The arrival of the iPhone has generated quite a positive response from mobile games publishers and developers, but the volume of paid-for mobile game downloads has nonetheless flatlined across North America and Western Europe, according to Juniper Research.
The report titled “Mobile Games: Subscription & Download 2008-2013 (Fifth edition)” found that although the retail value of the global mobile games market is expected to rise from $5.4 billion in 2008 to more than $10 billion in 2013, the potential for growth in many key markets is being dampened by a combination of limited on-portal revenue share for publishers and poor games marketing.
Report author Dr Windsor Holden argues that Apple’s model where publishers get 70% of the revenue generated is “incredibly attractive” to games developers hence they’re jumping on-board. “The danger is that if operators do not respond with a similar business model, publishers faced with low margins may simply exit Java completely, thereby reducing consumer choice in the longer term,” he added.
The report also found that while ad-funded downloads are growing in popularity, the revenues accrued from advertising are unlikely to be sufficient for developers or operators. With CPM rates likely to fall in the face of pressures on advertising budgets, advertising would be largely employed by publishers as a means of monetizing older content.
However, Juniper’s study remained optimistic about prospects for growth in regions such as the Indian Sub Continent, Africa/Middle East and South America. Two key reasons are: increased mobile adoption, and low levels of penetration of both games consoles and fixed Internet. These in turn contributed to make a mobile phone the de facto gaming device.
Other findings from the Juniper report include:
- China and the Far East will remain the largest regional market for mobile games throughout the period covered by the report.
- Global revenues from in-game advertising will rise significantly from 2008 to 2013.
- Operators need to reduce data charges further for out of bundle customers to encourage casual mobile Internet usage and thereby stimulate the mobile entertainment market
More information about the report is available from Juniper’s website.