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Growth in app consumer spend is outpacing mobile games – and the industry’s top publishers are taking note and are breaking away from the space.
This week, EA’s Investor Day saw little mention of its mobile games business – despite the fact it uses the platform to inflate user numbers across its top IPs. But EA did dedicate a fair amount of time to mobile – largely for its new EA Sports app.
The app, which EVP and chief experiences officer David Tinson notably labelled as its first product beyond gaming, will provide users with the latest news, stats and highlights for sports, as well as include social features to engage with others. It will also include some ‘gamified’ features such as challenges and mini-games.
But the focus here was clearly on engaging with a wider non-gaming audience, as well as with players of its games when they aren’t playing its titles like EA Sports FC and Madden NFL.
“We see a big opportunity to expand our total addressable market and business beyond gaming,” said Tinson.
It’s in the app
EA isn’t the only games company looking outside of gaming. Last week PUBG developer Krafton announced an equity investment of ₩120 billion ($89.5 million) into South Korean streaming firm Spoon Labs. The company operates audio-only live streaming and podcast platform Spoon, and has launched short-form video streaming service Vigloo. It’s the largest investment by the firm in a non-gaming company.
Krafton said it was driven to invest by the “growth potential” of the short-form video drama market. You may start thinking about the ill-fated Quibi platform, which raised nearly $2 billion for short form video content and attracted top actors to the service before it famously crashed and burned within months of launch.
But as Variety reported earlier this year – short-form dramas are rising in China. In fact, citing Nikkei Asia, the most successful productions are said to make tens of millions of dollars within just days of release.
Voodoo, meanwhile, best known for its hypercasual and hybridcasual titles, has been busy building up its social media portfolio with chat app Wizz and the acquisition photo-sharing app BeReal. It acquired the latter for an upfront payment of €166 million in June.
Then you have Lords Mobile developer IGG (I Got Games) touting its apps business – which includes the Link messaging platform – as one of the primary revenue growth drivers for the company. The Pokémon Company’s Pokémon Sleep is a unique way to track sleep while adding gaming elements, picking up more than $119 in gross revenue ($83.8m net) to date, according to AppMagic estimates.
Over the years, Unity and Unreal have also expanded their customer bases into other sectors like the automotive industry, as well as film and TV. During its Q1 2024 earnings call, AppLovin CEO Adam Foroughi said one of the ads firm’s focuses for future growth was to extend its service outside of games.
“There is nothing that limits our models to just gaming,” he said. “By expanding into web-based marketing and e-commerce, we expect our AI models to improve with added demand diversity.”
It doesn’t always work. Game of War and Mobile Strike developer MZ ventured into non-gaming through its Satori platform, which the company hoped could be used for applications such as smart cities and the ‘internet of things’. But it never took off and was spun-off into its own entity, taking CEO Gabe Leydon with it.
Non-gaming growth
So what is it that some of the world’s best games publishers see in the non-gaming world?
Well, the elephant in the room is of course Apple’s privacy changes which have drastically shaken the foundations of the mobile games market.
The non-gaming apps space is growing faster by consumer spending on the App Store and Google Play combined, led by entertainment, social media, and utility and productivity. Which coincidentally, covers the above examples.
Mobile games still earn more – $112.1bn versus $77bn, according to Sensor Tower’s 2024 year-end estimates. But non-gaming apps are forecast to grow at a CAGR of 11.1% to 2030, versus games’ 4.2% growth.
What does that mean? Non-gaming revenue could surpass games in 2030, hitting $145 billion, compared to games’ poultry $143.1bn. It’s also worth noting that spend for streaming platforms like Netflix takes place off-platform, hiding greater revenue sums.
When it comes to downloads – non-gaming already dominates by a predicted 173bn installs to 90.4bn for 2024. Though interestingly, apps are anticipated to rise at a CAGR of 4.6%, while games will rise by 4.8%. That’s not much consolation when the end result is potentially 226.9bn downloads of non-gaming apps and 119.7bn games in 2030, however.
Time spent in apps also far, far outweighs mobile games, according to Sensor Tower Android estimates. Android phones saw 0.53 trillion hours played in 2023, compared to 4.53 trillion hours of engagement with non-gaming apps.
Industry shift?
As well as investments into non-gaming apps and platforms, games companies have started to become transmedia behemoths. Or at least, they are trying to be as Hollywood looks to tap its top IPs with hits like The Last of Us, Detective Pikachu, Sonic the Hedgehog and The Super Mario Bros. Movie. And then sometimes you get flops like the Borderlands film, but the intent is there.
With strong technological foundations for running live games and multiplayer services, highly engaged communities, carefully managed ‘forever franchises’, and expertise in acquiring users, perhaps some of the world’s largest games publishers are now viewing themselves as the world’s largest social and entertainment firms.