A major shift in the U.S. app economy has just taken place. In the second quarter of this year, U.S. consumer spending in non-game mobile apps surpassed spending in mobile games for the first time in May 2022 and the trend continued in June. This drove the total revenue generated by non-game apps higher for the quarter, reaching about $3.4 billion on the U.S. App Store, compared with $3.3 billion spent on mobile games.
After the shift in May, 50.3% of the spending was coming from non-game apps by June 2022, according to new findings in a report from app intelligence firm Sensor Tower. By comparison, games had accounted for more than two-thirds of total spending on the U.S. App Store just five years ago.
The trend was limited to the U.S. App Store and was not seen on Google Play, however. In Q2, games accounted for $2.3 billion in consumer spending on Google Play in the U.S., while non-game apps accounted for about $1 billion.
Image Credits: Sensor Tower
This shift in the U.S. app market is the most significant finding in the new report and demonstrates how successfully Apple has managed to create a subscription economy that allows a broader range of apps to generate sizable revenues.
The new data also supports this, as it shows it’s not only the biggest players that are benefiting from subscription revenue growth. In Q2 2022, 400 apps generated more than $1 million in consumer spending on the U.S. App Store, which is eight times the total from the same quarter in 2016. In addition, 61 U.S. App Store non-game apps generated at least $10 million in U.S. consumer spending in Q2 2022 — that’s more than the number of non-game apps that had generated $1 million+ in revenue in Q2 2016.
A handful of non-game apps also topped $50 million in U.S. consumer spending in the quarter, including YouTube, HBO Max, TikTok, Tinder, Disney+, Hulu and Bumble.
Image Credits: Sensor Tower
Subscriptions are the major revenue growth driver here, as non-game apps grew at nearly twice the rate — at a 40% compound annual growth rate — since June 2014 compared with less than 20% for games, the report found.
The trend is a significant reversal of what mobile app spending looked like just a few years ago.
In 2019 and early 2020, for instance, mobile game spending growth was consistently higher than non-game spending. Game spending then surged again at the start of the COVID-19 pandemic. But by late 2020, non-game growth had caught up and the gap widened in 2021.
Image Credits: Sensor Tower
While non-games are enjoying their new dominance, it’s not all great news for the app economy in this most recent quarter. The report also found that U.S. app spending overall declined for the first time in Q2, following the wind down from the spike generated by the pandemic.
At the start of the pandemic (around April 2020), year-over-year growth in consumer spending had jumped from around 20%-30% in 2019 to 35%-55% over the next 12 months. But in May 2022, U.S. spending declined for the first time as consumers began to shift their dollars back to other non-mobile activities like restaurant dining and travel.
Despite this decline from the pandemic highs, consumer spending in Q2 2022 was still up 71% over Q2 2019.
In other key findings from the quarter, summer travel drove travel apps to record high downloads in the U.S. and U.K., and airline app downloads in these markets were up 30%+ compared with Q2 2019, before the pandemic.
Meanwhile, the top-five ticketing apps saw 10 million downloads, up 70%+ from Q2 2019 as consumers returned to concerts, sports games and other events.
Image Credits: Sensor Tower
Worldwide app downloads slowed also slowed in the quarter, as installs totaled 35 billion in Q2, down 2.5% year over year. App Store downloads fell 1.3% to 7.8 billion and Google Play installs dropped 3% to 27.2 billion.
The most downloaded non-game app worldwide was TikTok, which has held the top position eight times out of the past 10 quarters. It was followed by Instagram, Facebook, WhatsApp and Snapchat. TikTok (including Douyin in China on iOS) had 187 million downloads in the quarter.
The top mobile game globally was Subway Surfers, with over 80 million downloads — its highest total since 2014, and following the game’s maker Sybo’s acquisition by gaming giant Miniclip in June 2022. The number two title was Garena Free Fire with 70 million installs for the third quarter in a row.
China was still the larger contributor to iOS gaming revenue, despite a pause on game approvals in May 2022. In Q2, 65% of consumer spending on China’s App Store was on mobile games, while 35% was on non-game apps in Q2 2022 — percentages that remained unchanged from a year ago in June 2021. Japan’s App Store still generates the third-most gaming revenue on iOS and it maintained this position, though games’ share shrank a bit to 68% of the total spend, down from 70% in June 2021.
US App Store revenue from non-game apps just topped games for the first time
Архив рубрики: Gaming
Game studio HiDef partners with Snap to develop a Bitmoji dance social mobile game
A game studio, HiDef, announced today that it is teaming up with camera company Snap Inc. to develop an off-platform Bitmoji-based dance and music social game. The game will leverage Snap’s augmented reality tech as well as Bitmoji, the personalized cartoon avatar maker. Bitmoji joined the Snap family over five years ago, and today over a billion avatars have been created.
The Bitmoji-based dance expression game will be a standalone title and is expected to launch in 2023. Snap will also support HiDef’s upcoming flagship dance party game IP, which aims to host a dance party for billions across the globe.
