Horace Dediu Dirk Schmidt provides soome great insights into the rise of iOS as a platform. Smartphones as a games platform have displayed a significant abilty to rapidy disrupt incumbent games platforms and ecosystems such as handheld or portable consoles which traditionally have dominated the mobile games market.

U.S. Portable Game Software by Revenue

Peter Farago over at Flurry says “Recently, no industry has been more impacted by digital distribution than video games.  Leading the disruption are iOS and Android devices, whose free and inexpensive games, distributed across a massive installed base of powerful and networked tablet and mobile phone form factors, have already disrupted billions of dollars of game revenue.  In this blog post, Flurry focuses on how mobile devices have severely altered the shape and flow of revenue in the multi-billion dollar portable game category.

Portable gaming, played primarily on Nintendo DS and Sony PSP devices, has been dominated by these two companies for over two decades.  In this model, at retail, consumers pay around $200 for the gaming device and up to $40 for popular game cartridges.  Because of the similar form factor, overlap in consumer base (especially younger players on iPod touch) and the casual nature of game content, Flurry combines iOS and Android devices with traditional portable devices to form the category.  With the inclusion of smartphone game revenue into the category, shifts taking place in market share become clearer.”

The chart displays the share of U.S. revenue generated for portable games from 2009 to 2011.  Note that we project November and December for 2011, based on their ratio to the first 10 months of the year, as observed in 2009 and 2010.  Starting on the left, for 2009, we calculate $2.7 billion in total U.S. portable game revenue.  For 2010 and 2011, we estimate $2.5 billion and $3.3 billion, respectively.

The most striking trend is that iOS and Android games have tripled their market share from roughly 20% in 2009 to nearly 60% in just two years.  Simultaneously, Nintendo, the once dominant player, has been crushed down to owning about one-third of market in 2011, from having controlled more than two-thirds in 2009.  Combined, iOS and Android game revenue delivered $500 million, $800 million and $1.9 billion over 2009, 2010 and 2011, respectively.

Horace Dediu Dirk Schmidt has this to say about the iOS ecosystem as a game platform. At this year’s WWDC Apple offered an update on Game Center accounts. The data we have so far is shown in the following graph.

Before being acquired, another network, OpenFeint, announced 180 million iOS accounts in October 2011. Another figure to consider is the 40 million subscribers to Xbox Live (out of 66 million Xbox users). This subscriber base is paying for a service (about $1 billion per year) so it’s not the same as the free Game Center model.

Rather than being a revenue source, Game Center is designed to engage users and to capture usage information. It also lets us gauge gaming “consumption” on iOS devices. That itself allows us to contemplate it as a gaming platform vis-à-vis alternate platforms.

To consider the figure as a proxy of penetration and engagement, the graphic below shows cumulative sales of gaming devices.[1]

Here are some observations:

• There is a pattern of turnover of market participants
• Each console “generation” had a clear market leader
• The best-selling gaming device was the Nintendo DS closely followed by the PlayStation 2 [2]
• Considering the 130 million Game Center accounts, iOS is already the third largest gaming platform
• Furthermore, considering the OpenFeint iOS figure of 180 million accounts announced in 2011, iOS has already surpassed the cumulative sales figures for the Nintendo DS
• No gaming device has ever reached the 200 million mark
• At the current growth rate the number of Game Center accounts will surpass 200 million before the year end
• Apple cites the number of games, downloads and payments to developers as evidence of ecosystem health and growth. The figure of Game Center accounts is yet another indicator. It shows growth in and of itself, but it also has the side effect of offering comparative measurement of performance. That measurement compares favorably with other game platforms.

The economics are different but they always are when a disruption takes root.

—

Notes:

Based on reported cumulative sales (Wikipedia), excluding gaming devices with less than 10 million cumulative sales (excludes for example PlayStation Vita), excludes also “home computers” due to missing reported figures
This Wikipedia article contradicts the previous.

