Mobile + Social + Games = Viral Growth?

Way back in 2003 Nokia held an outdoor party in a trendy Milan neighborhood to show off its new N-Gage handsets. It was part of a European tour to fete the launch of a phone that was supposed to open up the untapped mobile gaming market for the Finnish behemoth. At the time many in the mobile phone industry thought a dedicated handset was the best way to access the mobile gaming market, a flawed assumption borne out by N-Gage’s flop. Other attempts proved only marginally successful until the 2007 arrival of the iPhone and its App Store. While the former showed there was a market for an engaging touch cellphone, the latter democratized mobile games because now the proverbial kid working out of his parent’s garage could develop a game that in a few clicks could be downloaded by the world.

 

Such was the change facilitated by the Apple App Store that for a period in early 2011 Bubble Ball, a game created by a 14-year-old American, outgunned all the games created by professional developers to be the most downloaded free app. Now with mobile phone manufacturers, service providers and games giants still digesting the new democratic reality, the ground is again shifting as mobile gaming becomes more social.

 

Given the sheer size of the mobile games market – technology consultancy Gartner forecasts it will be worth $16.8 billion in 2015, almost double last year’s figure — it is little wonder that mobile gaming is now an important part of the annual Mobile World Congress in Barcelona, which this year takes place between February 27 and March 1. Some $11.9 billion in mobile gaming revenue is expected to come from consumer spending and $4.9 billion from advertising, with casual and social gaming making a large contribution to the growth, according to Gartner.

 

 “In the past, I might play a game for a few weeks or months until I lose interest. That changes with the social aspect that adds stickiness to the game,” says Tuong Huy Nguyen, a principal analyst at Gartner. “I realize you play a game I play and that you have this high score … so I decide to join a friendly competition. On top of that there is word-of-mouth advertising because maybe I tell you about a game so we can try it together.”

 

Almost one-third of U.S. mobile phone users aged 13 years old and up played games on their handsets on average over the three months to December, an increase of eight percentage points from a year earlier, according to comScore. In Europe’s biggest markets – Britain, France, Germany, Italy and Spain – it was 27.5% in December compared with 25.3% the year before. Gaming in the U.S. in December came in well ahead of listening to music (23.8 %), but behind accessing social networks (35.3 %) and browsing the Internet (47.5 %) in terms of popular uses of mobile phones.

 

One social networking company making the transition to mobile is Germany’s Wooga, which in December introduced the Apple iOS version of its Diamond Dash game, which already has more than 15 million monthly users on Facebook. After playing a few rounds of the mobile version you must get your friends involved with invites made through the Facebook mobile app, a move that Wooga, the third-largest Facebook game maker after Zynga and Electronics Arts, expects to lead to viral uptake.

 

“Our mission is to combine social and mobile,” said Sina Kamala Kaufmann, the head of communications and partnerships at Berlin-based Wooga. (Wooga's founders are pictured on Informilo's home page). “To play, you don’t have to use the social features, but we see that those who do use them are more active. We thought social would lead to retention and increased activity, but weren’t sure; now after a bit more than two months we know for sure that’s how it works.”

 

While Wooga seeks to combine its success in social gaming with the mobile world, there are those going the other way as they try to add a social element to their popular mobile games. For example, in February Rovio, the Finnish company behind Angry Birds, one of the most downloaded iPhone games of all time, made the game available to Facebook’s almost 900 million users.

 

Companies that have already successfully combined both mobile and social appear to be doing well: Japanese mobile social gaming company DeNA reported that its sales for the third fiscal quarter ended December 31st were $445 million, up 16% from a year ago. Gumi, another Japanese mobile social gaming company, raised $26 million in venture funding in November. And in the U.S., Facebook revealed its roadmap for social games and mobile apps for the rest of the year at its February Inside Social Apps 2012 conference.

 

The mobile space presents a huge opportunity to create cross-platform social games, Carl Sjogreen, director of product management at Facebook, said in remarks reported widely on the Internet. Ironically, Facebook recently cited its own lack of revenue from mobile services as a risk factor in its plans to go public. But for social gaming companies that can now reach Facebook's 425 million mobile users, and mobile gaming companies that can serve the full Facebook community, the combination of mobile and social will surely mean another year of record growth in revenue. 

 

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