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Mobile gaming monetization

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Mobile gaming monetization

  1. MOBILE GAMINGCURRENT AND FUTURE BUSINESS MODELS Shani Shoham shani@2020.vc
  2. AGENDA 1 THE MARKET Sizing, growth & drivers 2 MONETIZATION MODELS Mobile apps & mobile games: Benchmark & trends 3 CASE STUDIES DeNA, GREE & Hungry shark 4 EMERGING TRENDS WP7 & multi-platforms 5 FUTURE RESEARCH Geography & demographics
  3. KEY HIGHLIGHTS 1 $3B MARKET. 24% CAGR Driven by smartphone growth and mobile gaming penetration 2 MONETIZATION MODELS – VIRTUAL GOODS/IN-APP PURCHASING DOMINATE 72% of mobile games on iOS (Top 200) use in-app purchasing 3 VIRTUAL CURRENCY IS THE BIGGEST DRIVER 78% OF DeNA mobile revenues are based on virtual currency 4 EMERGING TRENDS WP7, multi-platforms & contextual gaming
  4. AGENDA 1 THE MARKET Sizing, growth & drivers 2 MONETIZATION MODELS Mobile apps & mobile games: Benchmarking & trends 3 CASE STUDIES DeNA, GREE & Hungry shark 4 EMERGING TRENDS WP7 & multi-platforms 5 FUTURE RESEARCH Geography & demographics
  5. MOBILE GAMING – MARKET STATS400M USERS. $3B REVENUES. 24% CAGR # of gamers per platform Revenues & growth by segment
  6. MOBILE GAMING – A LUCRATIVE MARKET A BASE OF ENGAGED USERS FOR ADVERGAMINGFrequency of use of your favorite mobile game 4% 23% 49% Several times a day Once a day 49% A few times a week Once a week or less 23% Play their favorite game numerous times a dayDuration of use day (favorite mobile game) 1% 20% 50% <1 minute 1-5 minutes 6-10 minutes 50% 10+ minutes 29% Play the game more than 10 min.Source: MTV Networks, "Love Em or Leave Em: Adoption, Abandonment and the App-AddledConsumer," June 7, 2011
  7. MOBILE APPS – MONETIZATION MODELS & TRENDS IN-APP PURCHASING DOMINATES Total iPhone App Revenues 1 In-app purchasing In-app purchasing 2 Paid apps 28% 3 Freemium 48% 4 Virtual goods 5 Advertising 24% 6 Subscription Free with in-app Paid with in-app Paid only* Source: Distimo July 2011
  8. MOBILE APPS – MONETIZATION MODELS & TRENDS IN-APP PURCHASING DOMINATES 1 In-app purchasing In-app purchasing* Source: Distimo July 2011
  9. MOBILE GAMING – MONETIZATION MODELS & TRENDS 72% OF REVENUES ARE IN-APP PURCHASING 20% 52% 72%* Sources: Flurry analytics & Distimo, June-July 2011
  10. DRIVERS FOR IN-APP PURCHASE DOMINANES CTR & VIRTUAL CURRENCIES 35% of the 300 most popular free games in June use some sort of virtual currencies to monetize in the Apple App Store for iPhone.* Source: Distimo July 2011
  11. MOBILE GAMING – PAID GAMES - ANALYSIS LTV=$1.44. DECLINING ASP. 93% OF APPS - <1000 DOWNLOADS ASP of 300 most popular paid for games Paid apps download stat $2.50 0.10% 7.30% $2.01 $2.00 -16% $1.69 -15% 20.70% $1.50 $1.44 $1.00 $0.50 71.90% $- June 10 Januray 11 June 11 <100 100-1000 1000-50000 >50000 Expected value – revenue per game = $5803* Source: Distimo July 2011, iOS
