A group of young people in masks playing video games.
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Why mobile gaming is taking over

Protocol Entertainment

Hello, and welcome to Protocol Entertainment, your guide to the business of the gaming and media industries. This Tuesday, we’re discussing how vital the mobile market has become to traditional gaming companies like Microsoft, Sony, and Take-Two Interactive. Also: another Call of Duty commitment from Xbox boss Phil Spencer and the sudden departure of gaming Twitter personality Nibel.

Mobile gaming is necessary for survival

Speaking last week at the WSJ Tech Live conference, Xbox chief Phil Spencer made a proclamation that has over the last couple of years become a common belief among the biggest names in the game industry.

“There’s no way that you succeed as a gaming company without access to mobile players,” Spencer said in defending the company’s proposed acquisition of Activision Blizzard. In its last fiscal quarter, Activision Blizzard made more revenue from its mobile games than it did on console and PC gaming combined.

Now, as the biggest names in gaming seek new revenue streams and consumers, they’re quickly realizing the largest and most lucrative untapped market is the smartphone.

The console gaming audience has hit a ceiling. This is not a new development, though it is rarely so bluntly said aloud. The combined install bases of Microsoft, Nintendo, and Sony amount to roughly 330 million.

  • Yet, to Spencer’s point, many of those console owners own more than one device, while many new buyers of the PS5 and Xbox Series consoles are not fresh customers but returning ones replacing old hardware.
  • Spencer said it was “imperative” Microsoft improve its position in the mobile gaming market to better compete with rivals and expand its audience.
  • “This opportunity is really about mobile for us,” Spencer said of the Activision deal. “When you think about 3 billion people playing video games, there's only about 200 million households on console."
  • Mobile gaming, on the other hand, accounts for roughly $100 billion — more than half of all spending on gaming globally, according to market researcher Newzoo.
  • This year, as other parts of the business have started to contract following the pandemic-era gaming boom, mobile is still expected to grow by more than 5%, Newzoo estimates.

Microsoft is far from alone here. Electronic Arts, Take-Two Interactive, Sony, and others have all laid out ambitious plans on mobile over the past two years, often through strategic acquisitions and investments in mobile-first business models.

  • “Mobile phones are becoming more powerful and mobile games are becoming more sophisticated,” said Dennis Yeh, the gaming insights lead at mobile analytics firm Sensor Tower.
  • Yeh cited two other major developments that have made mobile now impossible to ignore: “Cross-platform or multiplatform play is becoming more viable and desirable,” while at the same time “free-to-play monetization and live [operations] are largely where the industry is moving, and mobile gaming was the original pioneer of those.”
  • “In developed markets like the U.S. and Western Europe, overall mobile spend is growing, and consumers are increasingly willing to spend on mobile games,” Yeh said. “In developing markets like Latin America and Southeast Asia, mobile represents access to a wide audience, especially consumers who don’t have the ability to buy a console or PC or don’t have access to stable bandwidth.”

Microsoft’s competition has already made inroads on mobile. Electronic Arts spent close to $4 billion last year acquiring mobile studios. Take-Two spent close to $13 billion to buy FarmVille developer Zynga.

  • “We’re excited that there are 3.5 billion players in our addressable market. It brings accessibility to our brand,” said EA mobile chief Jeff Karp in an interview with Protocol earlier this year.
  • “It’s really an opportunity to expand our overall ecosystem for the brand, and it creates practicable recurring revenues,” Karp added. “It also brings the opportunity to bring our games across platforms.”
  • “We were already a leader in the console and PC space, and we believe we had already the best collection of intellectual property in the space,” Take-Two CEO Strauss Zelnick told The Wrap this month. “However, mobile is the fastest-growing part of the interactive entertainment business.”
  • In August Sony acquired its first ever mobile studio, Savage Game Studios, and created an all-new PlayStation Studios Mobile Division.
  • PlayStation Studios chief Hermen Hulst described the move as “additive,” saying it will help Sony provide “more ways for more people to engage with our content.” The goal, Hulst added, will be to “reach new audiences unfamiliar with PlayStation and our games.”
  • PlayStation head Jim Ryan has also cited an expansion to mobile as central to its growth strategy, including a plan to release 20% of all titles by 2025 on smartphone platforms.
  • “By expanding to PC and mobile, and it must be said … also to live services, we have the opportunity to move from a situation of being present in a very narrow segment of the overall gaming software market to being present pretty much everywhere,” Ryan said back in May.

Mobile isn’t just a money-printing machine. Companies need expertise and teams willing to move fast, update at breakneck speeds, and also maneuver the increasingly byzantine platform structures of Apple and Google, which make a bulk of their app store revenues by collecting fees from mobile games.

