Last week, we published our latest mobile (game) market estimates for subscribers to our Global Mobile Market Report (and also via Newzoo Pro). Globally, the mobile games market will generate revenues of $77.2 billion this year, representing a healthy year-on-year growth of +13.3%.
Meanwhile, the global number of smartphone users will grow +6.7% year on year to 3.5 billion in 2020, presenting a new pool of players and payers for the years to come.
In this article, we’ll dive deeper into these numbers, while also sharing our thoughts on the impact of the ongoing COVID-19 outbreak (in terms of mobile game revenues and smartphone usage). Finally, we’ll present our mobile market forecasts from 2020 through 2023.
Lockdown Has Led to Consumers Engaging with Mobile Gaming More Than Ever
We’re all still experiencing the harrowing and unsettling situation that is the coronavirus pandemic. Gaming has been a means of escapism and time filling for many people confined to their homes, which we explore in our recent article.
National/regional lockdowns and travel bans across the globe have led to a significant increase in consumer engagement with mobile games, especially in mobile-first markets such as Asia, the Middle East, and Latin America.
Simply put, mobile’s portability and accessibility have solidified the platform’s dominance even further this year, partially due to a spillover effect from Internet cafes in certain markets (again, mostly in Asia).
What’s more, we’ve seen a slight increase in tablet usage in Q1 2020—the first instance of growth in almost two years. China, which was in strict lockdown throughout the entire quarter, drove the increase.
This Strong Engagement Will Trickle into Increased Revenues
Naturally, the rise in playing time will lead to revenue growth for mobile gaming. But as it is infamously challenging to convert mobile players into payers, engagement growth will by far outpace revenue growth—especially on Android, the dominant OS in many emerging markets.
Growth in direct consumer spending is also somewhat offset by the increasingly popular in-game-advertising (IAA) business model. Nevertheless, we forecast the market to reach $77.2 billion by 2020. An increased interest in gaming due to COVID-19-related lockdown measures is a primary driver.
In terms of the app stores generating these revenues, Apple and Google’s duopoly on the market still holds, but third-party-app-store revenues are growing faster:
- Apple’s App Store will generate $38.8 billion in mobile game revenues this year (+10.3% year on year), accounting for just over half of all mobile game revenues worldwide.
- Game revenues from Google Play, meanwhile, will hit $27.8 billion (+15.0% year on year) in 2020, claiming 36.0% of the global revenues.
- The remaining $10.6 billion will come from third-party Android app stores (+20.5% year on year). Google Play is banned in China, so the lion’s share of third-party revenues is driven by the Chinese market.
Future Outlook: Mobile Gaming on Track for Its First 100-Billion-Dollar Year
The mobile games market will continue to grow and cross the $100-billion mark in 2023. By then, we forecast the mobile games market to grow with a +10.8% CAGR (2019-2023) to $102.8 billion.
Emerging markets such as Southeast Asia, the Middle East and Northern Africa, Sub-Saharan Africa, and Latin America will contribute the most to growth. China, the U.S., and Japan will remain the three largest mobile games markets in 2023.
Hardware Manufacturers Face New Challenges, But Active Devices and Users Are Still Increasing
In the past few months, leading mobile manufacturers such as Samsung, Xiaomi, and Vivo have delayed new product releases due to the pandemic. With factories around the world grinding to a halt, the lockdown has disrupted the supply chain, which negatively affects the manufacturing and distribution of mobile hardware.
On the consumer side, delays in new smartphone-model releases—as well as the looming global recession—may undermine consumers’ incentives to upgrade current models, further disrupting smartphone sales.
Despite the above, we do not foresee a significant impact on the number of smartphone users (or active smartphones) globally. After all, network availability is the key driving force for smartphone usage, and carriers seem to be less-affected by the lockdown measures. Across the board, mobile network rollouts have not been significantly impacted.
We forecast that the number of smartphone users globally will grow +6.7% year on year to 3.5 billion in 2020 with 4.2 billion active smartphones by 2020 (representing a +6.3% year-on-year growth).
5G Rollout Will Be More Impacted, But the Future Still Looks Bright
The extent to which the pandemic will disrupt 5G’s rollout globally is still difficult to gauge, but it seems it will be somewhat impacted. In many Western markets, carriers expect delays for 5G network deployments; yet, governments in Asia are still pushing hard for national rollouts.
The global number of smartphone users will continue to grow, reaching 4.1 billion in 2023, a +5.9% CAGR (2019-2023). The number of active smartphones will grow at a slightly slower rate (+5.5% CAGR) to 4.8 billion in 2023.
Sub-Saharan Africa, Central Southern Asia, Southeast Asia, Latin America, and Middle East and Northern Africa will see the fastest growth in the number of smartphone users, thanks to smartphones becoming more affordable—as well as local breakthroughs in mobile Internet.
All in all, the mobile remains the biggest segment in the games business, with revenues and user engagement alike continuing their strong growth trajectories in the years to come.
Our analysts will be keeping a keen eye on mobile gaming—as we always do. We can’t wait to see the market finally hit its first $100-billion year in 2023, so stay tuned for more mobile-related insights!