Meanwhile, the global number of smartphone users will grow +6.7% year on year to 3.5 billion in 2020, presenting a new pool of players and payers for the years to come.
In this article, we’ll dive deeper into these numbers, while also sharing our thoughts on the impact of the ongoing COVID-19 outbreak (in terms of mobile game revenues and smartphone usage). Finally, we’ll present our mobile market forecasts from 2020 through 2023.
Lockdown Has Led to Consumers Engaging with Mobile Gaming More Than Ever
National/regional lockdowns and travel bans across the globe have led to a significant increase in consumer engagement with mobile games, especially in mobile-first markets such as Asia, the Middle East, and Latin America.
Simply put, mobile’s portability and accessibility have solidified the platform’s dominance even further this year, partially due to a spillover effect from Internet cafes in certain markets (again, mostly in Asia).
What’s more, we’ve seen a slight increase in tablet usage in Q1 2020—the first instance of growth in almost two years. China, which was in strict lockdown throughout the entire quarter, drove the increase.
This Strong Engagement Will Trickle into Increased Revenues and it is proven
Naturally, the rise in playing time will lead to revenue growth for mobile gaming. But as it is infamously challenging to convert mobile players into payers, engagement growth will by far outpacing revenue growth—especially on Android, the dominant OS in many emerging markets.
Growth in direct consumer spending is also somewhat offset by the increasingly popular in-game-advertising (IAA) business model. Nevertheless, we forecast the market to reach $77.2 billion by 2020. An increased interest in gaming due to COVID-19-related lockdown measures is a primary driver.
In terms of the app stores generating these revenues, Apple and Google’s duopoly on the market still holds, but third-party-app-store revenues are growing faster:
- Apple’s App Store will generate $38.8 billion in mobile game revenues this year (+10.3% year on year), accounting for just over half of all mobile game revenues worldwide.
- Game revenues from Google Play, meanwhile, will hit $27.8 billion (+15.0% year on year) in 2020, claiming 36.0% of the global revenues.
- The remaining $10.6 billion will come from third-party Android app stores (+20.5% year on year). Google Play is banned in China, so the lion’s share of third-party revenues is driven by the Chinese market.
Future Outlook: Mobile Gaming on Track for Its First 100-Billion-Dollar Year
The mobile games market will continue to grow and cross the $100-billion mark in 2023. By then, we forecast the mobile games market to grow with a +10.8% CAGR (2019-2023) to $102.8 billion.
Hardware Manufacturers Face New Obstacles, But Active Devices and Users Are Still Increasing Fast
In the past few months, leading mobile manufacturers such as Samsung, Xiaomi, and Vivo have delayed new product releases due to the pandemic. With factories around the world grinding to a halt, the lockdown has disrupted the supply chain, which negatively affects the manufacturing and distribution of mobile hardware.
5G Rollout Will Be More Impacted, But the Future Still Looks Bright For The Upcoming Tech Connectivity
The extent to which the pandemic will disrupt 5G’s rollout globally is still difficult to gauge, but it seems it will be somewhat impacted. In many Western markets, carriers expect delays for 5G network deployments; yet, governments in Asia are still pushing hard for national rollouts.