  12. MOBILE GAMING – ADVERTISING- ANALYSIS LTV - $16-$33.5 Monthly advertising revenues per act. user Gaming apps – Duration analysis iOS $10.0 $9.5 7% 17% $9.0 11% $8.0 $7.0 $6.5 16% $6.0 $5.0 25% $4.0 $4.0 $3.0 24% $2.0 $1.0 Few days 1-3 weeks $- 1-2 months 3-6 months* source: Mobclix, January ‘11
  13. PAID-APPS VS. ADVERTISING BASED MODEL X2 MORE ARPU THROUGH ADVERTISING IN A SINGLE MONTH Paid-apps – One-time revenue per user Monthly advertising revenues per act. user iOS Android (E) iOS Android $10.0 $9.5 $2.01 $9.0 $8.0 $7.2 $1.69 $6.5 $1.53 $7.0 $1.44 $1.29 $6.0 $1.10 $4.9 $5.0 $4.0 $4.0 $3.0 $1.9 $2.0 $1.0 $- June 10 Januray 11 June 11* source: Mobclix, January ‘11
  14. MOBILE GAMING – IAP - ANALYSIS AVG TRANSACTION - $14. GAMING - TOP IAP CATEGORY Average price per gaming transaction Gaming - # of IAP per user* source: Flurry Analytics, July 11
  15. MOBILE GAMING MONETIZATIONSUMMARY1 In-App purchasing dominates In-app has gained significant momentum in the last 12 months2 Drivers: virtual currencies & CTR CTR is x8 higher. Virtual currencies drive users behavior3 Advertising still valid Source: Flurry, June ‘11 Video based advertising offers higher CTR. iPAD avg. eCPM as high as $1.754 Hybrid models Monetization mechanism should be considered based on the game advertising, freemium upgrades and in-app purchases, will allow more engaging games to maximize revenue
  16. AGENDA 1 THE MARKET Sizing, growth & drivers 2 MONETIZATION MODELS Mobile apps & mobile games: Benchmarking & trends 3 CASE STUDIES DeNA, GREE & Hungry shark 4 EMERGING TRENDS WP7 & multi-platforms 5 FUTURE RESEARCH Geography & demographics
  17. DeNA MOBILE – CASE STUDY VIRTUAL CURRENCY DRIVES GROWTHin Million DeNA Mobile Revenues ¥25,000.00 ¥20,000.00 Other 1% ¥15,000.00 Advertising 9% ¥10,000.00 Avatar related 12% ¥5,000.00 Virtual currency ¥0.00 78% 1Q 09 2Q 09 3Q09 4Q 09 Q1 10Source: Benjamin Joffe, Virtual goods conference, San Francisco 2010
  18. GREE MOBILE – CASE STUDYVIRTUAL CURRENCY DRIVES GROWTHUsers Revenue $133M 20M 2010.04-06 Digital goods (82%) Ads (18%) 2010.06
  19. HUNGRY SHARK– CASE STUDY 200% REVENUE INCREASE. 200,00 DAILY DOWNLOADS. From Paid-app to in-App purchase From $1 per download to $3.26 avg. transaction Daily downloads peak at 250,00 No. 1 free App in 48 countries Total downloads – 18.5 x5 overnight increase in revenueSource: Ian Harper, MD of FGOL August ’11, MobileEntertainment
  20. AGENDA 1 THE MARKET Sizing, growth & drivers 2 MONETIZATION MODELS Mobile apps & mobile games: Benchmarking & trends 3 CASE STUDIES DeNA & GREE 4 EMERGING TRENDS WP7 & multi-platform 5 FUTURE RESEARCH Geography & demographics
  21. EMERGING TRENDS WP7 EMERGESJan‘11 July ‘11 Growth 1 2 25% 2 1 78% 3 3 75% 4 6 61% 5 5 104% 6 4 242%
  22. EMERGING TRENDS MULTIPLE PLATFORM GAMERSSource: Newzoo BV, US National Gamers survey, Feb ‘11
