Abstract from 2014 Laurent MICHAUD Market Report on Mobile Gaming

Mobile gamingCrushing it

M14225IN3A – December 2015 – Synthesis

Digital Entertainment

This document is a part of our "Digital Entertainment" category which includes in 2014:- two datasets in Excel- a state-of-the-art report in PowerPoint- four market reports in Word, each with its synopsis in PowerPoint- privileged access to our lead Media analysts

Contents of the report

Synopsis

Copyright © IDATE 20142

1. Executive Summary

2. Methodology & definitions

3. Mobile gaming devices: smartphones and tablets top the list

3.1. Apple, the market booster3.2. Device wars: Samsung, Apple and the rest3.3. Handheld consoles vs. mobile devices3.4. The devices’ technical capabilities: smartphones have surpassed

handheld consoles

4. Target audience: everybody!4.1. Close to half of smartphone and tablet owners are mobile gamers4.2. The mobile gamer population is increasingly female and older4.3. Growing popularity of the tablet4.4. Mobile games: to relax and pass the time, sometimes multitasking4.5. Gamers spent an average 26.10 USD in 20134.6. Is mobile gaming cannibalising games on other platforms?

5. OS and app store wars5.1. Android: the OS that powers most mobile devices5.2. Android vs. Apple: twice the number of app downloads but half the

revenue5.3. iOS applications much more lucrative5.4. Android: app downloads and revenue both on the rise

This study takes a look at the state of gaming on mobile platforms – i.e. smartphones, tablets and handheld consoles – in terms of technology and device shipments, and in terms of usage which has been heavily influenced by innovations in interactivity and gameplay. It also explores the market from an industrial standpoint, against a backdrop of OS and app store wars, and takes a look at its economics, detailing the latest trends, success stories and wining business models. Lastly, the report provides market figures and forecasts up to 2018.

Mobile Gaming: Crushing it

6. The economics of mobile gaming6.1. Incomparable catalogues: a plethora of titles6.2. Mobile devices: the platform of choice for casual and social games6.3. Evolution of distribution models: swift and massive6.4. Business models6.5. Mobile games generate the bulk of app stores’ revenue6.6. An industry populated by disparate players6.7. Market expected to continue to flourish

7. Conclusion: how are mobile games impacting the gaming industry as a whole?

1. Mobile gaming devices: smartphones and tablets leading the way


1.1. Device wars: Samsung, Apple and the rest

> Samsung is the market leader with a 31% market share in terms of volume, well ahead of Apple with 15%.

> More than 1 billion smartphones sold in 2013, up from 725.2 million in 2012.

31%

15%

5%5%5%

39%

Samsung Apple Huawei LG Lenovo Others

Market share for the top five smartphone suppliers in 2013 (unit sales)

Source: IDC, 2014

Samsung Apple Huawei LG Lenovo

219.7

135.9

29.1 26.3 23.7

313.9

153.4

48.8 47.7 45.5

2012 Shipment Volumes 2013 Shipment Volumes

Source: IDC, 2014

Global smartphone sales for the top five suppliers, 2012-2013(Million units)


1.2. Handheld consoles vs. mobile devices

> IDATE estimates that 1,139.9 million smartphones and 283.8 million tablets were sold in 2014 .

> Smartphones represent 77.9% of the combined sales for these three types of device, compared to a paltry 2.7% for handheld consoles.

Handheld consoles could disappear in the medium term if:

· they do not manage to reinvent themselves, particularly in their ability to deliver online social gaming services and access to social media sites;

· and if they fail to fully embrace the cloud for electronic game sales and streaming.

Tablet sales, by geographical area, 2014-2018 (Million units)

Source: IDATE, Mobile gaming, January 2015

2014 2015 2016 2017 2018North America 87.5 94.7 99.8 102.5 103.6Europe 69.2 82.2 90.1 94.2 95.8 Asia-Pacific 113.9 154.5 191.0 225.5 250.4 Latin America 13.3 20.8 29.9 40.0 52.2 Total 283.8 352.1 410.7 462.2 502.1

2014 2015 2016 2017 2018North America 153.0 164.2 169.3 172.3 173.6 Europe 217.8 245.0 266.9 285.6 301.2 Asia-Pacific 662.8 800.4 920.0 1 021.0 1 112.6 Latin America 106.3 137.9 169.3 195.2 210.5 Total 1 139.9 1 347.5 1 525.5 1 674.1 1 797.9

2014 2015 2016 2017 2018North America 12.2 12.9 12.4 10.6 7.7 Europe 12.2 13.4 13.3 12.0 9.9 Asia-Pacific 14.1 15.1 14.9 14.0 12.5 Latin America 1.3 1.4 1.4 1.3 1.1 Total 39.8 42.8 41.9 37.8 31.2



Smartphone sales, by geographical area, 2014-2018 (Million units)

Handheld console sales, by geographical area, 2014-2018 (Million units)

2. Target audience: everybody!


Male Female0%

10%

20%

30%

40%

50%

60% 55%

45%49% 51%

43%

57%

2011 2012 2013

2.1. Mobile gamer population more female and older than total gamer population

> In 2013 in the United States, 47% of smartphone and tablet owners played a mobile game at least once in the past 30 days. · This percentage has increased by 9% since 2012 and

by 20% since 2011.