—

Source:

http://www.asymco.com/2012/08/07/measuring-ios-as-a-gaming-platform/

No matter how you look at the numbers, one thing is clear about the video game industry: “Big” is an apt description for the industry. In honor of our fourth annual GamesBeat conference starting on Tuesday, we’ve dug out an interesting set of facts and numbers about gaming. We hope that some of these make you go “Wow!” Enjoy.

Mobile gamers now likely outnumber PC players in China (192 million vs. 180 million projected by the end of this year). [Niko Partners]

GamesBeat 2012 has 81 speakers, moderators, and judges.

35 companies applied for our “Who’s Got Game?” contest for the best game startup.

Number of minutes played in Zynga’s games over the last three years: 1.8 trillion. [Zynga]

Apple takes down 5,000 apps a month. [Xyologic]

GamesBeat numbers show 145 companies raised $1.5 billion in 2011.

Free-to-play reality: More than 80 percent of revenue comes from less than 10 percent of users. [Digi-Capital]

Games as a percentage of all apps in the top-25 ranks in the U.S. Apple App Store in May 2012: 88 percent. [Flurry]

World of Warcraft paying subscribers in Q1, 2012: 10.2 million.

The average game industry acquisition was $30 million in 2011. [Digi-Capital]

Percentage of surveyed adults who played at least one mobile game in the last month: 44 percent. [PopCap]

Year-to-date sales drop for U.S. physical retail games: 25 percent. [NPD]

Electronic Entertainment Expo 2012 data: 370,000 square feet of exhibit space, 200 exhibitors, and 45,000 attendees. [ESA]

Microsoft stats: 67 million Xbox 360 consoles sold since 2005, 19 million Kinects sold since 2010, and $56 billion in revenue generated from its game business. [Microsoft]

Games are expected to grow from $52 billion in revenue in 2011 to $70 billion in 2017. [DFC Intelligence]

The average investment in a game startup is $7 million. [Digi-Capital]

Social games generate $1 per user per month. Real-money online gambling generates $300 per month. [Betable]

Expected price of the Wii U: $299. Sales expectations: 10 million to 15 million in the first year. [DFC Intelligence]

Social games are a $7.3 billion business. Online gambling generates $32 billion in revenue per year. Casinos report revenues of $426 billion. [Betable]

Grand Theft Auto V’s expected sales: $700 million. [Michael Pachter, Wedbush Securities]

Amount of advertising money spent by Sony on PlayStation Vita’s launch in the U.S.: $50 million. Amount spent by Gree on its platform launch in the U.S.: $50 million.

Number of tanks obliterated by 30 million gamers in World of Tanks: 1.3 billion.

Percentage of indie-game sessions played on iOS and Android in the first quarter of 2012:68 percent.

Percentage of Zynga’s revenue that comes from advertising: 8.7 percent.

Price Sony paid for cloud gaming startup Gaikai: $380 million.

Price Zynga paid for OMGPOP: $183 million plus bonus.

Price Nexon paid for 14 percent of NCSoft: $688 million.

EA’s packaged games published in fiscal year 2009: 67.

Games EA’s branded online game service published in fiscal year 2012: 25.

Zynga’s monthly active users: 244.0 million. [AppData]

Our vote for the best game of E3 2012: The Last of Us (developer Naughty Dog’s upcoming exclusive for PlayStation 3)

World’s most popular social game: Zynga Poker, with 33.5 million monthly active users. [AppData]

Gamers spent $3.4 billion on all types of games in the first quarter of 2012 in the U.S. About $1.5 billion was spent on physical retail games, and $1.38 billion was spent on digitally distributed games. Gamers spent $525 million on used and rental games.

Active gamers in Turkey: 21.8 million.

EA’s revenue for fiscal year ended March 31, 2012: $4.143 billion.

EA’s digital revenue for fiscal year ended March 31, 2012: $1.159 billion.

Number of new games submitted to Apple App Store per day: 62. [148apps.biz]

Number of active games on the Apple App Store: 119,408. [148apps.biz]

Number of active apps on the Apple App Store: 679,348. [148apps.biz]

The most popular category for game investments: mobile games. [Digi-Capital]

Number of chips Zynga Poker pays out in a day: 16 trillion.

