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#1: Mobile Gaming Half-Year Report
Now that we’ve crossed the half-year threshold, it’s time to look at how the mobile gaming industry has fared in 2022. A report from Sensor Tower on the overall health of the market tells us that spending is down across both the App Store and Play Store compared to the same period last year. The App Store also experienced a decline in game downloads while the Play Store had a slight uptick of 1.3%. This decline is attributed to normalization from the surge experienced during the pandemic, post-IDFA realities, and a global economic slowdown.
While the report provides a solid overview of the mobile gaming business, it will be interesting to examine the data a little deeper and find out which genres are flourishing and which are facing a decline. With that in mind, let’s dig into the data!
First, a look at the most generalized game segments (bucketed by Sensor Tower into Casual, Mid-Core, Sports & Racing, and Casino) shows that all segments, except for Sports & Racing, saw a decline in downloads.
The revenue charts are similarly sobering and all genres have struggled to match the numbers of the previous year, with the Sports & Racing segment seeing a significant 16% decrease in revenue.
Why did Sports & Racing have such a large decline? It’s primarily due to the underperformance of the biggest sports game you have probably never heard of, Konami’s Pro Ya-Kyu Spirits A. It’s a baseball game available only in Japan that experienced a large surge in pandemic spending but has been on a steady decline since its revenue peak in January 2021. Its H1 2022 revenue of $176 million is a 26% decline from the same period last year, but even then the game is still responsible for around 15% of total segment revenue.
The next segment to look at is Casual, the segment which captures the most downloads (primarily because of the contribution of Hypercasual games, which comprise almost 40% of all downloads).
The graph above illustrates how downloads and revenue for the casual gaming genres have changed between the first halves of 2021 and 2022. Most genres did not fare well this year, declining in both aspects. The exceptions were Hypercasual, Arcade, and Tabletop, which had an increase in revenue. The Hypercasual revenue bump is interesting (note that these revenue numbers are for IAP only). It reveals that Hypercasual publishers have begun hybridizing their games to increase IAP spend and wean off monetizing on ads alone.
Going one level deeper into the subgenres, the top-performing ones (outside of Hypercasual subgenres) were the Idler, Action Puzzle, and Simulator subgenres, with revenue growth of 30%, 22%, and 19% respectively (despite a reduction in downloads).
Next, we’ll look at the Mid-core segment, which shows similar reductions across downloads and revenue except for the Action genre, which showed growth in both categories.
At first glance, this is slightly strange as Action isn’t known for its strong performers, but the confusion is lifted when you discover that Sensor Tower has categorized Genshin Impact as Action in the Open World Adventure subgenre.
A look at Genshin Impact shows that it had a good first half of 2022 compared to 2021, increasing its revenue by 19%, though downloads have declined a little.
Going into subgenre level data gives us some interesting results as the Beat ‘em Up subgenre has seen 79% growth in downloads and a colossal 235% increase in revenue when comparing H1 2022 with H1 2021!
The culprit is Dungeon Fighter by Nexon, which was only released this year in South Korea but has amassed 1.5 million downloads and almost $53 million in revenue. Other high-performing subgenres were the Real-time Strategy and Card Battler, with a 49% and 26% increase in revenue respectively. Like the Beat ‘em Up subgenre, the Card Battler one also saw a new entrant in 2022 contributing significantly, with Yu-Gi-Oh! Master Duel amassing 2.3 million downloads and $31 million for the year to date.
The final segment, Sports & Driving, has no significant surprises, with downloads up slightly compared to 2021, but seeing a substantial drop in revenue like most of the other genres we’ve investigated. The 21% downturn in Racing revenue is due to the top 2 racing games, Tencent’s QQ Speed Drifters and Zynga’s CSR2 having a slow first half of the year, with CSR2’s revenue dropping by 32% compared to last year.
So what’s our takeaway? Overall, the mobile games industry is facing a period of decline. As Sensor Tower has noted, it is essentially a combination of a correction of the pandemic surge, post-IDFA changes, plus a global economic slowdown. With the economic situation predicted to worsen, expect to see an unpretentious remaining half of the year.
Game Launch Radar
#1: Chimeraland
- Publisher: Level Infinite
- State: Launch
- Territories: Global
- Classification: Midcore – RPG – Survival
Quick thoughts:
- Chimeraland is a cross-platform title and is also available on PC via direct download on Steam. Gameplay is a combination of survival and monster hunter set in an open world, with the closest comparison being Ark Survival Evolved. The character creator looks pretty robust, there being 16 different character types to choose from, with each type having variations based on age and gender. You can choose to be a wasp-like creature, a humanoid jellyfish, a squid-head…etc. Truly, the options are glorious and not the boring tropes we all know and are bored of.
- Level Infinite is Tencent’s new publishing division which was launched at the end of 2021. It publishes on a range of platforms and is responsible for the recent viral hit V Rising on PC.
#2: Friends & Dragons
- Publisher: Playsome
- State: Limited Release
- Territories: 33 Countries
- Classification: Midcore – RPG – Puzzle RPG
Quick thoughts:
- This is the debut title from Playsome, a mobile developer from Finland founded by ex-Next Games veterans and funded by Play Ventures and EQT Ventures.