Females now the majority of mobile gamers While they account for less than half of all gamers all platforms combined, they represented 57% of mobile gamers in 2013. . · This percentage has been increasing steadily over the

past several years: + 12 points between 2011 and 2013.

> In 2013, 50% of mobile gamers played every day, compared to 30% in 2011.

> 82% of gamers play several times a week, compared to 61% in 2011.

> Gamers who play on their tablet play more than those who use other devices.

> For 46% of gamers, the time spent gaming has increased since 2012, but has remained identical for 45% of them

Percentage of smartphone and tablet owners in the United States who are mobile gamers, 2011-2013

Source: Popcap Games – Information Solution Group

Gender breakdown of mobile gamers in the United States, 2011-2013

Source: Popcap Games – Information Solution Group

U.S. consumers who played a mobile game at least once (1,205)

Mobile Gamers - U.S. consumers playing a mobile game in the past 30 days (1,008)

0%

10%

20%

30%

40%

50%

60%

42%

27%

50%

38%

56%

47%

2011 2012 2013

3. The OS and app store wars


3.1. Android is the number one operating system in terms of tablet, smartphone and handheld console sales.

> Android is the OS that powers most mobile devices.

> Android outperforms Apple in terms of app downloads

> Apple’s App Store and Google Play are the market’s two biggest applications stores in terms of inventory and downloads. · In July 2014, each was offering over 1 million applications,

well ahead of the Windows Phone Store, the Amazon Appstore and BlackBerry World.

· These top two app stores combined represent 78.8% of available applications.

Market share for the different tablet, smartphone and handheld console OS, in 2013

Source: Statista

19%75%

3%1%

2%

iOS Android Windows MobileSony Nintendo


Number of applications available on the main app stores, in July 2014

Google Play Apple App Store Windows Phone Store

Amazon Appstore

BlackBerry World0

250,000

500,000

750,000

1,000,000

1,250,000

1,500,000

1,300,000 1,200,000

300,000 240,000

130,000


3.2. Android: more downloads but less revenue

>According to a report published by App Annie, in Q3 2014 there were 60% more downloads from Google Play than from the Apple App Store. > But Apple well outpaces Android in terms of revenue generated: in that same quarter, the revenue earned by Apple’s App Store was 60% higher than revenue the generated on Google Play.

> iOS applications are much more profitable.> Average revenue per download stands at 0.02 USD for an Android application, and at 1 USD for an iOS application. > The average revenue generated by an Android application is 1,125 USD, compared to 4,000 USD for an iOS application.

Comparison of app downloads and revenue on the iOS App Store and Google Play, in Q3 2014

Source: App Annie

Source: Forbes

Google Apple Microsoft

Number of apps per developers 5 5 3

Number of downloads per app 60 000 40 000 4 062

Revenue per download (USD) 0.01875 1 0.1538

Average revenue per app (USD) 1 125 4 000 625

Average revenue per developer (USD) 6 000 21 276 2 222

How much do apps make on average on the different app stores? (2013)

4. The economics of mobile gaming


Platform Number of games

PlayStation Store 2 750

Nintendo e-shop 1 507 (in 2013)

Xbox Live Marketplace 1 770

Uplay (only PC games) Over 400

Facebook 13 063 (in 2013)

Steam 3 700

Apple App Store 244 560

Google Play 201 500

4.1. Incomparable catalogues: a plethora of titles

> In 2014, there were more than 200,000 games available in each of the main app stores.

> Mobile games represented 15.5% of the applications on offer on Google Play, and 20.4% of those available on the Apple App Store.

> Mobile games far outnumber games available on other gaming platforms.

