Cross-cutting trends 2013 - 2014

About the main trends in the mobile games industry of the outgoing year and what to expect in the near future – in our New Year’s Eve “program” material.  

Market saturation and absolute dominance of free-2-play

2013 is the year of the beginning of the oversaturation of the market. It is already clear that he cannot feed everyone (less than 0.01% of released games become successful titles), but the required quality bar has not yet soared too high (box office hits were developed by teams of 4-5 people in a few months), therefore, in theory, a relatively small project can still shoot (but only with a solid marketing support, or aggressive Apple features).

As a result, we have the following situation: a large number of high-quality projects are coming out. The word “quality” does not mean that the projects are interesting and good, but that they are made in terms of graphics/ code at the same level with the market leaders. 

A large number of projects (the presence of intense competition) has led to an increase in the cost of traffic.

This has begun to remove from the scene those teams that do not have large budgets for promotion. It also made it pointless to develop paid projects.  

Why?

With marketing infusions / promotion by the platform holder, the project receives traffic, which provides a high level of visibility (a place in the showcase). 

A free-2-play project, having received a certain number of installations, under favorable conditions begins to earn a certain percentage of users for a certain period of time (which can last for years). 

A paid project cannot do this. He, as a rule, is deprived of IAP, plus it is expensive to buy installations for him, it may turn out that traffic will be more expensive than the amount that can potentially be earned from the project.

While Apple’s aggressive support /high-profile brand still allows you to earn on paid games. But we need to understand that the situation will worsen next year. 

Most likely, traffic prices will reach a critical level. Only a very limited number of companies will be able to afford its purchase. All others will be thrown out of the market or absorbed. 

Paid applications from independent developers will remain only as a very narrow niche that will be supported by platform holders.

In other words, it will be possible to draw a direct analogy with the film industry, where there are several leading studios producing box office films, as well as many small studios sponsored by independent foundations that produce the so-called art house.

Growing up of the audience

One of the main features of the mobile games market is its extremely large audience. Today, almost 1 billion people play on smartphones and tablets. No game console could even dream of something like this. 

So far, for most of this audience, match-3 is the perfect pastime. But it is important to understand that very soon a solid part of it will want more complex products. 

Actually, the appearance of such a phenomenon as midcore a year ago was the first bell, a hint of the emergence of a more demanding audience. In the same year, we observed its growth (along with the growing popularity of Clash of Clans, its numerous clones, the appearance on the market of a large number of wargames, tactical strategies, action games and tower defenses). 

Expansion from the East

In October of this year, the Japanese App Store overtook the US in terms of revenue from mobile applications. Google Play of South Korea even earlier turned out to be larger than a similar state. The Chinese App Store, in turn, came close to the American one.

The growth of income from these countries was largely facilitated by the popularization of messengers in them, free tools for communicating over the network, in fact, analogues of the once popular PC – ICQ. 

It’s funny: the rapid revenue growth of entire regional application markets is only a consequence of the successful monetization of messengers. 

But here it is important to understand a couple more fundamental points

This year in Japan and South Korea, the stage of transition of the audience from featured phones to smartphones has entered the final phase. This has led to an increase in the paying audience of iOS and Android, which is against the background of a traditionally higher percentage of paying players (and an average check than in the USA and Western Europe). As a result, the figures are astronomical in terms of revenue.

In China, the growth of smartphone penetration has also played a crucial role. Although it is not worth talking about very large numbers due to the high level of piracy and the fragmentation of markets.

In general, the increase in the money supply brought to the leading players of these markets led to the beginning of the second wave of Asian expansion. At the moment, it is expressed only in buying and investing in leading Western companies. Next year, perhaps, we will witness a large number of transactions, like the one that took place this fall between GungHo and Supercell.

But we also do not exclude the interpenetration of Western and Asian markets. The success in the Japanese market of King, Supercell and Social Quantum titles suggests the possibility of such a scenario. 

***

These trends seemed to us the most important. Although, of course, it was possible to recall the growth of Google Play, and the increase in budgets for the development itself (we mentioned marketing), the formation of the Middle East market and the emergence of new regions for a “soft launch”. But I think it will be better to talk about them next year!

Happy New year! Tomorrow you will find a lot of material about the best games of 2013!