Mobile gaming is hot — but tricky to crackMay 9, 2016 | By Fluent
Publication date 5/9/16
Making money from mobile gaming is the potentially lucrative meta game that developers around the world are trying to play.
Mobile gaming will make $37 billion (U.S.) in 2016, surpassing PC ($32 billion) and console ($29 billion) gaming for the first time, according to a report by Newzoo, a gaming analysis firm. Little wonder, then, that many of even the best-known gaming companies in the world are trying to get a bigger piece of the hand-held pie.
Nintendo, for example, was a company that didn’t bother with phone gaming for the longest time. It changed its mind last year, and last month launched its first foray into mobile gaming with Miitomo, an app that’s more of a social network than a traditional game.
On launch day, Nintendo’s stock jumped up 8 per cent, and the company announced at its recent earnings call that the game has been a hit out of the gate, with more than 10 million downloads. The company also announced upcoming apps for Animal Crossing and Fire Emblem, which are two of its successful console franchises. The larger world still waits for Mario and the company’s most beloved characters on phone.
Sony has had plenty of kicks at the mobile market, creating dedicated hand-held consoles like the PSP and Vita (and even building phones), but neither approach has had much success. Its latest attempt is creating a new division called ForwardWorks, which will focus on bringing some PlayStation characters to new phone games. Capcom, maker of Streetfighter and Resident Evil, also just announced that it had created a mobile division to leverage characters from its franchises onto phones.
Part of the issue with these companies is that mobile was long seen as small time and just for casual gamers. The profit margins on phone games were also much less than games created for traditional consoles — a handful of dollars versus, say, $30 for something on the Nintendo’s DS line.
Now that the audience has moved to phones, so these companies have to, too. In its year end call, Nintendo announced a new console coming in March 2017, but forecast declining sales for its hardware in 2016, including Wii U sales falling to 800,000 units from 3.26 million, and 3DS dropping from 6.79 million to 5 million, with very little software coming to help the bottom line.
“My guess is that (the big studios jumping in) has more to do with their other stuff not working out as much as they’d like it too, than with the mobile space particularly changing,” said Matt Rix, a Toronto-based game developer with Milkbag Games.
Rix created Trainyard, a paid iOS and Android game that was a hit in 2010, which allowed him to quit his day job and work on games full time. He is currently working on FutureGrind for PC.
With dozens of games released every week and gaudy numbers about usage and a huge global audience, the trick still is to get customers to actually pay for the games. A recent survey by Fluent, a marketing company, found that 50 per cent of mobile gamers have never spent anything on a phone game.
The flip side of this is that 85 per cent of apps sold are games, and there are more players than ever. So developers have turned their attention largely to “whales,” the term the Wall Street Journal coined for mobile game big spenders who reportedly fork over an average of $87 a year on free-to-play games — ones where users can play a fully functional game for free, but then are hit up for money to get access to additional content.
While paid or premium games — which ask for payment upfront — may be in decline because of this, free-to-play is clearly thriving, with dominant companies such as Super Cell (Clash of Clans), King (Candy Crush Saga) and Rovio, which just released Angry Birds Action! (which ties into the upcoming film).
Supercell reported profits of $964 million in 2015, based largely on three free-to-play games:Clash of Clans, Boom Beach and Hay Day. That’s almost double the $592 million reported for 2014.
And yet, this is exactly where the biggest game and entertainment companies are jumping in with both feet.
“The hand-wringing and the bearishness is way overwrought. To me, mobile is becoming a real business,” said Chris Heatherly, who is charge of Disney Interactive’s mobile games business, in an interview with Venturebeat. “The industry struggled for five years to get to free-to-play. Now, you have a lot of competent free-to-play teams that know how to make money. That’s going to be the table stakes.”
Disney has a hit on its hands with Disney Crossy Road, a co-development project that features the House of Mouse’s characters in a free-to-play version of developer’s Hipster Whale’sFrogger-inspired mobile smash.
Rix said that if he had a great idea for a mobile game, he’d take another shot, but these days he prefers creating games for Steam, the PC-based digital online store, just because there is much more flexibility and the ability to really build and communicate with your audience.
Mickey Mouse’s marketing muscle aside, sometimes games of quality will be found by gamers.
Ryan Cash, one half of Toronto-based Built by Snowman, who created the 2014 hit Alto’s Adventure, says that his company’ssuccess is proof that if you make something of quality and market it correctly, a premium paid game can still succeed. It’s the last part that most developers don’t really take care of.
“I’ve met so many developers . . . and I ask, ‘what’s your marketing plan?’, and they answer, ‘Oh, well, we hope Apple will feature it,’” said Cash.
“Getting featured by Apple is awesome, but it’s not a marketing plan.”