Games have been on mobile phones since the days of Tetris and the brick-like handsets of the 1990s. Yet new research shows a huge surge in the time and money that UK consumers spend playing on mobile devices with the advent of smartphones, while console gaming has increased by only 1 per cent in a year.
The National Gamers Survey, shown exclusively to Marketing Week, finds that spending on mobile games has risen by 30 per cent in the past year, while the time users spend playing them has gone up by 43 per cent. Nearly half of mobile gamers – 45 per cent – play three or more titles each month, according to the study by gaming website GameHouse and research company Newzoo.
Mobile devices have now overtaken social media and casual game websites when it comes to players giving up both their free time and their cash. Social and mobile games also appear to have affected the revenues made by casual websites, on which users are spending more time but less money.
Rumbi Pfende, UK manager for GameHouse, says: “Mobile gaming is in a situation where casual gaming was when it started. Everyone knows everyone does it, but nobody has quantified – particularly for advertisers – just how popular it is and more importantly, how receptive people are to paying for it. This is the next phase on from social gaming.”
Smartphones are the dominant device for mobile gaming. Three-quarters of mobile gamers use them, while fewer than a fifth use either more basic phones, tablet computers or iPods. More gaming apps are now downloaded from Google Play – the app marketplace for Android phones – than from Apple’s iPhone App Store, although Apple is ahead when iPad games are added in.
Indeed, Apple is still some way from being dethroned as the most valuable mobile gaming platform. Owners of iPhones are much more likely to spend money on games than other handset owners. While a quarter of mobile gamers have iPhones, 37 per cent of those who pay for games use Apple’s handset. Samsung comes second, with 20 per cent of mobile players. Additionally, 18 per cent of people who pay for games do so on a Samsung device.
The market is changing rapidly, however. As Marketing Week reported exclusively in May, the past year has seen a breakthrough for mobile commerce, which has now reached a mainstream consumer audience. That trend appears to have filtered quickly through to the mobile gaming market too.
Pfende says: “With micropayments, the gaming audience is used to spending money online, but there was a concern that wouldn’t translate from PC to mobile. But it has. Users will pay up to £5 on average for a mobile game and that is a fair bit of money.”
The proportion of mobile gamers willing to pay is higher than those who don’t mind spending money to play via casual gaming websites and social networks. Nearly 40 per cent will part with their cash for a mobile phone game, but still more money is spent on consoles and ‘massively multiplayer’ online games such as World of Warcraft.
Consoles are still the most popular gaming platform, with 51 per cent of the online population aged 10 to 65 using them, and 61 per cent of console players paying to do so – the highest proportion of any platform.
Nintendo’s Wii is the most used console, followed by Microsoft’s Xbox 360, then Sony’s PlayStation 3. But in 2012, the money spent on consoles has increased by only 1 per cent compared with 2011, and their share of total gaming revenue is decreasing.
Pfende says: “When consoles first came on the market, everybody had to have one. Now there is a barrier to entry, because it costs money, whereas casual gaming is free.
“Casual and social gaming is now easy, quick and has broad reach. It is so simple to do that it is easy for the genre to pick up new users and grow quickly. You get the same entertainment fix in a convenient way, whereas consoles require you to plug in and buy things.”
Sales of boxed desktop and laptop games have dropped by 7 per cent in the past year, and revenue growth from downloadable games for these platforms remains flat. This is despite a 31 per cent increase in the amount of time users spend playing both types of game in total.
Alongside the lack of growth in the console segment, this suggests a bleak future for the established gaming industry if it doesn’t evolve. Console and computer games are struggling to translate playing time into money to the degree they once could.
For this reason, console manufacturers are increasingly diversifying their businesses to move into content partnerships, hosting streaming services such as Lovefilm, Netflix and BBC iPlayer, for example. Game developers depend more on downloadable games and add-ons, in addition to their boxed titles, and are also expanding into casual and social gaming.
“At the moment, they are trying to find a middle ground, creating more games that are more casual. That is low-hanging fruit for them,” Pfende says. She also points out that more established gaming companies are investing in casual game developers, an example being Electronic Arts, which acquired Popcap in early July.
“Consoles are in decline, so they are trying to become more connected, and they are realising that casual and social games are the future,” she adds.
Among desktop and laptop games, the movement towards downloads as a distribution channel is also palpable. Only 41 per cent of people who play games on these platforms use exclusively boxed games, while 29 per cent play only downloaded games and a further 29 per cent play both.
