Everyone is in recession: The industry serving nearly 4 billion users, the scale of hundreds of billions of dollars falls into the first ‘fall’ in history

Mobile games have been around since Nokia’s Snake game in the late 1990s. But the arrival of the App Store (Apple) in 2008 ushered in a new era with more than 10 years of development. explosive growth and shows no signs of cooling down.

In 2021, there are about 3.9 billion smartphone users worldwide, according to data from Newzoo. Most of them have at least once played a video game on their phone. Therefore, mobile games by 2021 have become a market worth 116 billion USD and account for half of the total revenue of the gaming industry.

The first drop in the history of establishment

However, according to a report from application analytics firm Data.ai, the amount of money users pay for mobile games has decreased in 2022. The reason is due to rising inflation, consumers have to thrifty spending and hesitation before purchasing decisions. Mobile games are not an essential and urgent need, so this “arbitrary” cost is chosen as the top cut option.

Spending on mobile games fell 5% globally, from $116 billion to $110 billion in just one year, according to data provided by Data.ai. This is the first drop. Also according to a July 2022 study by market data company Ampere Analysis, not only mobile games, game sales, including console and PC games, have fallen 1.2 percent. % year-on-year to $188 billion in 2022.

Despite the decrease in “spending”, game installs on mobile phones still increased by 8%, reaching a record 90 billion downloads. Games in the “hyper-casual” genre topped the charts.

Hyper-casual is the game with the most minimalist content compared to other games. These games will have a simple gameplay, players can play immediately after installation without any instructions.

Hyper-casual does not need beautiful graphics, catchy sounds or tough puzzles, but attracts players with simple, repetitive but “scrolling” operations. For example, Helix Jump of this genre is globally popular game and has been trending for a very long time.

In recent years, the evolution of mobile games has become a prominent story in the gaming industry. So many publishers have bet big on mobile game apps.

Early last year, video game company Take-Two bought mobile game company Zynga for $12.7 billion. In 2016, Activision Blizzard, Microsoft’s game company, also acquired King Mobile – the maker of Candy Crush Saga for $5.9 billion. In particular, some time ago, Microsoft also bought Activision Blizzard for $ 69 billion.

However, rising interest rates and inflation have greatly affected the growth of the mobile game industry. According to Data.ai research, non-game apps are already more resilient in 2022.

Revenue for those apps grew 6% year-over-year to $58 billion. Dating apps and short video formats like TikTok have grown tremendously. Installs of these apps increased 13% year over year to 165 billion downloads.

New difficulties in 2023

The mobile gaming industry is expected to face many difficulties in 2023. Apple has introduced App Tracking Transparency. This feature requires apps and websites to consult users before they can be tracked. In the Settings section, users will also be able to review which apps require tracking and can grant or block arbitrary permissions. Even Google plans to adopt this feature.

This limits advertising features and affects the recognition of video games. Because many game publishers are successful in part because advertising has shaped the insights of their target customers and delivered the right games to them. But now, they can’t do that anymore. In 2023, Data.ai expects mobile game revenue to drop another 3% to $107 billion.

Associated influence

The slowdown in mobile gaming growth has impacted the global digital economy. Because video games have become one of the biggest revenue streams for digital advertising platforms and mobile app stores. It contributes tens of billions of dollars in marketing spend and sales commissions each year.

Apple, Google and Meta also report that the same amount of money users spend on games has led to a drop in their most recent quarterly revenue. Even some mobile game companies that have benefited the most during the Covid-19 pandemic have had to make some radical changes this year to adapt to macroeconomic conditions.

Take for example Voodoo, the France-based company that has become one of the largest mobile game publishers on the App Store based on downloads. However, when advertising prices increase by 15-20%, it means that the cost of attracting new players will be more expensive and the launch of new games will also face many limitations.

“We had to change our entire strategy to more casual and traditional gaming,” says Alex Yazdi, Voodoo co-founder and CEO. Apple’s adoption of the new feature also caused ad revenue on Facebook, Twitter, Snap and YouTube last year to “evaporate” billions of dollars.

Besides, in this shaking of the mobile game market, it seems that the big winner is only Candy Crush Saga, the 10-year-old game of Activision Blizzard. It was the highest-grossing game franchise in the US app stores for 21 consecutive quarters.

Currently, some leaders of many game publishers are pessimistic about the business prospects of this industry. However, the future development is still a mystery.

Synthesis