mobile video game market trends & stakes

Mobile transforming the game marketCartoon Digital 2014

Laurent MICHAUDHead of Digital Entertainment PracticeTel: +33 (0)4 67 14 44 [email protected]

5-7 May 2014, Helsinki, FINLAND

Market, Data & Trends

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Table of content

1. Video game value chain disintermediation p. 04

2. Video game market overview p. 07

3. Mobile game market in-depth approach p. 11

4. Conclusion p. 24

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I’m responsible for studies on consumer electronics, digital home, video games, music and related phenomena:changing uses, new uses and devices, technology innovation, content protection and rights management.I’m also actually involved in studies conducted by IDATE for local authorities and their expression to definedevelopment strategies around ICT (Information and Communication Technologies) and CCI (Cultural and CreativeIndustries).I carry out techno-economic appraisals for innovation agencies and incubators on the issues of video gaming andmultimedia content development.I participate in sector-based, market and strategic studies in the areas of ICT, television, Internet and video.

I was the originator of Game Summit, which takes place during the Digiworld Summit in November each year(www.gamesummit.pro).I hold a Master's degree in Economic and Financial Engineering.

˃ Laurent MICHAUD, Head of the "Consumer Electronics and Digital Entertainment" division

Author

1. Video game value chain disintermediation

1.1. Traditional value chain: hardware & physical s oftware oriented

Design & Creation

Tools Providers

MiddlewareProviders

Developers Publishers Distributors Retailers

Home Consoles(Microsoft, Nintendo, Sony, and a lot of traditional publishers)

Mobile Phones & Smartphones(Apple, Samsung, HTC, Nokia, Google & Gameloft, SuperCell, King , Kabam, GungHo and many indies)

Computers and Online Games(Zynga, King, Wargamming.net,Tencent, Blizzard Entertainment)

Smart TV(Onlive, Playcast, Visiware, Tectoy, SreenAngels…)

Handheld Consoles(Nintendo, Sony, and less and less traditonal publishers)

Tablets(Apple, Samsung, HTC, Nokia, Google & Gameloft, SuperCell, King , Kabam, GungHo and many indies)

1.2. Digital value chain: services & game oriented

Gamers & UGC

Home Consoles + PSN + XBLA + Nintendo Online Store(Microsoft, Nintendo, Sony, and a lot of traditional publishers)

Mobile Phones & Smartphones(Apple, Samsung, HTC, Nokia, Google & Gameloft, SuperCell, King , Kabam, GungHo and many indies)

Computers and Online Games(Zynga, King, Wargamming.net,Tencent, Blizzard Entertainment)

Smart TV(Playcast, G-Cluster, Visiware, Apple, Google…)

Handheld Consoles + PSN + Nintendo Online Store(Nintendo, Sony, and less and less traditonal publishers)

Tablets(Apple, Samsung, HTC, Nokia, Google & Gameloft, SuperCell, King , Kabam, GungHo and many indies)

Providers

Design & Creation Tools Providers

&MiddlewareProviders

Developers / Publishers / Distributors / Retailers

2. Video game market overview

8

Source: IDATE, November 2013

World video game market by segment, 2013-2017 (million EUR)

2.1. World video game market

6 05010 292 14 021 14 690 11 467

10 719

13 168

17 36320 334

21 5656 548

6 959

6 5825 694

4 241

5 387

6 306

6 7876 971

6 956

1 401

1 276

1 1551 049

956

16 955

19 013

21 12923 633

26 091

6 833

7 917

8 893

9 868 10 812

0

10 000

20 000

30 000

40 000

50 000

60 000

70 000

80 000

90 000

2013 2014 2015 2016 2017

Home Console Hardware Market Home Console Software Market Handheld Hardware Market Handheld Software Market

Offline Computer Software Market Online Computer Software Market Mobile Software Market

9


World video game market by segment, 2013 and 2017

2.2. The digital sub segments growth

˃ The Breakthrough of full digital sub segments despite next gen home consoles arrival

• Home consoles will represent 40% of the total market in 2017 against 31% in 2013.

• Part of mobile games will be steadybetween 2013 and 2017.