Pany Haritatos, head of Snap Games, said in a statement:
We’re working with HiDef as a marquee partner because of their leadership in the gaming and entertainment space, as well as our shared goal of engaging audiences through creative expression. Games have already captured the interest of 320 million Snapchatters and we are excited to team up with HiDef on this exciting new music and dance game.
“There are over 1 billion Bitmoji avatars just waiting to dance! We’re honored Snap chose HiDef to bring their community onto the virtual dance floor. Our game will offer a new place for Snapchat’s audience to express themselves creatively through music and dance,” said Chip Lange, CEO at HiDef, Inc.
HiDef was co-founded in 2019 by Jace Hall, Anthony Castoro and Rick Fox, as well as Chief Impact Officer David Washington, to build new gaming experiences via a proprietary technology platform.
Game studio HiDef partners with Snap to develop a Bitmoji dance social mobile game
6 investors on 2021’s mobile gaming trends and opportunities
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Many VCs historically avoided placing bets on hit-driven mobile gaming content in favor of clearer platform opportunities, but as more success stories pop up, the economics overturned conventional wisdom with new business models. As more accessible infrastructure allowed young studios to become more ambitious, venture money began pouring into the gaming ecosystem.
After tackling topics including how investors are looking at opportunities in social gaming, infrastructure bets and the moonshots of AR/VR, I asked a group of VCs about their approach to mobile content investing and whether new platforms were changing perspectives about opportunities in mobile-first and desktop-first experiences.
While desktop gaming has evolved dramatically in the past few years as new business models and platforms take hold, to some degree, mobile has been hampered. Investors I chatted with openly worried that some of mobile’s opportunities were being hamstrung by Apple’s App Store.
“We are definitely fearful of Apple’s ability to completely disrupt/affect the growth of a game,” Bessemer’s Ethan Kurzweil and Sakib Dadi told TechCrunch. “We do not foresee that changing any time in the near future despite the outcry from companies such as Epic and others.”
All the while, another central focus seems to be the ever-evolving push toward cross-platform gaming, which is getting further bolstered by new technologies. One area of interest for investors: migrating the ambition of desktop titles to mobile and finding ways to build cross-platform experiences that feel fulfilling on devices that are so differently abled performance-wise.
Madrona’s Hope Cochran, who previously served as CFO of Candy Crush maker King, said mobile still has plenty of untapped opportunities. “When you have a AAA game, bringing it to mobile is challenging and yet it opens up an entire universe of scale.”
Responses have been edited for length and clarity. We spoke with:
Hope Cochran, managing director, Madrona Venture Group
Daniel Li, partner, Madrona Venture Group
Ethan Kurzweil, partner, Bessemer Venture Partners
Sakib Dadi, investor, Bessemer Venture Partners
Alice Lloyd George, founding partner, Rogue VC
Gigi Levy-Weiss, general partner, NFX
Hope Cochran and Daniel Li, Madrona Venture Group
Does it ever get any easier to bet on a gaming content play? What do you look for?
Hope Cochran: I feel like there are a couple different sectors in gaming. There’s the actual studios that are developing games and they have several approaches. Are they developing a brand new game, are they reimagining a game from 25 years ago and reskinning it, which is a big trend right now, or are they taking IP that is really trendy right now and trying to create a game around it? There are different ways to predict which ones of those might make it, but then there’s also the infrastructure behind gaming and then there’s also identifying trends and which games or studios are embracing those. Those are some of the ways I try to parse it out and figure out which ones I think are going to rise to the top of the list.
Daniel Li: There’s this single-player narrative versus multiplayer metaverse and I think people are more comfortable on the metaverse stuff because if you’re building a social network and seeing good early traction, those things don’t typically just disappear. Then if you are betting more on individual studios producing games, I think the other thing is we’re seeing more and more VCs pop up that are just totally games-focused or devoting a portion of the portfolio to games. And for them it’s okay to have a hits-driven portfolio.
There seems to be more innovation happening on PC/console in terms of business models and distribution, do you think mobile feels less experimental these days? Why or why not?
Hope Cochran: Mobile is still trying to push the technology forward, the important element of being cross-platform is difficult. When you have a AAA game, bringing it to mobile is challenging and yet it opens up an entire universe of scale. The metrics are also very different for mobile though.
Daniel Li: It seems like the big monetization innovation that has happened over the last couple of years has been the “battle pass” type of subscription where you can unlock more content by playing. Obviously that’s gone over to mobile, but it doesn’t feel like mobile has had some sort of new monetization unlock. The other thing that’s happened on desktop is the success of the “pay $10 or $20 or $20 for this indie game” type of thing, and it feels like that’s not going to happen on mobile because of the price points that people are used to paying.
Alice Lloyd George, Rogue VC
6 investors on 2021’s mobile gaming trends and opportunities
How Niantic evolved Pokémon GO for the year no one could go anywhere
Pokémon GO was created to encourage players to explore the world while coordinating impromptu large group gatherings — activities we’ve all been encouraged to avoid since the pandemic began.
