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George Jijiashvili, Senior Analyst at Omdia is joined by Jonathan Stringfield, VP at Activision Blizzard Media, Kristan Rivers, CEO at AdInMo and Juan Francisco Di Nucci CEO at AWG, to unpick the current key trends in the mobile games industry and identify opportunities for the broader mobile ecosystem.

The mobile games market continues to experience impressive growth, further boosted by the pandemic. According to Omdia, end-user spend on mobile games is predicted to surpass $100 billion for the first time in 2021, generating $103 billion, or 62% of the total global games revenue. Importance of mobile games will only grow, as its total share is set to increase to 69% by 2025, when it is expected to bring in whopping $129 billion.

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Cloud gaming and game subscriptions pick up pace

Cloud gaming is now gaining real momentum, as it is set to grow from just $1.4bn in 2020 to $12bn in 2025, according to Omdia. Most of the vital pieces are finally coming together to make cloud gaming a viable option for both serious and casual gamers; this includes rapidly expanding fast internet connectivity globally, 5G network rollouts, improved video streaming technology, and growing availability of appealing content. Helped along by the investments from leading game companies and tech giants, adoption of cloud gaming and game subscription services are accelerating.

Juan Francisco Di Nucci highlights that these developments “lower the barriers to entry” for playing premium game titles, which in the past were only available to the owners of consoles or powerful PCs. Meanwhile, mobile game developers are increasingly implementing subscriptions as part of their efforts to forge long-lasting customer relationships, boost user retention and drive revenue growth.

It’s clear that a cure-all business model doesn’t exist: all monetization methods will continue to coexist within the games ecosystem, including one-off purchases, microtransactions, subscriptions and advertising.”

In-game advertising brings opportunities and pitfalls

In-app ad revenue’s share of the total mobile games market value is growing, as game publishers turn to advertising as a supplementary or primary source of revenue. In-app advertising brought in $43bn in 2020 (or 32% of the total mobile games revenue), which is set to grow to $94bn in 2025 (or 42% of the total).

Developers however must be wary of in-game advertising’s many pitfalls – and as Kristan Rivers points out, “effective monetization must be balanced with gamer experience”.

It’s clear that a cure-all business model doesn’t exist: all monetization methods will continue to coexist within the games ecosystem, including one-off purchases, microtransactions, subscriptions and advertising.

For game makers, the biggest challenge will be understanding the interplay between game mechanics and monetization methods, as well as utilizing the right combination of those models.

Changes to IDFA oblige game makers to alter their approach

Apple’s imminent user-privacy rule changes, limiting advertisers’ access to the unique identifier for iOS devices (IDFA), will cause iOS in-app advertising revenue to dip by 17% below original expectations this year, according latest projections from Omdia. iOS users will remain highly valuable targets for advertisers and game makers: in 2020, iOS users spent on average 4.7 times more on apps than Android users.

There is a growing sentiment that the changes to IDFA are net-positive for the games industry, which – as Jonathan Stringfield noted – “got enamored with up-front targeting and tracking via click-through and lost track of the key business metrics”. In many ways, it will serve as a course-correction for the industry, forcing companies into better practices.

The webinar video goes into greater depth into these and other near- and long-term term industry trends. It also includes further questions from the audience.

Available to download now – Omdia’s Cloud Gaming and Subscription Revenue Forecast: 2020-25
This report provides a global forecast of cloud gaming market revenue from 2017 through 2025, covering 50 markets. For more information about this forecast, please contact George.

George Jijiashvili

Senior Analyst, Omdia