Hours played by Call of Duty: Modern Warfare 3 players: 1.6 billion.

Market value for key game companies:
Tencent Holdings    $55.6 billion
Facebook                    $57.7 billion
Activision Blizzard $13.3 billion
Zynga                           $3.95 billion
Electronic Arts        $3.8 billion
THQ                              $35.7 million

There were 56 million tablets purchased worldwide in 2011, but a new report from Forrester Research predicts that number will explode in the years ahead: its researchers say that there will be 375 million tablets sold by 2016, representing a compound annual growth rate of 46 percent, and that by 2016 there will be 760 million tablets in use overall.

That will still put tablets a ways behind PCs — there will be 2 billion PCs in use in 2016. But combined with new products like frames (essentially docks for tablets to amp up their functionality), Forrester says that tablets will gradually become the computing device of choice among consumers — especially among those in emerging markets, whose first home computing device will more likely be a tablet than a desktop or laptop PC.

Google survey finds games trump all other uses for tablets

As we see the rise of tablet and smartphone devices and they become the dominant form of computer usage the landscape of games platforms will inevitably change.

According to the survey, 84% of tablet owners play games, ahead of even searching for information (78%), emailing (74%) and reading the news (61%). 56% of tablet owners use social networking services on their device, while 51% consume music and/or videos, and 46% read ebooks.

AdMob does not break out which tablets were owned by the users, but the survey was conducted in March this year, at a point when Apple’s iPad accounted for the lion’s share of the tablet market in the US – although Samsung’s Galaxy Tab had also been available for a few months.

The survey found that 38% of respondents spend more than two hours a day using their tablets, while another 30% spend 1-2 hours. It appears that tablets are predominantly domestic devices, with 82% of people primarily using their tablets at home, versus 11% who say they are used primarily on the go, and 7% who said at work.

28% of respondents say their tablet is now their primary computer, while 43% say they spend more time using their tablet than they do their desktop or laptop computer.

Apple is and will continue to lose market share to Android but will remain market leader

Apple, which effectively created the tablet market with the launch of its iPad two years ago, and has been setting the bar for what to make ever since, has seen some reduction in its tablet market share over the last year or two as more competitors have launched products.

But Forrester predicts it will manage to hold on to its lead going forward as the market’s “clear leader”, in the words of Forrester researcher Frank Gillett, who also penned a blog post summarizing some of the bigger points in the report.

Part of Apple’s strategy to stay on top will be to target newer markets like the enterprise segment — which will represent one third of all tablet buyers by 2016 — and consumers in countries like China. Meanwhile, Android will actually see a net decline in its installed base of tablets by 2015, with Microsoft also gaining ground in the process.

By 2016 Android tablet shipments will outnumber those of iPad shipments

(Indeed, another analyst firm, IDC, in March predicted that by 2016 Android tablet shipments will outnumber those of iPad shipments. Shipments are not necessarily sales, however, and does not take into account the size of the installed base.)

In particular, Forrester says Google’s network of Android device makers and the ecosystem around them “will struggle” to keep up with Apple in the premium-priced range. Furthermore, Forrester doesn’t see the various issues that have surrounded Android up to now — among them device fragmentation, software support and a variety of Android flavors — improving in the years ahead. (What’s interesting is that Forrester doesn’t seem to think that these same factors will affect the installed base of Android smartphones, which will continue to grow.)

The other big challenge for Android, Forrester notes, is the proliferation of forked Android device makers. While we still have no news of Amazon launching a Kindle Fire product outside the U.S., Forrester is very bullish on how it, and others making forked Android tablets, will fare.

Apple will still represent the majority of tablets in use in 2016, even as Windows finally grows.

