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State of the Mobile Games Market

The Western mobile games market, which we broadly analyze by removing the Chinese, Taiwanese, Japanese and Korean markets from the numbers, saw overall installs climb by 14% to 47.5B while the net revenues declined by 11% to $38.2B.

In terms of revenue, the genres that took the most damage were:

#1 Racing (revenue -28%, downloads +8%)

The genre was down early a third down due to a decline across all titles. The decline of top-grossing titles Zynga’s CSR2 (-33%) and EA’s Need For Speed (-44%) had a big impact overall. The RPI (revenue per install) shows that new installs didn’t help offset the decline. The games that grew in installs were those with low levels of monetization such as Traffic Rider and Gameloft’s Asphalt 8.

#2 Shooters (revenue -24%, downloads +2%)

Apart from Mech Arena from Plarium and EA’s APEX Legends, all shooter titles declined in the Western markets. And unlike Racing, Shooter games also generally saw a decline in downloads as well.

Noticeably, Tencent’s PUBG Mobile and Garena’s Free Fire were both down 37%. Call of Duty Mobile lost 24% of revenue compared to a year prior. In terms of monetary value, we’re talking about a decline measured in hundreds of millions of Dollars.

#3 Action Games (revenue -18%, downloads +11%)

This is a very broad genre with lots of different sub-genres from MOBAs to Runners. The decline of the whole genre in the Western markets was caused by a decline in two of the most significant sub-genres: Brawlers and Fighting Games.

The Brawlers sub-genre is pretty much Brawl Stars. A game that really fell during 2022 losing nearly half of its revenues in the process. We analyzed the massive change in the game’s progression model earlier (Brawl Stars Ditched Loot Boxes - a Revolution or a Mistake?), and referred that the drastic changes were dictated by underperformance.

#4 Action Games (revenue -18%, downloads +11%)

Fighting games declined some 20% in the Western markets due to the decline of top titles: Mortal Kombat (-51%), Injustice (-38%), and Marvel Contest of Champions (-12%). But the genre's future looks positive due to the resurrection of the Marvel Contest of Champions. The game may very well set revenue records in 2023, which is a fantastic feat for a game that was launched in late 2014.

#5 Simulation Games (revenue -18%, downloads +16%)

Roblox, which brought well over a billion Dollars in 2021, declined by 27% in 2022 while not losing downloads. Interactive Story Games (-36%), Time Management (-29%), Dress Up (-28%) and Home Design Games (-36%) were also down significantly.

Not-a-Fun-Fact: Design Home (-33%) was acquired by EA in the Glu acquisition. Redecor (-28%) was acquired by Playtika in the Reworks acquisition. Based on Linkedin, both acquired companies have shed lots of talent, which may explain at least part of the decline as not everything can be dumped on the worsening economic environment.

As you can see from our data above (source: Data.ai) there was only one genre that grew revenues last year: Party games. It’s a niche genre that benefited from the breakout success of Stumble Guys. A game that Scopely ended up acquiring.

THE THREE MARKET OBSERVATIONS

Hours spent on mobile per day surpasses 5 hours.

The lockdowns over 2020 and 2021 significantly increased time on a device. Though the lockdowns are mostly gone, the time on devices continued to increase (9% YoY) at a more modest speed.

When looking at time spent in games, Creative Sandbox games such as Roblox and Minecraft dominate growth in many markets. Globally, time spent grew 25% from 2021 to 2022.

Conversely, Battle Royale (Shooting) games were among the biggest 'losers' of 2022 — seeing time spent decline by around 20% globally. Then again, markets that buck the trend include China and Saudi Arabia, where Battle Royale Games grew boomed by +15% and 45%, respectively.

The recession is hitting gaming, not apps

As the disposable income (measured by National Disposable Income Growth Index) decreased pummeled by interest rates and inflation so did the spending on games.

While games represent over 60% of apps in all measures, they were also the most affected by cooling consumer spending. The number of games surpassing $10M, $100M, and $1B spending dropped by -1%, -4%, -33% YoY respectively.

To be noted, game downloads continued to grow (+8% YoY) despite Apple’s privacy changes that have reshaped mobile marketing.

Apps on the other hand avoided the hit. Maybe because Netflix, Tinder, Spotify, and YouTube a seen more like bills rather than extra.

Games with IPs and/or high production values bucked the trend.

Consumer spending in Mobile Gaming Dropped -5% in 2022 to $110 Billion. Yet well-known IP games such as Diablo Immortal and Apex Legends Mobile saw success in adoption and IAP consumer spending as mobile games are now capable of offering console-like graphics and gameplay experiences. At the same time, cross-platform open-world RPG Genshin Impact continues to break new ground, crossing its $3 Billion in IAP Spend in Q2 2022.

Overall, in the key Western markets, MMORPGs, Roguelikes, Merge and Puzzle genres largely bucked the recession in terms of revenue.

In terms of downloads, it was Word, Merge, Roguelikes, Sandbox, and Party Games saw a rise in downloads.

psst: Here (LINK), you can read more about who’s bucking the recession from a Deconstructor of Fun report.

🎙️ Deconstructor of Fun Podcast

🎧 TWIG #215 THE 2023 PREDICTIONS 🎉🥳🥁🏆

TWIG’s 2023 Predictions. This week, the fearsome trio Eric K, Eric S, and Laura go through their 2023 Predictions: Eric K makes a call on the mobile & console markets, blockchain, China, and AppLovin; Eric S on content, M&A’s, brand advertising, and a few “too hot for TV” surprises; Laura on Apple & VR, monetization and innovation in mechanics. Until next week.

🎧 Lightheart's 5 Key Questions Behind Mr Autofire's $40m+ Success

If you've triggered a rewarded video ad anytime in the past few years, you have most likely seen a captivating, easy to understand advertisement for Lightheart Entertainment's hit game Mr. Autofire. With over $40m in lifetime revenue and still growing, Mr. Autofire is an understated and indisputable success story. In today's interview, Ethan sits down with Lightheart Co-Founder Miikka Ahonen about the founding of the company and the birth of Mr. Autofire. Most importantly, Miikka reveals the 5 Key Questions the Lightheart team used when assessing the concept behind the game and deciding whether this was or was not the right first game for Lightheart to bring to market.

Gaming Roundup

• Microsoft faces EU antitrust warning over Activision deal - sources

• Report: New YouTube policy leads to increased demonetisation of games content

• Saudi Arabia increases Nintendo stake to 6%

• Apple reportedly set to unveil AR/VR headset this year

• China takes steps to tighten grip on tech by acquiring 'golden shares' in Tencent and Alibaba