Amir Ghodrati is director of market insights at App Annie.
The global health crisis has proved to be one of the most chaotic periods for many industries – but the mobile gaming sector has boomed.
Quarantined consumers set new quarterly records for consumer spend in mobile games, with over $19 billion spent on purchases through the app stores in Q2 2020 — the largest quarter ever. With advertising spend dropping drastically across different industries, mobile gaming is enjoying the lucrative impact of consumers’ rapid shift in behaviour – from busy lives with hobbies to being shut in at home with the WiFi.
The average daily time spent in mobile has increased overall since the start of lockdown measures, as consumers look for new ways to spend their free time. COVID-19 has grown the pie, and mobile gaming is champing to maintain its lead position for consumer attention.
By the end of 2020, mobile game spending is set to extend its lead over desktop and home console gaming to more than 2.8x and 3.1x, respectively — solidifying that mobile gaming is in a league of its own.
In the first week of Q2 2020 – the start of national lockdown for many European countries, and of localised lockdowns in the US – weekly mobile game downloads broke records at over 1.2 billion, and weekly download levels remained at 1 billion on average throughout the quarter, up 20% year over year.
With ad spend dropping across a plethora of different industries, mobile gaming is drinking up any spilled dollars
Amir Ghodrati
Before lockdown, we already saw that ad spend in mobile gaming was increasing; in November 2019, for every dollar a brand DSP (Demand Side Platform) spent on MoPub’s exchange, about 74 cents went to a gaming publisher — an impressive 19% increase year over year.
With ad spend dropping across a plethora of different industries, mobile gaming is drinking up any spilled dollars. MoPub had already seen brand spend increase on video by approximately 180% year over year in November 2019.
One key factor that might wake up a wider gamut of advertisers is the shift in the demographic of mobile gamers: “A common misconception in mobile in-app gaming is that the audience skews younger, meaning they don’t possess any major buying power,” reports Nayef Hijazi, Head of Product Marketing, MoPub.
“The reality is that people across diverse demographics (both men and women of assorted ages) are playing games on their phones. According to our data, gaming ARPDAU (average revenue per daily active user) was at least 2.5 times higher than any other vertical in November 2019. This is a signal that the gaming user is becoming more valuable to both advertisers and publishers.”
As well as a broader demographic than ever before, the overall mobile experience has evolved to be a richer channel for consumer engagement – one that extends to the world of mobile gaming. With smartphone technology now contending with the experience on consoles, the friction of the mobile experience has waned.
While the benefit of playing on the go used to be the compromise in overall experience — poorer graphics, slower streaming — smartphone technology has now caught up and rivals that of the console. However, gaming is the most mature sector within the app economy, so it’s key for brands to dive deeper into mobile gaming insights to know where to best invest their dollars.
Mobile devices have made strides in power and hardware capabilities, enabling Core Games, in particular, to flourish. 5G will only make the experience smoother still, with Core games set to benefit the most from faster streaming.
It’s rare that we think of luxury fashion brands and mobile games in the same space, but ads have effectively become homeless overnight
Amir Ghodrati
In fact, Core games made up 76% of spending in mobile games in 2019 (despite representing only 18% of downloads), echoing the growing shift towards this genre in western markets. This sub-sector is highly adept at leveraging mobile gaming features that enhance player engagement, for example: extensive customisation, competitive online play and season pass membership, are all features that add to a game’s stickiness and, in turn, drive consumer spend.
Consumer spend in mobile gaming usurping luxury?
The luxury industry – the most lucrative for advertisers with a global consumer spend in 2018 of $1 trillion – has been hit hard by COVID-19. More than 40% of global luxury-goods production happens in Italy—and all the Italian factories, including small, family-based façonniers, temporarily shut down.
The changes to the travel industry have compounded these logistical issues; 20% to 30% of industry revenues are generated by consumers making luxury purchases outside their home countries. For example, in 2018, Chinese consumers took more than 150 million trips abroad. Before COVID, the luxury industry was reportedly set to top its 1 trillion USD global consumer spend by 20205, hitting 1.5 trillion US.
It’s rare that we think of luxury fashion brands and mobile games in the same space, but ads have effectively become homeless overnight. COVID-19’s impact on consumer technology, travel and tourism has been brutal to behold; advertisers desperately need a new avenue to engage with similar demographics.
While many brands have frozen ad spend, as the world looks to a future post COVID-19, creating demand and growth is paramount. Mobile gaming, with its rapid growth in comparison to consoles – and other industries as a whole – is clearly where brands should be investing.
Total global consumers may be small in comparison to the luxury industry, but its growth rate is in the lead. In 2019, the number of games that exceeded $100M annual consumer spend saw an incredible 59% growth in 2019 compared to two years prior. Furthermore, 17% more games surpassed an annual consumer spend of $5 million in 2019 versus 2017.
Like most lucrative trends, it’s only by diving deeper into the insights and macro trends that brands can win the competition for attention in this increasingly competitive marketplace for advertising. While winners in the mobile gaming industry are those which tap into the rich mobile features that increase player engagement, the advertisers are following suit.
As the most mature category in the app store, gaming often inspires other categories
Amir Ghodrati
Advertisers have a lot to learn from mobile gaming – and so do publishers
One major factor that makes gaming inventory effective for brands is that it offers engaging formats like full screen video. On MoPub’s exchange, the average rewarded video completion rate in games was 93% in November 2019.
The sophistication of game developers in their ability to harness mobile technology to better engage with their users doesn’t just catch the eagle eye of brand advertisers. In fact, as the most mature category in the app store, gaming often inspires other categories.
Game developers increasingly incorporate gameplay and design elements across different game genres and it’s important to analyse gaming category information in more detail to really understand this hybridisation and how to leverage it.
App publishers across all genres – from retail through to social media – perform better when they understand the specific features driving the most engagement across all categories. Gaming is the most mature category on the app store, so success stories often translate to other genres even if they don’t obviously relate.
Competitive brands will be focusing on the macro trends and movers and shakers. For example, within Core Games, Action represents the biggest portion of time spent. For brands to shift mobile advertising spend to mobile games is one step, but in order for those brands to be successful they need to understand the trends within gaming in detail.
