US and China Mobile Games Markets Brief

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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

  • 1Mobile Games Brief, May 2014 | Copyright 2014 SuperData Research. All rights reserved. | www.superdataresearch.com Mobile Games BriefDigital Games Market Brief: United States & China May, 2014
  • Executive summary Whats 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). Chinas 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 condence 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.
  • SuperData | Digital games market intelligence 3 2013 2014E 266M 182M 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 ChinaU.S.
  • SuperData | Digital games market intelligence 4 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%
  • 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 5 Cost per install (CPI) and average revenue per user (ARPU), indexed* (Q1 2013 vs. Q1 2014) Larger publishers with more marketing dollars have inated 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 inated 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, Chinas 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 99 104 137 137 101 105 104 CPI ARPU 20142013 Jan Feb Mar Jan Feb Mar 100 92 251 151 100 146 123 111 229 163 CPI ARPU 20142013 Jan 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.
  • 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 audiences wants and needs. SuperData | Digital games market intelligence About Who we are 6 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
  • Senior Analyst, Consumer Insights Stephanie Llamas stephanie@superdataresearch.com ! Director, Business Development Sam Barberie sam@superdataresearch.com ! 116 West 23rd Street, 5th oor New York, NY 10011 +1 646 375 2068 www.superdataresearch.com Twitter @_SuperData Contact How to reach us SuperData | Digital games market intelligence 7 Director, Global Business Development Ibrahim Dai min.dai@talkingdata.com ! Director, Mobile Game Analyst & Consulting Jet Yu jet.yu@talkingdata.com ! 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