Number of games available on digital distribution platforms, in November 2014(all platforms combined)

Source: IDATE, based on industry figures, October 2014


4.2. Evolution of distribution models: swift and massive + FTP

> The top earning iOS game in 2013 brought in 633,000 USD a day: Candy Crush Sage from King.com. > In 2014, the top earning game, Clash of Clans (Supercell), generated 1.4 million USD and attracted close to 69,000 new players a day. > More than 90 million people around the world play Candy Crush Saga (King.com) every day. > The number 10 title in 2013, Big Fish Casino – Free Slots, Blackjack, Roulette, earned 150,000 USD a day.> The number 10 title in 2014 earned 120,000 USD a day.

> All of the 20 most popular games in the US in 2014 were Free2Play, compared to the top 18 in 2013. > On Apple’s iTunes Store, paid games now account for only 8% of the entire catalogue of games, compared to 47% in 2012. > The Free2Play and pay to play models co-exist, but the first is much more common. Even the video game industry’s veteran players are investing in mobile games, and mobile game pure players have entered the Freemium fray, starting with EA and Gameloft. > The purpose of this model is to pique players’ interest before getting them to pay. Once they have been won over, they will buy virtual goods, etc. depending on how serious they become about the game.

Top 20 iOS games in 2014 in terms of revenue

Source: Thinkgaming.com, October 2014

Source: Statista

Segmentation of iOS games by business model, in February 2014

Game Publisher Price Daily revenue (USD)

Daily new users

Clash of Clans Supercell Free 1 387 620 68 594

Candy Crush Saga King.com Limited

Free 1 097 578 54 085

Game of War - Fire Age Machine Zone Free 710 273 32 903

Big Fish Casino – Free Slots Vegas Slots & Slot T

Big Fish Games

Free 336 687 16 728

Kim Kardashian: Hollywood Glu Games Free 265 706 22 531

Farm Heroes Saga Zynga Free 222 904 2 269

Hay Day Supercell Free 186 878 21 802

Slotomania - Free Video Slots Games

Playtika LTD Free 157 629 12 132

Boom Beach Supercell Free 135 155 21 319

The Simpsons™: Tapped Out Electronic Arts Free 119 457 22 043

92.00%

6% 2.00%

5. A market that will continue to flourish


5.1. A gamer population that keeps on growing

> IDATE estimates that in 2014, there were 630.7 million smartphone gamers around the world and 277.2 million tablet gamers .

> On both smartphones and tablets, more than 40% of the world’s mobile gamers live in the Asia-Pacific region and, in 2014, 17.3% were located in China.

> In 2014, 8.7% of the world’s population played games on a smartphone, and 3.8% played games on a tablet. The percentage of the population that are smartphone gamers will increase by 2 points between 2014 and 2018, while the percentage of tablet gamers will increase by 4.4 points.

2014 2015 2016 2017 2018Asia Pacific 274.3 299.1 321.8 341.8 360.5

EMEA 139.2 150.8 162.9 175.7 189.2

Latin America 82.3 86.0 90.5 96.3 103.7

North America 135.0 139.1 142.5 144.9 146.6

Total Worldwide 630.7 675.0 717.7 758.7 800.1

Growth rate 8.5% 7.0% 6.3% 5.7% 5.5%

2014 2015 2016 2017 2018Asia Pacific 115.8 172.7 231.1 287.1 334.2

EMEA 62.3 75.3 86.1 94.5 101.7

Latin America 38.9 56.0 72.0 86.9 103.3

North America 60.1 66.0 69.8 72.1 73.4

Total Worldwide 277.2 370.0 459.1 540.6 612.7

Growth rate 44.6% 33.5% 24.1% 17.8% 13.3%

Number of smartphone gamers, by geographical area, 2014-2018 (Million)



Number of tablet gamers, by geographical area, 2014-2018 (Million)

2014 2015 2016 2017 2018

9,306 10,684 12,074 13,397 14,7333,505

4,6245,792

6,9678,181

Smartphone Tablet


Tablet vs. smartphone gamers, 2014-2018(millions)


5.2. A market (re)invigorated by tablets

> The mobile gaming market represented 12.8 billion EUR in 2014, with 72.6% of this revenue generated by smartphone games.

> In 2014, 42% of market revenue was generated in Asia-Pacific, and 30% in North America.

Global mobile gaming market, 2014-2018 (Million EUR)

2014 2015 2016 2017 2018

9,306 10,684 12,074 13,397 14,733

3,5054,624

5,7926,967

8,181

Smartphone Tablet

42%

23%5%

30%

Asia Pacific EMEA Latin America North America

Global mobile gaming market, by geographical area




5.3. Asia dominates the global market

Mobile gaming market in 2014, by geographical area


3.8 billion EUR

0.6 billion EUR

3.0 billion EUR

5.4 billion EUR


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Abstract from 2014 Laurent MICHAUD Market Report on Mobile Gaming

Data & Analytics