˃ A serious growth• An average annual growth of 11.4%

for online gaming and 12.2% for mobile gaming for the period 2013-2017 against 11.1% for the entire video games market.

11% 14%

20%

26%

12%

5%

10% 8%

3% 1%

31% 32%

13% 13%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2013 2017

Mobile Software Market

Online Computer SoftwareMarket

Offline Computer SoftwareMarket

Handheld Software Market

Handheld Hardware Market

Home Console SoftwareMarket

Home Console HardwareMarket


2.3. Asia-Pacific, the world’s biggest video game m arket

World’s top video game segments in 2013

10

11%

11%

12%

6%

2%

45%

13%

Asia-Pacific, 21 billion EUR

Latin America, 2 billion EUR

Home Console Software Sales

Home Console Hardware Sales

World = 54 billion EUR

13%

26%

15%11%

7%

18%

10%

17%

29%

12%

13%1%

18%

10%

4%

13%

11%

13%

5%

35%

19%

Online Gaming SalesOffline Computer Software SalesHandheld Console Hardware Sales

Handheld Console Software Sales

EMEA, 16 billion EUR

North America, 15 billion EUR

Mobile Software Sales

3. Mobile game market in -depth approach

12

3.1. Mobile game market value

Source : IDATE – November 2013

- 0,04 0,07 0,13 0,16 0,29 0,56

1,15

1,70

2,37

3,26

4,44

5,64

6,72

7,61

8,41

9,08

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Mobile game revenue (smartphone + tablet)(EUR billions)

Apple iPhone SDK release

Apple iPad

13

˃ Confirmation of the attraction tablets for gamers˃ 248 million tablets sold in 2013


Domestic tablet shipments by geographic area, 2013- 2017 (million units)

3.3. The tablet explosion

0

100

200

300

400

500

600

2013 2014 2015 2016 2017

North America Europe Asia Pacifique Latin America Total

14

3.4. Mobile and online segment in the race

Rank Companies 2011

1 Sony 5,78

2 Activision Blizzard 4,76

3 Microsoft 4,62

4 EA 3,87

5 Nintendo 3,81

6 Tencent 2,51

7 Konami 1,75

8 DeNA 1,72

9 Ubisoft 1,39

10 GREE 1,28

11 Zynga 1,14

12 Nexon 1,14

13 Namco Bandaï 1,08

14 NetEase 1,02

15 Disney 0,91

Rank Companies 2012


2 Sony 4,59

3 Microsoft 4,56

4 EA 3,96

5 Tencent 3,63

6 Nintendo 2,78

7 DeNA 1,84

8 GREE 1,74

9 Ubisoft 1,64

10 Konami 1,40

11 Zynga 1,28

12 Apple 1,26

13 Nexon 1,25

14 NetEase 1,25

15 Take Two Interactive 1,06

Rank Companies 2013

1 Tencent 5,27

2 Microsoft 4,70


4 Sony 4,33

5 EA 3,66

6 Take Two Interactive 2,45

7 Nintendo 2,93

8 Apple 2,01

9 DeNA 1,61

10 GungHo Online Ent. 1,55

11 Nexon 1,48

12 NetEase 1,43

13 Ubisoft 1,36

14 GREE 1,34

15 Google 1,20

Top 15 Game Companies by revenue ($ billions )

Source : IDATE from Newzoo

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3.5. Age 2 of mobile game companies

Company Country Revenue 2011

Revenue 2012

Net Income 2012

Revenue Q1 2013

(Million USD) (Million USD) (Million USD) (Million USD)

GREE Japan 637.9 1 577.2 478.1 111.5

Mobage Inc. (DeNa)

Japan 1 046.0 1 401.0 NA 528.0

Gameloft France 211.4 267.8 23.4 70.1

EA Mobile USA 242.0 269.0 NA 79.0

Rovio Finland 106.3 195.7 71.3 NA

Supercell Finland NA 100.0 NA 179.0

GluMobile USA 66.2 87.5 20.5 17.1

Gamevil South Korea

37.6 64.8 20.7 15.5

G5 Games Sweden Russia

1.4 2.6 NA NA

Mojang Sweden NA 41.0 28.7 NA

KongZhong China 40.9 21.2 NA 3.7

GungHo Online Entertainment (GOE)

