June 1, 2021
Emerging Entertainment: Mobile Gaming is Eating the World
Global video game revenue in 2020 approached $180 billion, according to market research company IDC — making the industry larger in sales than the global movie and North American sports industries combined. Just one game, Grand Theft Auto V, which was released in 2013, has raked in more than $6 billion, earning it the title of highest-grossing media of all time in the U.S.
But even Grand Theft Auto’s numbers are overshadowed when we look at gaming in the emerging markets space. Honor of Kings, the most popular video game in China, has generated nearly $10 billion in revenue since its release in 2015, and Monster Strike, another mobile game released the same year as Grand Theft Auto has pulled in more than $9.2 billion.
Gaming > All Other Entertainment
Those figures dwarf some of the most ubiquitous entertainment stalwarts such as the original Star Wars, which grossed a measly $3 billion (adjusted for inflation) and James Cameron’s Avatar, which earned $2.8 billion upon release in 2009 to become the highest grossing film of all time. In digital media, Spotify pulled in $9.3 billion in 2020 (though just $2.35 billion in profit), and even Netflix’s $25 billion in annual revenue last year is eclipsed by the revenues of the top three highest-grossing mobile games (Honor of Kings, Monster Strike and Puzzle & Dragons).
Of course, the entire video game industry received a boost with global pandemic lockdowns, which provided people with plenty of time to play for hours on end. This past year exacerbated the most curious parts of the video gaming phenomenon: who plays these games and the method by which they’re played.
Mobile Gaming > All Other Gaming
According to the Financial Post, a third of the world’s entire 7.7 billion people are gamers. A majority of those gamers, particularly in emerging markets, are playing on cheap smartphones instead of $500 consoles. Mobile gaming revenues accounted for about $87.7 billion of overall global industry revenues in 2020 compared to console gaming figures of $52.5 billion. China encompasses nearly two-thirds of the entire mobile gaming market. More people play Tencent’s multiplayer online battle arena (MOBA) game Honor of Kings — 100 million — on a daily basis than the 52.9 million viewers who tuned in for the most-watched episode of Friends.
Mobile gaming owes much of its popularity to a low barrier to entry accessed through platforms that have dramatically lowered costs. While games dating back to the late 1970s required robust computing power and memory (the first game console ever, the Atari 2600 required 1 MHz and 4 kB of data), mobile games today only require 1GB of memory on smartphones that typically have over 2GHz.
In addition to accessible platforms, a majority of mobile games are free to download and start playing, allowing gaming companies to accrue monthly active users from the get-go. The fact that so many of these games are “free to play” — until you need that exact $2 microtransaction for another life to beat your current level — is what we see as a long-tail opportunity for the industry. These games have driven adoption and engagement, and the potential for many of the 2.5 billion global gamers to turn into paying customers cannot be understated, particularly as e-sports tournaments such as the Free Fire World Series, which comes with a $2 million prize pool, become more common.
Of course, as we continue to invest in this space, we’re mindful of the continuing debate over the place of microtransactions in video game titles, and how companies can walk the PR line between profitability and player loyalty. But with more than 3 billion smartphones in the global marketplace — and over 50% of them in emerging markets — the democratization of gaming will continue to expand the universe of gamers.
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