  23. AGENDA 1 THE MARKET Sizing, growth & drivers 2 MONETIZATION MODELS Mobile apps & mobile games: Benchmarking & trends 3 CASE STUDIES DeNA, GREE & Hungry shark 4 EMERGING TRENDS WP7 & multi-platforms 5 FUTURE RESEARCH Geography & demographics
  24. WHY GEOGRAPHY MATTERS IN-APP IN CHINA – ONLY 34% OF REVENUESIn-app as % of total revenues (Top 200 apps)Source: Distimo, June 2011
  25. KEY HIGHLIGHTS 1 $3B MARKET. 24% CAGR Driven by smartphone growth and mobile gaming penetration 2 MONETIZATION MODELS – VIRTUAL GOODS/IN-APP PURCHASING DOMINATE 72% of mobile games on iOS (Top 200) use in-app purchasing 3 VIRTUAL CURRENCY IS THE BIGGEST DRIVER 78% OF DeNA mobile revenues are based on virtual currency 4 EMERGING TRENDS WP7, multi-platforms & contextual gaming
  26. SOURCES- PARTIAL LISTMintel - Mobile Gaming - US - May 2011Mintel - Mobile and Casual Gaming - US - December 2010PwC - Entertainment & Media sectorDistimo – Various reportsFlurry Analytics – Various reportsNielsen company – Various reportsEA – UBS Best of Americas Conference presentation – September 2011Activision – Investor day presentationZynga – S1Opportunities in the App ecosystem – Media AgilityCasual Connect Seattle – July 2011Mobile Game Monetization @ SGSGREEElectronic Arts
  27. MOBILE GAMINGBACKUP SLIDES Shani Shoham shani@2020.vc
  28. SMARTPHONES VS. FEATURE PHONES – US SAMPLESMARTPHONES OVERTAKING FEATUREPHONES PENETRATION
  29. FREEMIUM VS. PAID ACROSS APP STORES FREEMIUM DOMINATES ACROSS ALL APPSTORES* Source: Distimo July 2011
  30. PAID APPS - ANALYSISPRICING STATS SIMILAR ACROSS ALL APPSTORES
  31. APPS BUSINESS MODELS BY GEOGRAPHYNO SIGNIFICANT DIFFERENCE
  32. MOBILE GAMES BY PLATFORM TIME SPEND ON iOS – SIGNIFICANTLY HIGHER Time Spent per Month on Mobile Games by US Mobile Gamers, by OS, Q2 2011 (hours) 4.5 4.5 RIM BlackBerry Hours Feature phone 1 4.7 Windows Phone 7 Android 9.3 Apple iPhone (iOS) 14.7 0 2 4 6 8 10 12 14 16Source: The Nielsen Company as cited incompany blog, July 6, 2011
  33. WHY GEOGRAPHY MATTERS (1) DONWLOAD GROWTH IN CHINA EXCEEDS THE US* iPhone download growth volume 2011 vs. 2010
  34. WHY GEOGRAPHY MATTERS (2) CULTURAL DIFFERENCES EVEN AMONG SIMILAR COUNTRIES US vs. UK Mobile gamers - demographicUK (n=328) 18-24 25-34 35-44 45-54 55-64 65+US (n=486) 0% 20% 40% 60% 80% 100% 120%Source: PopCap Games, "2011 PopCap Games Mobile Phone Gaming Research" conductedby Information Solutions Group, Feb 28, 2011
  35. EMERGING TRENDS MMO & CONSOLE/ONLINE GAMES – SPENDING INCREASESMedian Amount Spent on Virtual Content Among US Gamers, by Game Type, July 2011 $80 $70 $60 $50 $40 Jul-10First-party $30 Jul-11 $20 $10 $0 MMOs Free-to-play games Console games with PC games with Casual games Social networking online play online play games $60 $50 $40Three party $30 Jul-10 $20 Jul-11 $10 $0 MMOs Free-to-play games Console games with PC games with Casual games Social networking online play online play games

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