The sustained interest in gaming bodes well for the industry as a whole, however, and for brands using it as an advertising channel. Although developers such as Zynga have relatively few paying users, they still “make a ton of money” from brand partnerships, Pfende says, because they have developed such a wide reach among consumers.
“That is where a lot of gaming companies are going,” says Pfende. “If you want to find people where they are spending more of their time, and where they are comfortable spending money, it gets harder and harder. Gaming gives you ‘stickiness’, and people are still willing to whip out their credit cards, even though they are using their tablets and their mobiles.”
Meanwhile, the audience for gaming across the board continues to grow. Two-thirds of the online UK population aged 10 to 65 play video games of some kind. In 2012, they spent £3.6bn (up 6 per cent on 2011) and 387 million hours per week (up 19 per cent) on gaming in total.
Most of the increase has been delivered by new gamers. The year-on-year rise in the time each player spends gaming is somewhat less, increasing by 7 per cent to 7.7 hours a week. But there are now 9 per cent more gamers in the country overall – around 34 million, according to the report’s estimate. It is a marketplace that could yet be more lucrative for gaming brands and advertisers alike.
The Frontline: we ask maketers on the frontline whether our ‘trends’ research matches their experience on the ground
UK marketing manager
Sony Computer Entertainment Europe
We are still enjoying good sales across our different formats, but there is a lot of diversifying of devices that offer gaming at the moment, as this research shows, which is one of the things that we are facing. Actually, I don’t think that’s a bad thing, because it is opening up a lot of people to gaming who didn’t play before. It’s mostly ‘snack’ gaming, whereas our products offer a bit of a deeper experience, but once they are into gaming hopefully the logical next step is to sell them into our products.
Our strength is the richer, deeper titles and we will continue to develop those for both the home console and the handheld PlayStation Vita but via the PlayStation Network online community we can offer more snackable gaming as well. We have a range called Minis that are smaller games at a lower price point that people can download. There are some titles we have that fall in the middle of the two.
We are seeing a big spike in not only the individual titles that people are buying, but also the time people are spending on playing them – and particularly the time they spend playing online. Titles such as Call of Duty have opened the market up to that.
You buy a game and it is not just about the single-player eight-hour story, it is about the hundreds of hours people put in online afterwards.
Chief marketing officer
Over the past year, we have been re-engineering our games for Facebook to make what we call casual-social games. That has given us a couple of hit titles. Bubble Witch Saga and Candy Crush Saga are in the top 10 Facebook games worldwide.
The jargon is that they are ‘freemium’. People can and do play the entire game without making any payments and will be shown video advertising. A small portion of the players will buy extra game codes or boosters to help them complete levels faster.
We are about to launch our first major mobile title, which allows people to play Bubble Witch Saga on mobile. It is completely synchronised with the Facebook version of the game.
The console business is flat to declining in terms of global revenue. It is still very large, but it is not growing. There is some impact from the Nintendo Wii and the Microsoft Kinect in terms of broadening the audience, but it is still very much the preserve of the younger male adult audience. Social and mobile have managed to appeal to a much broader demographic.
At King.com, we have three main revenue streams. We have video advertising, some of which is incentivised so players can get an extra life if they watch a video. Then we have transactions, which are the Facebook credits that players spend money on. Third, if people play Bubble Witch Saga on Facebook, we offer the option to play on our website in small-stake cash tournaments. Facebook credits is probably the largest.
Vice-president of franchise development
We have been working with Samsung on a number of different promotional collaborations, the biggest so far being the launch of the Angry Birds Space game. Samsung wanted to promote its Galaxy mobile devices, and specifically the Galaxy Note smartphone. Our main platform is still mobile devices and mobile-connected audiences, so it was natural for us.
The original Angry Birds game cost 59p to download, and back in 2009 there were 63 levels at launch. That was a complete game, but in the past two years we have been bringing in new content and new levels over time. Now there are over 300, and you haven’t invested more than the original 59p. Then we can create more business by bringing paid-for additions and enhancements to the game.
There have been big gaming brands out there for decades: Super Mario has been around for 26 years and is still going strong. The brand is still fresh and has a lot of loyal fans who have carried on with it throughout the years. Ours is something similar, but we will try to avoid established formulas and find our own ways of making refreshing games and changing things around.
Overall, the merchandise and licensing activities account for 30 per cent of all our revenue. That’s a healthy number already, but we are looking for growth on that side. We don’t have anything locked down around our flotation yet but we are working on building up the Angry Birds brand. Broadcast media and the potential movie are big opportunities that will take the value of the Angry Birds brand to a completely new level.