And yet, analysts estimate that 2020 was Pokémon GO’s highest-earning year yet.
By twisting some knobs and tweaking variables, Pokémon GO became much easier to play without leaving the house.
Niantic’s approach to 2020 was full of carefully considered changes, and I’ve highlighted many of their key decisions below.
Consider this something of an addendum to the Niantic EC-1 I wrote last year, where I outlined things like the company’s beginnings as a side project within Google, how Pokémon Go began as an April Fools’ joke and the company’s aim to build the platform that powers the AR headsets of the future.
Hit the brakes
On a press call outlining an update Niantic shipped in November, the company put it on no uncertain terms: the roadmap they’d followed over the last ten-or-so months was not the one they started the year with. Their original roadmap included a handful of new features that have yet to see the light of day. They declined to say what those features were of course (presumably because they still hope to launch them once the world is less broken) — but they just didn’t make sense to release right now.
Instead, as any potential end date for the pandemic slipped further into the horizon, the team refocused in Q1 2020 on figuring out ways to adapt what already worked and adjust existing gameplay to let players do more while going out less.
Turning the dials
As its name indicates, GO was never meant to be played while sitting at home. John Hanke’s initial vision for Niantic was focused around finding ways to get people outside and playing together; from its very first prototype, Niantic had players running around a city to take over its virtual equivalent block by block. They’d spent nearly a decade building up a database of real-world locations that would act as in-game points meant to encourage exploration and wandering. Years of development effort went into turning Pokémon GO into more and more of a social game, requiring teamwork and sometimes even flash mob-like meetups for its biggest challenges.
Now it all needed to work from the player’s couch.
The earliest changes were those that were easiest for Niantic to make on-the-fly, but they had dramatic impacts on the way the game actually works.
Some of the changes:
Doubling the players “radius” for interacting with in-game gyms, landmarks that players can temporarily take over for their in-game team, earning occupants a bit of in-game currency based on how long they maintain control. This change let more gym battles happen from the couch.
Increasing spawn points, generally upping the number of Pokémon you could find at home dramatically.
Increasing “incense” effectiveness, which allowed players to use a premium item to encourage even more Pokémon to pop up at home. Niantic phased this change out in October, then quietly reintroduced it in late November. Incense would also last twice as long, making it cheaper for players to use.
Allowing steps taken indoors (read: on treadmills) to count toward in-game distance challenges.
Players would no longer need to walk long distances to earn entry into the online player-versus-player battle system.
Your “buddy” Pokémon (a specially designated Pokémon that you can level up Tamagotchi-style for bonus perks) would now bring you more gifts of items you’d need to play. Pre-pandemic, getting these items meant wandering to the nearby “Pokéstop” landmarks.
By twisting some knobs and tweaking variables, Pokémon GO became much easier to play without leaving the house — but, importantly, these changes avoided anything that might break the game while being just as easy to reverse once it became safe to do so.
GO Fest goes virtual
Like this, just … online. Image Credits: Greg Kumparak
Thrown by Niantic every year since 2017, GO Fest is meant to be an ultra-concentrated version of the Pokémon GO experience. Thousands of players cram into one park, coming together to tackle challenges and capture previously unreleased Pokémon.
How Niantic evolved Pokémon GO for the year no one could go anywhere
MTG acquires mobile racing game studio Hutch Games for up to $375 million
Sweden’s MTG is making a significant acquisition in the mobile gaming industry. The company is acquiring Hutch Games, the London-based game studio behind popular mobile racing games such as Rebel Racing, F1 Manager and Top Drives.
The acquisition is an important one for MTG as the company is spending $275 million right away and setting aside another $100 million for performance-based payments.
If you’re not familiar with MTG, you probably know its portfolio companies. Over the past few years, MTG has acquired ESL and DreamHack to become an esports leader.
MTG has also acquired InnoGames and Kongregate for their popular web-based and mobile games. And it sounds like MTG isn’t done just yet, as the company plans to acquire more companies in the near future.
MTG explains why the acquisition makes sense in its announcement. Hutch Games isn’t focused on a single game. It has built a portfolio of successful games, which is always a good sign for future growth.
The game studio has also licensed some well-known brands, such as F1. And MTG believes that F1 Manager, Top Drives and Rebel Racing still have a lot of growth potential. Free-to-play mobile games have become games-as-a-service, so you want to keep them popular over the long run.
When it comes to long-term potential, Hutch Games also has more games in the pipeline for 2021 and 2022. Finally, it’s a cost-effective studio, as most employees are developers.
During the first nine months of 2020, Hutch Games generated $56.3 million in revenue and $13.3 million in earnings before interest and taxes (EBIT). Hutch Games investors included Backed VC, Index Ventures, Initial Capital and angel investor Chris Lee.
As you can see, free-to-play games can be lucrative. That’s why there will be some consolidation in the future. Some companies will use their deep pockets or take advantage of debt to build out big portfolios and the real estate of your home screen, one game at a time.
MTG acquires mobile racing game studio Hutch Games for up to $375 million