While Forrester says that Samsung and low-priced tablet makers will “stay the course” with Android, we will increasingly see others turn to Microsoft’s new tablet OS, Windows 8, for their tablet ambitions. However, that will not really begin in earnest until 2014 because it will take “most of 2013 for the Microsoft ecosystem to create a fully capable Windows Metro experience for customers.” Once it gets going, “Microsoft will be a significant player, but one chasing a leader with a multi-year head start.”

Although tablets, by and large, are not as functional as the average PC, Forrester says that we will see a new class of consumer electronics emerge that will fill that gap: “frames” (effectively docks), which Forrester predicts will become a common way to give tablets more features, more power and link them up to other devices, like TVs, to use them to consume content. “Frames will become a new form of stationary PC, rising in volume even as laptop growth decays, redefining the desktop PC market as the stationary PC market,” Gillett writes.

Tablet cannibalisation of laptop sales accelerates by 2015

Sources -

http://techcrunch.com/2012/04/24/forrester-760m-tablets-in-use-by-2016-apple-clear-leader-frames-also-enter-the-frame/

https://docs.google.com/a/simplelifeforms.com/viewer?url=http://services.google.com/fh/files/blogs/AdMob%2520-%2520Tablet%2520Survey.pdf

“The mobile gaming market is key to building a successful strategy,” according to Janelle Benjamin, SuperData’s VP of Research, “Only by capitalizing on the early momentum can game companies establish a sustainable footprint for the longterm.” This report presents a snapshot overview of the mobile gaming sector.

Subscribers to SuperData’s services receive KPIs (e.g. ARPPU), market analyses, and revenue estimates on a monthly basis.

Key Findings

• Mobile gaming will represent a $7.5 billion worldwide market by 2015E, tripling from $2.7 billion today.
• Asia currently the largest market for mobile gaming, with revenues forecasted to total $3.2 billion by 2015E.
• Freemium accounts for 55% of all mobile game revenues, compared to 6% ad revenue.
• Between 3.5% and 10% of a mobile Free-to-Play game audience will convert to paying users.
• Most users spend between $8 and $15 per month.

Newzoo’s latest Trend Report on Online Casual and Social Games shows that 126 million Americans, or 87% of all gamers aged 10 to 65, play games on social networks or casual game websites such as Pogo, AGame, Miniclip, AddictingGames, Yahoo and King.com. In the US social networks, obviously dominated by Facebook, attract 60% of these gamers, 41% of time and 38% of money spend. The share of paying gamers averages 22%, totaling to 28 million Americans. The situation in European, Asian and Emerging markets is comparable, in terms of share of total game time and wallet. The only exception is that Europeans are less likely to spend money. Also, the popularity of social networks as game platform is significantly higher in Emerging and Asian markets than in the West.

Key Take-Aways

• Online casual and social gaming takes 39% of all 215 million hours spent on gaming each day in the US and 29% of money.
• Share of time and money is comparable in Asia, Europe and Emerging markets except for the share of money in Europe which is considerably lower: 16%
• 87% of all 145M US gamers aged between 10 and 65 play on casual websites or social networks.
• 22% of 126M US online casual or social gamers also spend money doing so.
• Europeans are less likely to spend money (18%)
• The share of paying online players is highest in Asia (46%)
• Only 8% of online casual or social US gamers spends all his or her online game time within social networks. This is higher in Europe (19%) and Emerging markets (15%).
• 87% of US Facebook gamers also plays games on casual websites.

Newzoo Trend Report: Casual Social Games – February 2012

We’ve been building our own location based games platform for a while now and we’re gearing up for the launch of the first game using that platform over at Vampire Cities. Simple Lifeforms believe location games are going to be a very large and important sector of growth for the on-line games industry.

Darrell Etherington from Betakit wrote a fascinating article on Location Games I thought I’d reprint it here.

Location Based Games (SOLOMO) The Next Big Thing

With the proliferation of mobile devices that come standard with location-aware and social features, it’s not surprising that game makers would embrace new technologies to provide gamers with experiences that leverage those abilities. A number of startups are trying to stay ahead of the game in social/local/mobile gaming; here are a few of the ones who appear to be doing it best so far.