Japan 104.5 280.0 NA 410.02

Kabam USA 126.03 180.04 NA 270.05

1/ D’après www.guardian.co.uk, sur le mois d’avril 20132/ Q1 2013+ May 2013 Mobile revenue, d’après gamesindustry.biz. On estime que Puzzle & Dragons représente 75% de ce chiffre.3/ Généré à 100% via jeux Facebook4/ Dont 100 millions USD généré par les jeux mobiles5/ Estimation officielle de KabamSource : IDATE d’après chiffres publiés par Kabam

Main players of mobile game segment

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3.6. Massive sales & virality

Source : IDATE from Thinkgaming.com, July 2013

Game Publisher Fee Daily Revenue Estimate

(USD)

Daily Active Users

(million)

Daily Installs

Estimate

ARPU/Lifetime Value (USD)

Candy Crush Saga King.com Free 632 867 6.68 112 500 2.87

Clash of Clans Supercell Free 527 389 4.07 29 897 3.94 MARVEL War of Heroes Mobage Free 474 650 3.53 24 347 4.13

Hay Day Supercell Free 421 911 2.84 29 383 4.53 The Hobbit : Kingdoms of Middle-earth

Kabam Free 361 789 2.04 24 656 4.05

The Simpsons™: Tapped Out Electronic Arts

Free 271 078 3.23 27 842 3.42

Kingdoms of Camelot : Battle for the North

Kabam Free 215 175 1.20 2 353 5.45

Minecraft – Pocket Edition Mojang $6.99 184 322 NA 33 800 5.30

Slotomania - Slot Machines Playtika Free 175 357 1.20 22 600 3.68

Big Fish Casino – Free Slots. Blackjack. Roulett

Big Fish Games

Free 150 306 NA 13 864 NA

iOS top 10 games per daily revenue in USA

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3.7. Ubiquity & multi platform strategy

Source : AppData – March 2014

Facebook : King vs Zynga

Copyright © IDATE 2014

3.8. The device war

Source: IDATE according to IDC - 2013

Evolution of global smartphone sales by the top fiv e suppliers(Million units)

44,0

35,1

4,9 5,1 6,1

70,7

37,4

10,3 9,9 9,1

Samsung Apple LG Huawei ZTE

Q1 2012 Q1 2013


3.9. The OS war

Source: IDATE according to IDC - 2013

App download market share, Q1 2013, by OS

51%

40%

9%

Android

IOS

Others


3.10. Games among other applications

Source: IDATE according to 148apps.biz, May 2013

Count of active applications in the iTunes Store, b y month, 2008-2013(Thousands)

-

100

200

300

400

500

600

700

800


3.11. App store metrics

According to 148apps.biz, updated 01/07/2013According to AppBrain, updated 08/07/2013According to AppAnnie.comAccording to Canalys

Comparative economics of games: iOS vs Android, Q1 2013

Platform OS # Active Apps

# Games % of Games

Games downloads/ Total app

downloads

Total revenue from app

downloadsQ1 2013

($M)

Games downloads revenueQ1 2013

($M)

Games downloads revenue/

Total revenue

iTunes Store

iOS 892,687 (a)

151,574 (a)

17% ≈40% (c) 1,628 (d) 1,140 70% (c)

Google Play

Android 778,397 (b)

109,630 (b)

14% ≈40% (c) 440 (d) 352 80% (c)


3.10. Pay-per-Play vs Free-to-Play

Source: IDATE according to Appbrain.com, May 2013

Share of free and pay-for games on Google Play

21%

18%

21%

18%

23%

15%

19%

79%

82%

79%

82%

77%

85%

81%

Arcade & Action

Brain & Puzzle

Cards & Casino

Casual

Sports Games

Racing

All Games

Paid apps Free apps

4. Conclusion

> Without doubt the most competitive gaming segment> An era of volatility and massivity> Direct access to the market for developers, but i nvolving new skills> A wave of mobile gaming socialisation> Notable appearances of multi-player titles in unsynchronised mode > The era of Free2Play> Mobile gaming well supports the ubiquity of games and will provide them their recognition.


Conclusion

Thank you

mobile video game market trends & stakes

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