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 STATS
400M 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 ADVERGAMING
Frequency 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 day
Duration 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-Addled
Consumer," 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
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 MONETIZATION
SUMMARY
1
In-App purchasing dominates
In-app has gained significant momentum
in the last 12 months
2 Drivers: virtual currencies & CTR
CTR is x8 higher. Virtual currencies
drive users behavior
3 Advertising still valid
Source: Flurry, June ‘11
Video based advertising offers higher CTR. iPAD avg.
eCPM as high as $1.75
4 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 GROWTH
in 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 3Q'09 4Q '09 Q1 '10
Source: Benjamin Joffe, Virtual goods conference, San Francisco 2010
18. GREE MOBILE – CASE STUDY
VIRTUAL CURRENCY DRIVES GROWTH
Users 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 revenue
Source: 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
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 REVENUES
In-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 LIST
Mintel - Mobile Gaming - US - May 2011
Mintel - Mobile and Casual Gaming - US - December 2010
PwC - Entertainment & Media sector
Distimo – Various reports
Flurry Analytics – Various reports
Nielsen company – Various reports
EA – UBS Best of Americas Conference presentation – September 2011
Activision – Investor day presentation
Zynga – S1
Opportunities in the App ecosystem – Media Agility
Casual Connect Seattle – July 2011
Mobile Game Monetization @ SGS
GREE
Electronic Arts
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 16
Source: The Nielsen Company as cited in
company 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 - demographic
UK (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" conducted
by Information Solutions Group, Feb 28, 2011
35. EMERGING TRENDS
MMO & CONSOLE/ONLINE GAMES – SPENDING INCREASES
Median Amount Spent on Virtual Content Among US Gamers, by Game Type, July 2011
$80
$70
$60
$50
$40
Jul-10
First-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
$40
Three 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
Editor's Notes
Strategy project: not just look at monetization methods but also at the overall pictures, the trends and what drives those trends.
massively multiplayer onlineTotalsmartphone penetration 1BDrivers for mobile revenue growth:Smartphone growth CAGR 2010-2015 is 19.8%Mobile gaming penetration in smartphones reach 41% and growing
IAP is anything that the user has to pay for after the initial purchase or download of your app. It doesn’t matter if your app was free or paid to begin with.Some people prefer to separate downloadable content (DLC) from in-app purchases (IAP), however, unless you are providing the DLC for free, I also consider these as IAPs.Flurry has designated in-app purchases into three categories:Consumable — Items like virtual currency or special items that can help a player get through a game faster and ascend to the next level. These items are designated as “consumable” because once used, they can’t be used again. (68%)Durable — Items that can continue to be used in a game after purchase. This can also apply to additional levels or add-on packs in a game. (30%)Personalization — Items that don’t impact game play but can create a more personalized user experience. This could be something like clothes or outfits for an avatar (2%)Virtual currency - Allows user to collect virtual currency by performing certain actions in the game or app
Well is it different in gaming apps
Virtual currencies: Increase from 24% 6 months earlier
Tokyo-based DeNA started in 1999 as an e-commerce company and transformed into a web service provider for PCs and cell phones since then, now employing over 500 people. The company name is a combination of “DNA” and the “e” from e-commerce.DeNA is engaged in the online advertising and affiliate business, e-commerce (mobile and PC web) and mobile portal services.The company’s biggest success is called Mobage-town, a combination of a virtual world, social network and gaming platform for cell phones. Currently, Mobage-town has 11 million members in Japan, which makes it the biggest mobile SNS in this country.DeNA opened a subsidiary, DeNA in San Mateo, California in January 2008, and plans to offer an English version of Mobage-town in the fall of 2008.
GREE is a Tokyo-based web services company that was founded in 2004 by then 26-year old Yoshikazu Tanaka. Before, Tanaka was responsible for operating the auctions operations for Rakuten, Japan’s biggest online shopping mall.The name GREE is derived from a sociological concept called “Six Degrees of Separation”. The company’s flagship product is called GREE Mobile, a mix of social network and free casual gaming platform.GREE started social network services on the fixed Internet but ultimately lost to Mixi, Japan’s biggest SNS. GREE’s fixed Internet platform is now practically abandoned.
Fremium version of Hungry Shark increases revenues by five times overnight.London-based developer Future Games of London says downloads of its Hungry Shark games on iOS increased to an average of 200,000 after it went free. It's now considering switching the entire output over to the model.It says the average transaction is now worth $3.26, based on in-app purchases costing from $2 - $5.Here are the headline results of the experiment.* Month on month iOS revenue has increased 200%* x5 overnight increase in revenue* Average transaction value of $3.26 with IAPs, up from $1 paid app price.* ‘Hungry Shark’ Enters Top 50 Grossing Games* Daily downloads reach 250,000* Total downloads for Hungry Shark series = 18.5m* ