Newzoo Free Report Spotting the Mobile Spenders V1

© 2014 Newzoo

SPOTTING THE MOBILE SPENDERSAn Analysis of Paying Smartphone and Tablet Gamers

NEWZOO FREE DATA REPORT

© 2014 NEWZOO | NOVEMBER | V1

GLOBAL WITH A FOCUS ON US AND WESTERN EUROPE

1.5bnThis Year

People Will Have Played a Game on a Smartphone or Tablet: 51% of the Global Online Population

Of Them

32%Will Have Spent Money On or In a Mobile Game: 485 Million Consumers

NORTH AMERICA: 151M (49%) NORTH AMERICA: 42% (64M)

© 2014 Newzoo

KEY 2014 FACTS

© 2014 Newzoo

$4.30Paying Mobile Gamers Spend

Per Month On Average This Year For All Mobile Gamers

Worldwide Combined

Totaling

$25bnIn Revenue Generated by Tablets and (Smart)Phone Games WorldWide

NORTH AMERICA: $7.68 NORTH AMERICA: $5.9bn

KEY 2014 FACTS

46%

Share Mobile SpendersClose To That Of Console/PC

Of all US & W-EU Mobile Gamers This Year

Spends Money, Compared to 36% 2 Years Ago.

Mobile games, dominated by the free-to-play business model, are not as different from console or PC gaming as

one might think in terms of paying players. In two years time, the share of spenders on a global scale has risen from

36% to 46% in Western Europe and the US combined. This share is 67% for console gaming and 59% for gamers that

play MMO type games. This increase in paying mobile gamers is one of the main drivers of revenue growth in

mature markets. Monthly single digit conversion rates of individual games are often misinterpreted as share of

mobile gamers that spends money.

© 2014 Newzoo

KEY TAKE-AWAYS

64%

Amazon Best inReaching (Big) Spenders

Of all Mobile Gamers that use the Amazon Appstore,

Spends Money on Mobile Games vs 41% on Average and 37% for Google Play.

Analysts and press focus predominantly on the iPhone, iPad and Google Play app stores. The Amazon Appstoreon Fire devices, Android, and preloaded on BlackBerry is

often overlooked. A closer look not only reveals large absolute gamer numbers in the US and Western Europe

but, more importantly, shows that gamers using the Amazon Appstore are the most likely to spend money. In

addition, it boasts a relative high reach amongst the valuable family-oriented demographic. Developing and

marketing games for the Amazon Appstore could prove most effective compared to other app stores and is

certainly undervalued at the moment.

© 2014 Newzoo

KEY TAKE-AWAYS

Screen Segmentation:Mobile Can Take 50%

In 2017, Mobile Games Are Anticipated To Take

When slicing gamer revenue data across the four typical screens used by a consumer, it comes as less of a surprise

that the share of mobile games has grown so explosively towards the 29% it will take this year. According to our Screen Segmentation ModelTM, it could grow to 50%.

© 2014 Newzoo

KEY TAKE-AWAYS

37%Of Global Games Market Revenues. 29% This Year.

COMPUTER ENTERTAINMENT FLOATING PERSONAL

58%

Growth Will Continue,Driven by Multiple KPIs

Of the $7.4Bn Year-on-Year Growth of Mobile Revenues,

Was Generated by Mature Markets (NAM/W-EU, JP/KOR).

© 2014 Newzoo

The mobile games market in mature markets is not saturated as some analysts claim. Investigating app store revenues and

single-game metrics does not reveal the dynamics behind growth. Understanding growth potential requires looking at

KPIs in a broader manner, revealing key local differences.

POPULATION CONNECTIVITY GAMERS SPENDERS AVG. SPEND/MONTH REVENUES

KEY TAKE-AWAYS

51%

The Big Spender Is a Family Man With A Full-Time Job

Of All Mobile Spenders oniPad & Amazon Fire Devices,

Have Children at Home versus 34% for All Non-Spenders.

© 2014 Newzoo

The majority of (big) spenders on mobile are male and have kids. For men the share of spenders rises with age, for women

it drops. On average one in five mobile spenders is a man older than 35. Spenders are also most likely to have a full-time job

and a large income. More than a third of mobile spenders play together with their children regularly and spend a large share

of their game budget on their kids. Mobile spenders do a lot more shopping, are more active on Twitter and Google+ and

have a distinct preference for certain mobile service providers. In-depth profiling of spenders illustrates that this is a valuable

target audience also outside of their game spending behaviour.

KEY TAKE-AWAYS

NAM EMEA

LATAM APAC

This year, games played on phones and tablets will gross $25Bn in revenues worldwide. With 1.5 billion mobile gamers, it is easily the most popular games market segment on the planet. This immense audience will ensure the market share of mobile will continue to rise. Depending on region, a specific “stack” of growth KPIs is at work, including rising connected population, share of paying gamers and average spend. Analysis of data on these KPIs, confirms that there still is enough room for growth, also in mature markets such as the US and Japan. Mobile gaming has tapped into new game time and wallets but cannibalization of other market segments is increasing. This does not imply that console and PC gaming are going to disappear or be decimated by these portable screens. After all, from a consumer perspective, these are different screens with their own characteristics and role in a persons’ life.

We aim to provide our clients insights that go further than app store data and in-game metrics, ultimately to outsmart competition. To do this, we combine financial market analysis, primary consumer research in 25 countries, app store / transactional data and census KPIs for the top 120 countries by game revenues. This report provides a glimpse of what we do. It also aims to take away a number of common misperceptions, including:

The US mobile games market is saturatedThe share of spenders for mobile is significantly lower than for PC and console Overestimation of mobile games revenues in Latin AmericaUnderestimation of the Asian market in general and Japan specificallyUndervaluation of revenues generated outside of iOS and Google Play

Enjoy our latest report. Feedback is more than welcome! Peter Warman

CEO Newzoo

$5.9Bn

2014 GLOBAL MOBILE GAMES MARKET | GAMERS & REVENUES

© 2014 Newzoo

INTRODUCTION

150M

$5.0Bn

450M

$13.5Bn

740M

$0.5Bn

160M

MOBILE GAMERS MOBILE GAMERS

MOBILE GAMERSMOBILE GAMERS

MOBILE REVENUES MOBILE REVENUES

MOBILE REVENUES MOBILE REVENUES

© 2014 Newzoo | Source: Global Games Market Report Premium

Mobile Console MMO

Free-to-play smartphone and tablet gaming evolve and show a similar share of spenders as console and PC gaming.

A common misunderstanding is that a pay-upfront business models give a 100% player/spender ratio. In the case of console gamers in the US, UK, Germany and France for instance, 33% of console gamers never spend any money. The share of paying players used to be even lower (59% in 2012) but digital distribution and DLC has helped to match smaller budgets. For mobile games, the ratio has gone up from 36% to 46% in two years time, a key driver of revenue growth in mature markets. Monthly single digit conversion rates of individual games are often misinterpreted as share of mobile gamers that spends money.

© 2014 Newzoo

MOBILE SPENDERS ON THE RISE

SHARE OF SPENDERS PER MARKET SEGMENT FOR US, UK, GER, FR | 2012 VS 2014

AGGREGATE OF US, UK, FR, GER


260MBIG SPENDERSMOBILE GAMERS

© 2014 Newzoo

SPENDERS DIFFER PER COUNTRY

SHARE OF MOBILE GAME SPENDERS PER COUNTRY | 2014

AVG

Behind the size of a market in total revenues, gamer behavior differs enormously per country. Understanding these complex dynamics can result in smart international and marketing strategies.

Surprisingly, Spain has the second highest share of big spenders after the US, with 7.1% of Spanish paying gamers classed as whales. Fellow European countries, Germany & The Netherlands, have the smallest share of whales with less than 4% each – lower than both Poland and Turkey.

6.8MIN THESE 10 COUNTRIES COMBINED


HOW APPSTORES COMPARE

© 2014 Newzoo

iPhone iPad Google Play Amazon

© 2014 Newzoo

AMAZON REACHES (BIG) SPENDERS BEST

SHARE OF MOBILE GAME SPENDERS PER APPSTORE | US, UK, GER, FR | 2014 While the world focuses on the battle between iOS and Google Play, it is Amazon that reaches the most valuable crowd.

A closer look at spending behaviour per app store not only reveals large absolute gamer numbers but, more importantly, shows that gamers using the Amazon Appstore are the most likely to spend money. These gamers also have a high share of big spenders characteristic for tablets such as Amazon’s most popular devices: the Fire Tablets. Combined with it’s more family-oriented demographics, the opportunity might be largely underestimated, suggesting developers should shift marketing resources towards the Amazon Appstore.


47.7% 57.1% 36.5% 64.2%

© 2014 Newzoo | Source: Newzoo Data Explorer

LEVEL OF SPENDING AMONGST ALL MOBILE GAME SPENDERS PER APPSTORE | US, UK, GER, FR | 2014

SURFACE, FIRE TABLET, IPAD GAMERS EARN MOST

SHARE OF HIGH EARNERS AMONGST MOBILE GAMERS PER APP STORE | US, UK, GER, FR | 2014 The app stores on iPad, Surface and Fire tablets reach mobile gamers with a relatively high income.

On average, 19% of the online population in the US, Germany and France has a high income. Google Play with its large and broad user base equals the average score. The stores that are used on tablets have a share of mobile gamers with a high income that is twice the average. The Windows Surface scores best, just ahead of the iPad and Amazon’s Fire tablets


© 2014 Newzoo


Japan’s feature phone gaming heritage evolves into smartphone and tablet gaming and results in an epic battle between Google Play and iOS for the market that will reach $6Bn this year.

As it currently stands, the Google Play Store has a higher reach amongst Japanese gamers than both of Apple’s stores. Over 50% of (non)paying gamers are using the Playstore store to download games. Paying gamers are much more likely to use the Apple App store for iPad store than non-paying gamers.

SINGLE COUNTRY SCOPE: JAPAN

JAPAN, WORLD’S LARGEST MOBILE MARKET

© 2014 Newzoo

IPHONE, IPAD, Google Play STORE USE AMONGST MOBILE GAME SPENDERS AND NON-SPENDERS | JAPAN | 2014

44% of all spenders (aged 10 to 50, Japan) use the iPhoneApp Store to download games


PROFILING THE MOBILE GAME SPENDER

© 2014 Newzoo

AGE / GENDER SPLIT FOR PAYING MOBILE GAMERS PER APPSTORE | US, UK, GER, FR | 2014Mobile games equally attract male and female players but when it comes to spending money, the demographic skews male.

Across the app stores, males make up between 61%-65% of the paying gamers depending on app store. The Amazon Appstore has the highest share of older paying gamers, with 24% male between the age of 36-50. Paying gamers using the Apple App Store for iPhone skew the youngest.


MAJORITY OF SPENDERS ARE MALE

© 2014 Newzoo

64%65%61%61% 36%35%39%39%


Half of mobile game spenders has kids at home. Tablet spenders are more likely to have kids at home.

A slight majority (51%) of both iPad and Fire Tablet mobile game spenders lives with children at home. More than one third of parents play games with their kids regularly and more than half of mobile game spending Dads state that the majority of their money is spent on games for their kids.


TABLETS FIND A FAMILY HOME

© 2014 Newzoo

HOME SITUATION FOR PAYING MOBILE GAMERS PER APPSTORE | US, UK, GER, FR | 2014


SOCIAL NETWORKS / APPS USED BY (NON-)SPENDING MOBILE GAMERS | US | 2014 Mobile game spenders are huge digital media consumers and more active on social networks than non-spenders.

American mobile game spenders are more active users of social networks and apps, particularly Twitter, Google+, Flickr and WhatsApp. 54% is an active user of Twitter versus 40% of non-spenders. Facebook use is close to equal for non-spenders and people that pay.

SINGLE COUNTRY SCOPE: US

US SPENDERS ARE TWEETERS

© 2014 Newzoo


MOBILE SERVICE PROVIDER USED BY (NON-)SPENDING MOBILE GAMERS | US | 2014 American mobile game spenders prefer the bigger brands when choosing a mobile service provider: AT&T and Verizon.

A surprising 24% of non-spenders in the US does not go for one of the four biggest telecom providers but selects a smaller player, most probably in a quest to get a better deal. AT&T beats Verizon in terms of popularity amongst paying mobile gamers.


US SPENDERS PREFER AT&T

© 2014 Newzoo


There is a strong correlation between mobile game spending behaviour and spending outside of entertainment and digital media.

In general, mobile spenders visit more different stores in a month period than non-spenders. BestBuy, Gamestop, Macy’s, Sears and Gap are far more popular amongst paying mobile gamers than the non-spenders. This shows this is a valuable target audience not only when it comes to digital content.


US SPENDERS ARE SHOPPERS AND LIKE TECH

© 2014 Newzoo

RETAIL STORE POPULARITY AMONGST (NON-)SPENDING MOBILE GAMERS | US | 2014


WHAT MAKES A CONSUMER START P(L)AYING?

© 2014 Newzoo

OPINION GETS GET PEOPLE PLAYING

WHAT DRIVES A CONSUMER TO START PLAYING (OR DOWNLOAD) A MOBILE GAME | US, UK, GER, FR | AGE 10-50 | 2014 The consumer’s voice is clearly the most important in selecting a game to play.

A recommendation from family & friends is a universal motivator for people to start playing a particular game. Good reviews are another key driver, highlighting the importance that gamers place on & their trust in the opinions of their peers.


© 2014 Newzoo


BIG SPENDERS ARE MORE COMPETITIVE

REASONS WHY A (MINOR/BIG SPENDING ) MOBILE GAMER STARTS SPENDING | US, UK, GER, FR | AGE 10-50 | 2014 The big spenders want to feel they are special and hope to get a competitive advantage compared to others. Minor spenders are in it for the (extra) fun.

Large spenders are far more motivated to pay by getting a premium account & being able to compete than minor spenders. Alternatively, making the game more fun is a more important reason to pay for the minor spenders.


