The state of free-to-play mobile gaming, by the numbers

This is an extract from a piece written by Dean Takahasi of Venture Beat. It contains some interesting insights that fit the consumer and business insights focus of our blog.

The statistics around mobile gaming are becoming staggering. At the Casual Connect Europe in Hamburg, Germany, the  move toward mobile games was evident among the 1,600 attendees. The numbers  suggest that a sweeping shift is happening in the industry.

Of the 7.1 billion people on the planet, about 4.3 billion have mobile  phones, according to the TomiAhonen Almanac 2013. About 1.3 billion of those are  using smartphones. There are an estimated 1.2 billion mobile gamers, or 18  percent of total mobile subscribers. By comparison, there are about 1.2 billion  computer users in the world.

Much of the excitement is, of course, focused on the growth of iPhones and  iPads and their Android counterparts. The app economy is creating jobs for small  studio developers at a time when the big console game companies are  hurting. On the iOS iTunes app store, there are 792,398 active apps,  including 132,963 active games, according to 148apps.biz.

In 2012, revenue earned from apps will approach $10 billion, with games  taking over 80 percent of the pie, Flurry reported.  The free-to-play business model (aka  freemium), where consumers download and play the “core loop” of a game for free  but then pay for virtual goods and currency through microtransactions, is the  the best business model in the era of digital distribution. When it comes to app  consumption on iOS and Android smart devices, consumers spend over 40 percent of  all their time using games.

And their favorite business model is free-to-play. Of the top free-to-play  games, about 47 percent have average revenue per daily active user at more than  25 cents. The average cost per install is $4. And while Android has lots of  users, iOS generates 3.5 times more revenue.

On the charts, the No. 10 top-grossing game makes about 10 times the revenue  of the No. 100 game, said Chris Williams, a vice president at Big Fish  Games.

Forrester Research found that 46 percent of mobile users use games on a daily  basis, and most users prefer apps that include ads instead of paying a purchase  fee.

Magid Associates found in a survey for Tapjoy that four out of five  smartphone users and nine out of ten tablet users have played a mobile game.  Kids ages four to 14 play mobile games more regularly on handheld game devices  than on tablets, but the gap is closing.

Smartphone gaming is no  longer just a U.S. business. Mobile chat networks have soared in Asia, with  Tencent’s We Chat reaching 300 million users, Japan’s Line getting 100 million,  and Korea’s Kakao Talk hitting 70 million. On Kakao, the viral spread of a game  can boost it into the top 10 lists on Google Play on a worldwide basis — sometimes generating $1 million a day, according to market  researcher App Annie  and industry sources.

Thanks to Kakao, the Google Play app store in Korea generates 95 percent of  its revenue from games, compared to 76 percent in the U.S. In the worldwide  Google Play app store, several Kakao-based games are on the top 10 grossing list  at any given time. Apple generates more game revenue than Google Play in  the United Kingdom, China, Australia, Canada, German, France, Russia, and Italy.  Still, Google Play earns a higher percentage of its revenue from games compared  to the Apple iOS app store.

….

Read the full article at venturebeat.com