- The gameplay is an interesting mix of the tactical battle and puzzle genres. You drag character tokens on a grid-based battlefield to attack enemies. Where the strategy comes in is through a feature called “flipping,” where moving a character past another makes it move in the opposite direction. By performing smart maneuvers, a player can efficiently position their troops to deal maximum damage or move characters out of danger.
- It was first soft-launched in the Philippines in August 2020, and Playsome have been slowly releasing it in more territories. It’s currently available in 36 countries worldwide.
Other Game Announcements
- EA’s new SKATE title will be released on mobile. Link
- Tencent’s global version of their massive MOBA Honor of Kings is in closed alpha in Mexico. Link
- The Lord of the Rings: Heroes of Middle-Earth soft launches in the Philippines. Link
- Ubisoft unveils gameplay of its upcoming mobile version of The Division. Link
- NetEase’s racing simulator, Racing Master, enters its 3rd closed beta in Canada. Link
- Rockstar removes GTA Vice City from the Play Store. Link
- Netflix unveils more information on Kingdom: The Blood, a game based off its popular zombie + Korean period political drama series. Link
- Lilith Game’s Rise of Kingdoms has exceeded $2 billion in lifetime revenue. Link
- Genshin Impact is the most tweeted about game on Twitter. Link
- K-pop supergroup BLACKPINK will hold PUBG Mobile’s first concert. Link
Company Announcements
- Unity is merging with ad platform ironSource. Link
- Sony’s acquisition of Bungie is finalized. Link
- Supersonic Studios’ Danielle Cohen Reich is promoted to VP of gaming at ironSource. Link
- Nintendo acquires production company Dynamo Pictures and will rebrand it Nintendo Pictures. Link
- Gaming investment firm The Games Fund moves from Moscow to Miami. Link
Ecosystem Announcements
- Spending in mobile apps exceeds that of games in the US App Store for the first time ever. Link
- Tencent will continue to uphold China’s strict game time restriction for minors this summer. Link
- China approves a further 67 games, none of them from Tencent or NetEase. Link
- Newzoo finds that 75% of South Koreans are gamers, with the majority of them preferring mobile. Link
- Netflix will provide an ad-supported subscription plan in partnership with Microsoft. Link
- A Shanghai-based tech firm has been fined $163,000 for publishing unlicensed games, one of the largest fines for this infringement in history. Link
- Konvoy Venture’s mid-year review shows a reduction in funding raised but an increase in the number of deals for H1 2022 compared to the previous 2 quarters. Link
- The UK Government has demanded that the games industry take action against loot boxes or risk regulation. Link
- US game spending is down 11% for June compared to last year. Link
- Israel’s digital game market is valued at $8.6 billion and is responsible for 5% of total global gaming spend. Link
Content Worth Consuming
- The Rise Of Midcore Mobile Games (GameRefinery): “It used to be the case that the mobile gaming market was dominated by Casual and Hyper Casual titles such as Candy Crush and Merge County. While these and many other titles in the Casual and Hyper Casual market are still popular, the growing popularity of Midcore games such as Diablo Immortal, Call of Duty: Mobile, and Apex Legends Mobile is a sign that the mobile market is evolving and providing new experiences that cater toward the needs of PC and console gamers.” Link
- Why Is Unity’s Merger With ironSource Angering Developers? (Game Developer): “We cover a lot of merger and acquisition news on Game Developer, but few stories have raised as much ire as this development. It turns out plenty of developers are familiar with ironSource’s somewhat sordid past. While the platform has most recently been a fairly run-of-the-mill advertising platform for mobile apps, it has a brief history of being affiliated with malicious adware.” Link
- Will Dislyte Become Lilith’s Third Billion Dollar Hit? (Deconstructor Of Fun): “Dislyte, which is Lilith’s latest game, manages to stand out in a saturated CCG-RPG market thanks to its trendy, mysterious aesthetics and musical appeals, topping the download charts across significant markets at launch. Lilith’s marketing strategy also showcased visual and audio excellence, lowering the barrier of entry for new players.” Link
To Value A Mobile Gaming Studio – A Framework (Pollen VC): “In this post, rather than focus on certain deals and multiples, we will try to set out a rational framework for how to value a mobile gaming studio based on some fundamentals around how these companies operate. As the gaming industry is attracting more capital from outside the traditional core of a handful of gaming VCs and very large established studios, there is a greater propensity for more generalist investors to not fully grasp some of the key value drivers in a gaming studio in their initial analysis.” Link
- Increasing The Longevity of Your Game (Mastering Retention): “Thousands of games are made each year, and very few go on to have great success. Despite their success, these games are rarely sitting atop the charts years down the road. Creating a successful game is hard, but maintaining that game’s success and daily active users is beyond difficult. This week on Mastering Retention, Tom speaks with Jonathan Durr (Studio Director & Co-Founder at Foxbear Games) about long term content treadmills, what metrics are useful when trying to maintain a game for years, consulting with your game’s most fanatical users, and feature development.” Link