© 2014 Newzoo


BIG SPENDERS TRY MORE GAMES

MAIN REASONS TO STOP PLAYING A MOBILE GAME AMONGST MINOR/BIG SPENDERS | US, UK, GER, FR | AGE 10-50 | 2014 Big spenders are more pressed for time and always on the lookout for a new (and better) game. Minor spenders leave when they are bored with the game.

Boredom is the key reason for minor spenders to leave a game (43%) though this is far less important for the big spenders (23%) who are most likely to quit once they have completed all levels of a game.


© 2014 Newzoo


WHY GROWTH WILL CONTINUE

© 2014 Newzoo

GLOBAL GROWTH CONTINUES

EARLY 2014 AND FRESH GLOBAL REVENUE ESTIMATES FOR (SMART)PHONE AND TABLET GAMES | 2013-2017 Fuelled by simultaneous growth in emerging as well as mature markets, mobile gaming will surpass $25Bn this year.

Both “mature” Western & emerging markets will show strong growth this year. The North American market is expected to grow 51% y-o-y and Western Europe by 47%. The fastest growth can be found in emerging Southeast Asian markets and China (+86%). Mobile is now expected to become the largest game segment by revenues in 2015,

Note: As part of the premium subscription to its Global Games Market Report, Newzoo updates clients on segments and regions every quarter based on continuous industry and market analysis. Results for the first nine months of 2014 have led Newzoo to adjust its 2014 full year forecasts, as well as the projections towards 2017. The figures below provide a summary of the revisions relating to mobile games.

GLOBAL DATA


© 2014 Newzoo

GROWTH DYNAMICS DIFFER PER REGION

KEY KPI’S BEHIND MOBILE GAMES REVENUE GROWTH | NORTH AMERICA, GLOBAL | 2014 As growth occurs on multiple levels, the ultimate end result is that market revenues soar. For each country in the world, the dynamics are different.

For mature markets such as North America, growth will be primarily driven by an increase in paying gamers & average monthly spend. Developing markets will flourish as online connectivity and the number of mobile gamers continues to rise.

358M 86% 151M 43% $7.68 $5.9Bn

POPULATION CONNECTIVITY GAMERS SPENDERS AVG. SPEND/MONTH REVENUES

7.2Bn 41% 1.5Bn 32% $4.30 $25.0Bn

GLOBAL AND NAM DATA

MOBILE MOBILE MOBILE MOBILE


© 2014 Newzoo

GLOBAL

27.7%NAM

44.0%

GLOBAL

13.1%NAM

15.2%

GLOBAL

38.7%NAM

25.6%

GLOBAL

20.4%NAM

15.1%

WHY MOBILE CAN TAKE HALF OF THE MARKET

SHARE OF 2014 TOTAL GAME REVENUES PER SCREENS | GLOBAL & NAM Divide in game revenues is slowly moving towards an equal split across the four typical screens a consumer has to access his or her digital content. Global figures are easily interpreted within the reference of one’s own country, especially in the US.

The Personal Screen, or (smart)phone currently takes 20.4% of all game revenues globally and 15.1% in NAM. We expect NAM to move closer to the global average before 2017, and for the Floating Screen to take an increasingly wider share of revenues across the globe.

GLOBAL AND NAM DATA


Company

Newzoo is an innovative global market research firm with a primary focus on games. We provide our clients with a mix of consumer research, transactional data and financial analysis

across all continents, screens and business models. We aim to be ahead the curve when it comes to global and local trends and

always put hard data into a broader perspective.

We work for the majority of top 25 public companies by game revenue, many independent game developers as well as a variety

of global hardware and media companies. The majority of our clients are based in the US, Japan and China. Our company has its headquarters in the center of Amsterdam. We recently kicked-off

our international expansion with an office in Shanghai, China.

Services

WWW.NEWZOO.COM [email protected]

© 2014 Newzoo

ABOUT NEWZOO

The data in this report is derived mainly from two of our products: Global Games Market Report Premium (12 months subscription)

Global, Regional, Top 100 CountriesAnnual PDF Report on Trends, Revenue/Gamer Data, Future Projections Granular Datasets (Updated Quarterly): 2013-2017 Gamer/Revenue DataQuarterly Updates with Trends, Mobile, Company Performance, M&A

www.newzoo.com/globalreportpremium

In-Depth Consumer Insights (12 months subscription)Available for 25 countriesCross-Analyze over 200 variables in the Newzoo Data ExplorerContinuous custom analysis support by our analysts

www.newzoo.com/newzoo-data-explorer

© 2014 Newzoo

SPOTTING THE MOBILE SPENDERSAn Analysis of Paying Smartphone and Tablet Gamers

NEWZOO FREE DATA REPORT

© 2014 NEWZOO | NOVEMBER

GLOBAL WITH A FOCUS ON US AND WESTERN EUROPE

Newzoo Free Report Spotting the Mobile Spenders V1

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