Massive Damage’s Please Stay Calm is a zombie survival story that pits players against hordes of the undead, all from the devices they carry around in their pockets. The iPhone-only title launched in October of 2011, and the team is currently hard at work on an update that will allow large groups of players to battle one another for control of real world global landmarks. The company is also working on a web-based graphic novel to leverage the IP it created for the game.

Massive Damage CEO Ken Seto said in an interview that Please Stay Calm has been doing well since its debut. “Since launch, we’ve had 650K downloads, 2.4 million unique locations [where players checked in], 16 million checkins, and 17.3 million zombies destroyed,” he said. “On an average day, our players spend 53 percent more time playing our game than the industry average and they play 68 percent more frequently than the industry average [referring to time spent playing social games on iOS].”

Seto said that despite the fact that Please Stay Calm employs both mobile and location-aware technologies, the majority of players still play mostly from stationary places. “The majority of our users play from stationary environments like their office,” he told us. “I believe this is a use case or trend that is not going to change so you have to shape the location-based gameplay around that conceit, especially if you want to expand beyond a very small niche group of people willing to travel around to play a game.” Rather than providing motivation to play on the run, Seto says location offers “an emotional link from the game world to the real world,” but also says the team tried to make sure “location did not get in the way of fun gameplay or social elements.”

Another zombie-themed game focuses much more on the location features of mobile devices, and less on the social aspect.Zombies, Run! is a Kickstarter-funded app that raised $73,000 from the crowdsourced financing site. It debuted on the iOS App Store on Monday, and combines the zombie survival genre with a fitness-motivation game that uses the iPhone’s GPS data to measure speed and distance while a player runs. The running is then tied to a zombie survival story – runners are characters in the game, getting medical supplies and other resources while avoiding virtual zombies during their workout.

For Adrian Hon and game co-creator and writer Naomi Alderman, the use of mobile technologies isn’t about limiting the experience, but about broadening it. The game doesn’t actually tie to a specific real-world location — it just uses that data to map activities in the virtual world.  ”It might seem like this makes the game less immersive and attractive,” Hon said in an interview. “But the opposite is true. By giving players a great experience wherever they are in the world – a city, a town, the countryside – we can reach more people.”

The goal for Zombies, Run! is to introduce more social features, including multiplayer modes, as well as a certain level of location-awareness, but even in its current state Hon is excited about their early progress. “We’ve had fantastic reviews, so we think it’s been received very well,” Hon said. “Since our launch Monday, we’ve been in the 20 Top grossing apps worldwide, competing toe-to-toe with the likes of Zynga.”

One of the earliest hits in location-based gaming and a title that continues to grow through global expansion is Shadow Cities, from Finland-based Grey Area. BetaKit talked to Grey Area co-founder and CEO Ville Vesterinen about the game, which pits players against each other in virtual, magic-based battles in cities around the globe.

“In playing location-based games people get a shared feeling of familiar context, which gives the gamers a common discussion point to socialize over,” Vesterinen said about what modern mobile tech brings to gaming. “This is a very strong driver in making our gamers more social and helps us build around our gamers, not around our content pipeline.”

Vesterinen also echoed what Seto noted about players tending to stick close to home even with location-aware gaming titles. “People play location-based games, just as other mobile games, mostly at homes and offices, but that does not mean location is not very relevant in the game,” he said. “Actually the opposite is true. Where one lives and works are very important to people and build into part of one’s identity.”

With $2.5 million in funding and what Vesterinen calls a “comfortable revenue stream” from Shadow Cities, the company is looking to expand beyond the 40 countries where it’s currently available, and is also working on a second Grey Area game which Vesterinen said “will again redefine what is possible in mobile gaming.”

One last company we spoke to is taking a different approach, by applying gaming mechanics in a much broader way. Quest.li is a new Russian startup which recently opened offices in San Francisco that aims to make a game out of virtually anything, via both mobile apps for iOS and Android and a browser-based client. Anyone can post a quest to Quest.li, which could be something as simple as answering a single trivia question, or as elaborate as sending people on a multi-stage scavenger hunt through a specific city or neighborhood.

