Mobile gaming – The last wilderness.

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Mobile gaming is the last wilderness but explorers are coming.

• Mobile gaming is the single largest segment of the Digital Life pie but as of yet there is no dominant player.
• There are three very strong multiplayer gaming offerings (Sony, Microsoft and Tencent) but as of yet none of them have managed to break out of their respective niche (consoles and China).
• Apple and Google are the two dominant ecosystems outside of China today, but they too, have both failed to create a multiplayer gaming environment that generates meaningful engagement from users.
• Users of smartphones spend 25% of their time playing games while for tablet users its 51%.
• Putting these two together leads RFM to estimate that mobile device users spend 31% of their time playing games making gaming the largest segment ahead of social networking at 21%.
• Consequently, in terms of engagement and monetisation opportunity, gaming is the single biggest opportunity in mobile but the segment remains completely open.
• It is the games makers like Supercell, King and Big Fish Games who are capitalising on gaming but in terms of the incremental monetisation opportunity created by having a multiplayer environment as part of an ecosystem, very little is happening.
• However there are signs that this is beginning to change with both Activision Blizzard (see here) and Tencent starting to make their move into this space.
• Activision has done this through the acquisition of King Digital while Tencent is moving outside of China using its investment in Glu Mobile.
• Tencent’s idea is to make its most successful Chinese games available to a wider audience but I suspect that this is unlikely to work.
• Just as foreign games have little appeal to Chinese users, Chinese games will have little appeal to non-Chinese consumers.
• If Tencent really wants to conquer this space outside of China, it will need to create a thriving multiplayer community based on games that non-Chinese users want to play.
• Activision Blizzard also has a long way to go as although King has 500m active monthly users, they only play Candy Crush and nothing else.
• Activision will have to create a compelling offering to entice these users to play mobile versions of its other offerings and thereby turn a one hit wonder into something that will last.
• This gives both Sony and Microsoft time to extend their leading gaming offerings into mobile, but so far their efforts have had very little success.
• For both of these companies, gaming is their best chance to get a foothold in mobile as their console offerings are very strong and the segment itself remains wide open.
• However, they have to act soon as others have seen this gap and are moving to make the most of the opportunity.
• The time to execute is now.