More than half of the $175 billion game industry will come from mobile games this year, forecasts market intelligence firm Newzoo in its annual industry overview in collaboration with Arm. And those mobile games will increasingly be high-fidelity, cross-platform games based on major franchises typically at home on consoles and PC.
Newzoo expects this shift to be responsible for the biggest transformation in the game industry over the next five years or so. Since 2017, when Newzoo first began analyzing the global game industry, "the mobile game market has experienced tremendous growth across the globe," and "mobile gaming continues to outperform PC and console as the biggest gaming platform," writes Tianyi Gu, Newzoo's market lead for telecom and mobile services.
In 2020, close to half of all game revenue came from mobile. In 2021, Newzoo expects that figure to rise from 48% to 52%, with mobile accounting for $90.7 billion. "With the rising trend of cross-platform games and established PC/console franchises coming to mobile, mobile gamers are increasingly looking for core gaming experiences on the touch screen," Gu said. "The growing appetite from consumers has pushed high-fidelity mobile games to the next level, thus demanding powerful mobile devices to support premium gaming experiences."
The game industry is estimated to generate $175 billion this year, with mobile accounting for more than half for the first time. Image: Newzoo
Newzoo's forecast aligns with major industry trends in gaming right now, in particular the push to bring traditionally big-budget console and PC franchises to mobile. Electronic Arts is currently beta testing a mobile version of its battle royale hit Apex Legends and just in the last six months spent a combined $3.5 billion on mobile developers Glu Mobile and Playdemic.
Activision Blizzard's Call of Duty Mobile, in collaboration with Tencent's TiMi Studios, has been a huge hit, while other Tencent mobile-first games like Honor of Kings have become the envy of the industry. Riot Games last month said it would bring its new PC tactical shooter Valorant to mobile devices before it releases console versions.
But perhaps the most telling mobile success story has been PlayerUnknown's Battlegrounds, which became a smash hit on PC before competitors copied its core features. Then, after teaming up with Tencent, PUBG Mobile became the lifeblood of the series and one of the most successful mobile games on the planet.
There are a few reasons why big game publishers are flocking to mobile, and all of them have to do with the immense revenue potential of the platform. Newzoo's report says 94% of global gaming fans play on mobile, compared to about one-third on consoles and less than half on PC. Mobile is also the fastest-growing platform since 2018, jumping from about $63 billion in revenue to nearly $91 billion.
Another big factor is the consumer appetite for what Newzoo calls "high-fidelity" games, as well as how much money those games can generate relative to the kind of casual fare one might typically have found on smartphones five to 10 years ago. Although it's not exactly clear how Newzoo defines a high-fidelity game, it says these experiences are ones featuring cutting-edge graphics and a depth in gameplay consistent with a console or PC title.
In China, those types of games now make up 70% of the top 200 highest grossing iOS games. In North America, that figure is just 33%, though growing incredibly fast. In 2016, Newzoo says just 6% of the highest-grossing iOS games in North America could be considered high-fidelity. In Europe, the dynamics are almost identical to those of North America, meaning there's an obvious growth opportunity for more polished, better produced mobile games that rival.
The obvious way to do this is to bring established franchises to mobile for the first time, as we're seeing with many of the shooters and battle royale titles currently on mobile or with plans to release on smartphones soon. "The rise of cross-platform play is also playing a big part in removing barriers between devices, and it's worth noting that big franchises often need to be accessible on mobile to truly become global successes," Gu writes.
The other emerging business strategy, Newzoo says, is to combine established franchises with novel genres and use mobile as a testing ground. "At the same time, mobile developers are learning from PC/console by introducing complex and immersive game genres to the touch screen, such as MOBA, strategy, racing, shooter and battle royale," Gu explains. "In fact, with mobile gaming's impressive growth in the past decade, a variety of genres have become more widespread on mobile than on PC/console."
Pokémon Unite, an upcoming 5v5 strategy game coming to the Nintendo Switch and mobile, combines the multiplayer online battle arena (MOBA) genre with the brand appeal of Pokémon. It is, unsurprisingly, developed by Tencent's TiMi Studios, ensuring the game is both built with TiMi's expertise (TiMi developed Honor of Kings, the world's most popular mobile MOBA) and guaranteed to have a strong presence in the China market.
Newzoo says the rise of cloud gaming and 5G connectivity will also help boost mobile over the next few years. The report estimates revenue from cloud-gaming platforms, including subscription revenue and in-game purchases, to grow from about $1.5 billion this year to $5.1 billion in 2023. Newzoo also estimates that the number of 5G-ready smartphones will grow from about 18% this year to 43% in 2023, ensuring a smoother and more performant cloud gaming experience.
"As the games market embraces a platform-agnostic future, enabled by cross-play and cloud gaming, consumers are increasingly looking for immersive and mid-core gaming experiences on the go. The continued proliferation of smartphones and internet access in growth markets will bring more players to the fold as well, leading to 3.2 billion mobile gamers by 2023 based on Newzoo's forecast," Gu concludes.
While China is ahead of the curve with regard to the trajectory of mobile gaming, "emerging markets and Western countries will play an increasingly important role in driving the growth of high-fidelity or next-gen mobile games," Gu adds. "In particular, the West is likely to follow China in shifting tastes more toward mid-core and core games as the young mobile-first generation matures."