“We do bring gaming mechanics into the real world, but it’s a result of developing interactions in the real world,” CEO and co-founder Danil Kozyatnikov said in an interview. “[Gaming just happens to be] the easiest and the most fun way to do that right now.” He said that what Quest.li is really about is creating “adventures” for groups of friends.

One important aspect of how those adventures work brings to mind the simple concept of a shared office pool. “You can play quests alone, or with other people. If you play with others, everyone gets the quest at the same time, and the first to complete the goal wins,” Kozyatnikov told me. “People can actually chip in real money at the beginning, so a quest might require players to chip in $10 to join. When they do so, at the end of a quest the person who wins gets 70 percent of the total, and creators of the quests get an and additional 15 percent.” Kozyatnikov said it’s a little like eBay, in that people who come up with good products (e.g., quests) stand to reap greater rewards through that 15 percent take they get when other players buy in to their game. Quest.li makes revenue by taking the remaining cut.

Because a lot of Quest.li’s quests involve going to real-world locations to uncover clues or answers, it makes sense to think of it like geocaching, but more competitive and with higher stakes. Even aside from that aspect, however, Quest.li holds a lot of appeal as a direct marketing tool for brands. Businesses could create quests that encourage players to learn more about their products and offerings, for instance, and then answer questions in exchange for rewards.

The same technology that enables the games listed above to take advantage of location information also has its downsides, however, including how much data it uses, which can end up causing big bills for users. Figuring out more efficient ways to handle data will be a priority both for game developers and for handset makers, and the motivation is definitely there to find alternate ways of offloading data costs for end-users.

Games that incorporate social, local and mobile features are only just beginning to emerge, and there’s already an interesting mix of approaches from companies trying to win big in that space. No Instagram-style juggernaut has yet to emerge, however, but as the technologies required for these experiences to work properly continue to be more widely used thanks to the rise of smartphone ownership, the likelihood of someone hitting it really big in this new frontier of gaming grows.

You can read the original at - http://betakit.com/2012/03/01/location-based-gaming-the-next-big-payday

Interesting data from the report which can be viewed here 

- 1 in 4 US consumers between the ages of 13-54 purchased virtual goods in 2011 up 100% since 2009.

- Purchases among US gamers increased 50%.

- 48% we’re purchased on a connected console marketplace (i.e. Xbox live or PlayStation Store)

- 42% we’re purchased directly within a game application.

- 40% we’re purchased using pre paid cards at retail stores.

- The average spend on virtual goods was $64.

Location games are coming.

Or so called social, location, mobile (SOLOMO) games

Your MMO guild members may be good friends but they’re scattered all across the world. Your mobile games steal your attention away from talking to people. Your social game hassles you to bug your friends for gifts, but otherwise you play alone. Your co-op sessions of Portal 2 tend to be played with mute strangers.

Most innovations in digital gaming tend to produce solitary experiences. This is fine most of the the time, but players don’t always want to be solitary. They like to gather to play, to participate and hang out. Social contact is healthy, and games have always had an important role in helping to bind communities together.

Video games have not really tapped into that spirit yet, but it feels to me like that’s the next wave.

It should come as no surprise that Steam is doing well, but this infographic puts in perspective just how much better Valve’s PC gaming digital storefront is doing than its competitors.

Note that some of the sales data dates back to June 2011, when Electronic Arts’ rival platform “Origin” was still known as the EA Store.

Some of the Most Interesting facts and figures are

- 40 Million people have steam accounts.

- 60% of PC game sales are now through digital distribution and not Retail – 51% of these are through Steam.

- 90% of game on steam are downloaded and played on Windows OS

Games are the obvious killer app of the mobile marketplace.

- 64% of people who pay for an app also download and play games.

- IOS is by far the most popular content centre with 300,000 APPs which is more than Android, Ovi and Blackberry combines.

- Social networking, weather and maps and navigation are all represented pretty significantly.