Mobile Gaming in Emerging Markets - Five-Year Forecast and Impact Analysis

Abstract

Description

Mobile gaming is enjoying solid growth. The number of gamers increased from about 55m in 2005 to about 183m in 2008, and global revenue in 2008 came to $6.9bn. Emerging markets contributed heavily, with China and India being among the most important in terms of new mobile gamers. A number of underlying factors contribute to this growth - first of all the evolving mobile technology environment: Better and faster wireless networks as well as more advanced and easy-to-use handsets are enhancing the user experience. Features such as touchscreens, 3D capabilities and online interactivity allow content developers to improve games. But apart from technological improvement and business-level innovation - which in the form of the iPhone App Store is revolutionizing the industry - the mobile gaming market is also evolving fast on account of mobile adoption. This trend is led by emerging markets, where improving economies are allowing consumers and businesses to catch up with the more advanced markets in terms of technology uptake. Although most people in emerging markets cannot afford sophisticated devices, they are eager to experiment and use mobile data services. This is true for both mobile communications and entertainment, of which mobile videogames are a major driving force. For many users, handsets are the first device they own that enables access to electronic forms of entertainment.

This report analyzes mobile videogaming market dynamics in emerging economies. This is done by analyzing these markets in the context of the overall mobile videogaming industry, taking a close look at the trends and dynamics in gaming and mobile gaming globally. This is followed by a top-level examination of emerging markets, including their mobile gaming-specific metrics, market enablers, adoption barriers, trends and opportunities. Also included are in-depth country profiles of eight emerging markets: Brazil, China, India, Mexico, Nigeria, Poland, Russia and South Africa. Each country study examines the economic background of local mobile and gaming markets, available products, pricing, barriers to adoption, current trends and overall market dynamics. The report also forecasts market growth and looks at interesting business models and initiatives.

• Global mobile gaming revenue came to $6.9bn in 2008, having grown strongly in recent years. The main driver was an increase from about 55m users in 2005 to about 183m in 2008. Emerging markets contributed heavily, with China and India being among the most important in terms of new mobile gamers.
• Mobile gaming is benefiting from expanded mobile access to the Internet and content services, in both developed and emerging markets, as 3G networks are launched, the handset user experience is enhanced and data access costs are reduced.
• Growth will be fueled by the changes the iPhone App Store has brought to more developed markets, where it is stimulating competition and interest in mobile games.
• Declining handset and data access prices have been central to the increased use of data services in emerging economies. Also, because devices such as PCs and gaming consoles are less common, the mobile phone has in many emerging markets become the primary device for accessing content such as websites and games. This, combined with improving economic conditions, is resulting in increasing adoption of mobile content and data services.
• Several barriers are hampering market growth, most of them specific to local conditions but related to low income levels, the prevalence of handsets with limited functionality, network and billing platform inadequacies and other technical issues, pricing for data access and games, the inadequacy of game distribution channels, inadequate payment mechanisms or piracy.
• In addition to the ecosystem-related issues, a number of country-level issues in emerging markets encourage local players to develop innovative business models to pursue the mobile gaming opportunity. Some of the most interesting examples are advergaming, free-to-play and social gaming. As shown in the country profiles, however, these usually have local peculiarities.

• What are the revenue and user base potentials of mobile gaming?
• How does gaming fit into mobile operators' overall data business? What can operators do to boost mobile gaming adoption?
• What are the barriers to mobile gaming growth in emerging economies? How important will the availability of advanced handsets be to mobile gaming adoption? And how much of a difference will 3G make?
• Which geographical regions will see the most growth in mobile gaming users? How do the opportunities in various regions compare?
• What kinds of strategies have proven successful in emerging countries, and why? When are core games, casual games, online games or advergaming the best choices? How about application stores, social networking, off-deck distribution, viral distribution, in-game micropayments, revenue-sharing and sponsored games?
• What strategies can succeed in generating revenue from mobile gaming in markets dominated by piracy?
• Who is doing these things?

Target audience

Mobile operators:

This report will help you both grasp the big picture and home in on the markets that best match your capabilities and objectives. Find out what the mobile gaming opportunity is in emerging markets, and identify the strategies that are most likely to succeed where incomes are low and piracy rife. Use the case studies to discover and compare new approaches to provisioning, pricing and billing of mobile games, including distribution channels, payment mechanisms and piracy mitigation.

Game developers, publishers, distributors and aggregators:

This report examines the value chain of mobile gaming and how it is changing. Discover what is holding back adoption in emerging markets and which strategies can overcome obstacles such as piracy. Evaluate markets to target those that best suit your products and capabilities. Anticipate trends in mobile networks and handsets in order to position your products and take advantage of unmet aspirational demand among new target audiences.

Advertisers:

Assess the opportunity for branded games and advergaming to promote your brand. Learn from the experience of campaigns involving mobile gaming in a variety of emerging markets and gain insight into what made them successful. This report will help you identify how to use mobile gaming to reach new audiences with effective messages. Case studies are provided involving advergaming and sponsored games.

Investors:

Locate opportunities in challenging environments. This report will help you evaluate and develop the strategies that will position your portfolio investments to take effective advantage of upcoming developments in one of the most exciting mobile application fields.

Study methodology

In order to analyze the impact of emerging markets on mobile gaming in general, we conducted specific research that built upon Pyramid Research' s regular coverage of the global mobile telecom market. The methodology followed was to analyze the current overall gaming and mobile gaming markets

at a global level and then measure the impact of emerging markets within the larger context. Because of the size and diversity of emerging markets, we selected a limited number of markets to examine in depth, based on their regional and global relevance. This allowed us to capture the diversity of experiences and approaches in various regions and contexts, providing a clear view not only of each market' s peculiarities but also of commonalities among them. Building on this country-specific analysis, we analyzed go-to-market approaches, the main barriers to adoption and upcoming opportunities. Throughout the report we draw lessons from emerging markets that can be applied to other geographies. To complete the study we e researched and interviewed several players, both at a global and a local level. These include mobile operators, game developers and publishers, content aggregators, handset vendors, local regulators and industry associations.