But the opportunities, and the existential necessity of diversifying how games make money and survive in an ever-changing industry, have made mobile key to survival.

“If you take a long-term bet, which we’re doing, that we will be able to get access to players on the largest platforms that people play on … we want to be in a position with content and players and storefront capability to take advantage of it. Gaming is the largest form of monetization on mobile, and we’re a gaming company.”

— Nick Statt

Read more: For gaming’s old guard, mobile is necessary for survival


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“We’re not taking Call of Duty from PlayStation. I know that’s not exactly what you asked, but just to punch that one in the nose — that’s not our intent. Our intent is not to do that … as long as there’s a PlayStation out there to ship to, our intent is that we continue to ship Call of Duty on PlayStation. Similar to what we’ve done with Minecraft since we’ve owned that.” — Xbox chief Phil Spencer reiterates the company’s position on Call of Duty in an interview on the Same Brain podcast as Microsoft’s regulatory feud with Sony in the U.K. rages on.

“There is that misperception or the thought, maybe, that certain IP would be off limits … We don’t view it that way at all. Dlala is a great example, because there’s no more precious IP at this company than Mickey. That’s a great illustration that we really aren’t married to a certain size of companies to warrant certain IP. We think that the right creator is worthy regardless of the size of their studio.” — Sean Shoptaw, senior vice president of global games at Walt Disney Company, talked to Gamesindustry.biz about its growing ambitions to license Disney characters and stories to indie game developers.

In other news

Electronic Arts partners with Marvel for three new games. The FIFA publisher will develop three new Marvel titles starting with its already-announced Iron Man game from Squadrons developer Motive Studio.

In more Marvel news: Marvel Snap explodes on the mobile scene. Marvel’s new digital card game, published by ByteDance-owned Nuverse, earned more than $2 million in its first week, according to AppMagic data.

Meta sold an estimated 470,000 Quest headsets in Q3. Based on Meta’s Q3 earnings report, AR Insider did some napkin math to arrive at likely sales numbers for the VR headset.

Netflix buys its sixth game studio. The company bought Spry Fox, a mobile studio known for games like Triple Town and Alphabear.

Target breaks a very important Sony street date. The retailer began selling Santa Monica Studio’s God of War: Ragnarök two weeks early, leading to spoilers pouring out on social media. Studio creative director Cory Barlog admonished Target in a series of exasperated tweets.

Comcast lost 561,000 TV subscribers in Q3.That’s up from 408,000 cord cutters during the same quarter last year.

Ralph Lauren joins the metaverse. The clothing brand will launch its Fortnite collaboration tomorrow with a fully redesigned logo, in-game virtual clothes and items, and a real-life merchandise drop.

China’s gaming market will decline this year. The predominantly mobile Chinese gaming market will shrink by 2.5%, according to Niko Partners, the first-ever contraction in the 20 years the firm has tracked the market.

A new chapter for PlayStation London Studio. The U.K. game studio known for projects using cameras, microphones, and VR is shifting focus to a PS5 title that will be its “most ambitious game to date,” the studio told GamesIndustry.biz.

Gaming Twitter loses one of its biggest names

On Monday, the Twitter account @Nibellion became inactive. The account owner, a high-profile yet anonymous video game news aggregator who goes by Nibel for short, said they were done with the platform.

Nibel cited a failure to monetize the account’s nearly half a million followers and a lack of faith in Twitter leadership under new owner Elon Musk.

  • “I have miscalculated the value of my Twitter activity and realize that it is nothing worth supporting by itself for the vast majority of people,” Nibel wrote on their Patreon page, which went live in September asking for $1 or $3 pledges.
  • “It is not me who is popular, but it is that work that is useful. It is not valuable by itself, but a comfortable timesaver, and I get that now,” they added. “I was unable to create a reliable revenue stream, but I’m still happy I gave it a shot.”
  • Nibel attracted close to 500,000 followers, but Twitter also has a history of failing to court and keep creators by helping them monetize their work on the platform. (See: the death of Vine.)

Nibel also said the tumultuous first days of Musk’s tenure as Twitter owner contributed to their decision.

  • “I do not trust the platform. I do not trust Musk and his seemingly infinite immaturity. I do not think Twitter will fall apart instantly but that it could die a slow death,” they wrote. “Why waste more time?”
  • For gaming fans, it was sad news. Nibel was consistently one of the fastest, most reliable gaming aggregators among the growing Twitter community of gaming enthusiasts.
  • Although they were not creating journalism on their own, Nibel was quite often boosting original sources and celebrating the work of other writers.
  • Scores of industry personalities have since posted messages of support for Nibel and mourned the loss of their voice in the community.

— Nick Statt


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Thoughts, questions, tips? Send them to entertainment@protocol.com. Enjoy your day, see you Thursday.

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