Sales of mobile games are projected to hit a 10-year low.
Boosted to prominence by the rise of smartphones and then app stores beginning around 2008, mobile gaming now represents roughly half of the nearly $200 billion games market, but sector analysts warn that figure is falling in key regions.
On Thursday (Dec. 15) the Financial Times reported that 2022 mobile gaming revenues are expected to be down by 6.4% to $92.2 billion, citing data from gaming research firm Newzoo, calling it “a sharp reversal” from the 7.3% rise in mobile gaming in 2021 and far off the 25.6% spike “in 2020 when lockdowns drove an increase in consumers’ appetite for virtual entertainment.”
FT added that research group Ampere Analysis “last month downgraded its forecast for the year to a 6.4% decline, or $6 billion less than 2021, driven by weakness in the U.S., China, and Japan, the world’s biggest gaming markets,” calling the drop a “wake-up call for the industry.”
Contributing factors for the drop in mobile gaming are largely in line with the bad economy and belt-tightening among consumers, particularly mobile gamers who are younger with less disposable income for nonessentials like game subscriptions or in-app purchases of extra lives, virtual apparel, and other trappings of the gaming universe, mobile, console, and desktop.
PYMNTS research spotted this one early. According to the September “Subscription Commerce Conversion Index: The Challenge of Cheaters” edition, a collaboration with sticky.io, “The share of consumers not subscribed to any service in July rose by 19% from May. Streaming services bore the brunt of this belt-tightening, losing 10% of their subscriber base on average.”
Read the report: Subscription Commerce Conversion Index: The Challenge of Cheaters
Game Makers Can’t Beat Slowdown
The downbeat forecasts are showing up in earnings outlooks.
During its fiscal second quarter 2023 earnings call in November, Take-Two Interactive CEO Strauss Zelnick said, “We now expect to deliver net bookings of $5.4 billion to $5.5 billion in fiscal 2023. Our reduced forecast reflects shifts in our pipeline, fluctuations in FX rates, and a more cautious view of the current macroeconomic backdrop, particularly in mobile.”
Take Two, whose titles include genre-defining games like Grand Theft Auto, completed its acquisition in May of mobile games company Zynga, which publishes popular mobile games such as Words With Friends and FarmVille, for $12.7 billion.
In addition to gamers trimming subscriptions, some are blaming Apple’s App Store ad policies for the downturn, with FT reporting that, “Last year, an iPhone software update required developers to get users’ consent to tracking — a policy known as App Tracking Transparency, or ATT — and most people did not opt in.”
The move “wiped billions of dollars from advertising revenues at Facebook, Twitter, Snap, and YouTube last year, and the games industry is still grappling with the fallout,” FT said, as game makers can no longer target gamers based on behavior sans permissions they’re not getting.
Other factors are also causing a drag on the mobile gaming category.
PYMNTS reported in October that “Regulators in the U.S., the U.K., and the EU have each recently called for a crackdown on digital ads targeting kids, blaming big tech for not doing enough to prevent young people from seeing ads and other marketing messages promoting things ranging from sugary, high-calorie foods to pop-ups that encourage them to make in-game purchases.”
Read more: Protecting Kids From Metaverse Marketing Is No Game
How Consumers Pay Online With Stored Credentials
Convenience drives some consumers to store their payment credentials with merchants, while security concerns give other customers pause. For “How We Pay Digitally: Stored Credentials Edition,” a collaboration with Amazon Web Services, PYMNTS surveyed 2,102 U.S. consumers to analyze consumers’ dilemma and reveal how merchants can win over holdouts.
