | www.superdataresearch.com

Mobile Games Brief Digital Games Market Brief: United States & China

May, 2014

Page 2: US and China Mobile Games Markets Brief

Executive summary What’s in here

SuperData | Digital games market intelligence

2Mobile Games Brief, May 2014 | Copyright © 2014 SuperData Research. All rights reserved. | www.superdataresearch.com

• The Chinese mobile games market reaches $3B in 2014E and is shortly expected to overtake the U.S. ($3.2B).

• China’s average revenue per paying user (ARPPU) and conversion rate both grow more than 20% since last year as ARPPU in the U.S. hits $21. An increase in spending confidence as well as new mid-core and core mobile games help boost both markets’ Q1 2014 spending.

• Compared to the same time last year, January marketing costs more than double in China and U.S. CPI (cost per install) grows 36% in response to market saturation. In the following months of Q1, spending in China has risen to meet high CPI costs while the average revenue per American user comes up short.

• Developers in both markets will need to focus on researching effective monetization mechanics and their most lucrative audiences in order to conquer an increasingly competitive and ubiquitously free-to-play market.

Page 3: US and China Mobile Games Markets Brief

SuperData | Digital games market intelligence

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2013 2014E

266M182M

242M237M

United States$3.2B 242M

China$3.0B 266M

Worldwide$21.6B 1,482M

2013 2014E

$3.0B

$1.4B$3.2B$3.0B

Worldwide mobile games reach $21.6B in 2014E Market growth due to rising smartphone penetration and maturing freemium market.

Audience (MAU)

Mobile games revenue and audience (MAU), 2014E

• As worldwide smartphone penetration continues to grow the mobile gaming audience, smartphones have become affordable gaming devices with a lower barrier to entry than PCs and consoles.

• The Chinese market in particular has seen quick and steady penetration growth with the availability of increasingly affordable Android devices.

• Players in both the United States and China have become more comfortable with the freemium model and, thus, more willing to spend money on in-app purchases.

Revenue

Mobile Games Brief, May 2014 | Copyright © 2014 SuperData Research. All rights reserved. | www.superdataresearch.com

Chin

aU.

S.

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SuperData | Digital games market intelligence

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Spending booms in China as it slows in the U.S. Payment security & the rise of mid-core games help boost spending in both regions.

Conversion ARPPU

2.9%2.4%

5.0%5.2%

$32.46$26.72

$21.60$19.52Q1 2013

Q1 2014

(Average revenue per paying user)United States China

• The growth of U.S. MAU has decelerated as the American mobile market saturates. As a result, not enough new spenders are entering the mobile games market causing a stagnation in the conversion rate.

• As Tencent brings big casual titles like Candy Crush Saga to China, more mobile users are becoming mobile gamers and spenders. Casual games are accessible and give users more opportunities to convert into payers at a low initial cost.

• Both Chinese and American mobile gamers have become more trusting of mobile payment methods. SMS payments through carriers and third-party providers like Ali Pay are quickly growing in China, and the iOS App Store and GooglePlay have increased payment safeguards, helping gamers in the U.S., and worldwide, feel more secure when making in-app purchases.

• Mid-core and core games have helped boost ARPPU in both regions since they are increasing in popularity across the United States and China and traditionally see higher spending than their casual counterparts.

Mobile Games Brief, May 2014 | Copyright © 2014 SuperData Research. All rights reserved. | www.superdataresearch.com

↓4% ↑21% ↑11% ↑21%

Page 5: US and China Mobile Games Markets Brief

Marketing costs & spending continue to rise in China A year later, U.S. spending shows little change while marketing costs increase by 37%.

SuperData | Digital games market intelligence

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Cost per install (CPI) and average revenue per user (ARPU), indexed* (Q1 2013 vs. Q1 2014)

• Larger publishers with more marketing dollars have inflated U.S. CPIs year-over-year in response to the over-saturation of app stores, leading to a freeze in top grossing ranks.

• U.S. spending has not risen to the demands of growing CPI. Though ARPPU has increased in the U.S., it did not increase enough to account for the slow-down in new users and decrease in conversion.

• Seasonal promotions in conjunction with spring festivals inflated Chinese CPIs this January year-over-year. CPIs decreased in the following months but stayed higher than a year ago.

• With the growth of casual games, China’s lower spenders have helped give ARPU an upwards bump in order to meet increasing CPIs. Whales are still the biggest contributors to mobile games revenue in China.

U.S.

100 99 104137 137101 105 104

CPI ARPU

20142013Jan Feb Mar Jan Feb Mar

100 92

251

151

100

146123 111

229

163CPI ARPU

20142013Jan Feb Mar Jan Feb Mar

50

China

124

Mobile Games Brief, May 2014 | Copyright © 2014 SuperData Research. All rights reserved. | www.superdataresearch.com

*Index compares shifts in a metric to a particular base month (January 2013), represented by the value 100.

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SuperData provides market intelligence on the online, digital and mobile games industry. We collect digital point-of-sale data directly from publishers and developers to give our customers unparalleled monthly insights into the unboxed games market. This allows us to identify key trends, evaluate marketing spend, establish accurate revenue estimates and analyze market changes for popular online games, including MMOs, FPS, casino, virtual worlds, mobile and social games.

SuperData publishes industry-relevant key performance indicators. Using our proprietary panel of 4.2 million paying online gamers, we establish monthly benchmarks such as monthly active users, conversion rates, ARPPU and title-level revenue estimates. Customers use our data to evaluate their performance, identify key growth opportunities, assess revenue potential, optimize their efforts, and better understand their audience’s wants and needs.

SuperData | Digital games market intelligence

About Who we are

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TalkingData is China's leading data service provider for Mobile Internet. We offer the most data-rich and insightful reports along with the best-in-class data products and solutions to accelerate your success into the Chinese mobile market.

TalkingData Insight: The Intelligence platform that gives the most accurate source of data for the Chinese mobile market. Based on that, we provide data-rich and insightful reports to help mobile businesses entering China stay ahead of the competition.

TalkingData AppCPA: The ONLY independent mobile Ad tracking platform integrated with all major mobile Ad networks and cooperating with all major mobile distribution channels (3rd part app stores) in China. Trusted by top advertisers and publishers.

TalkingGame: The No.1 mobile game analytics platform that is recognized by the whole mobile game ecosystem of China. TalkingData Analytics: The largest 3rd party Analytics platform for mobile apps in China. Used by 20000+ apps covering 400M+

devices.

Mobile Games Brief, May 2014 | Copyright © 2014 SuperData Research. All rights reserved. | www.superdataresearch.com

For a detailed overview and explanation of our methodology, data collection and terminology, please refer to our websites:www.superdataresearch.com/methodology • www.superdata.com/superdata-terminology • www.talkingdata.com/services

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Senior Analyst, Consumer Insights Stephanie Llamas [email protected] !Director, Business Development Sam Barberie [email protected] !116 West 23rd Street, 5th floor New York, NY 10011 +1 646 375 2068 www.superdataresearch.com Twitter @_SuperData

Contact How to reach us

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Director, Global Business Development Ibrahim Dai [email protected] !Director, Mobile Game Analyst & Consulting Jet Yu [email protected] !Room 602, Aviation Services Plaza Building #2, No. 39, DongZhiMenWai Street Dongcheng District, Beijing, China +8610 57842088-8008 www.talkingdata.com

For inquiries regarding U.S. data: For inquiries regarding China data:

Mobile Games Brief, May 2014 | Copyright © 2014 SuperData Research. All rights reserved. | www.superdataresearch.com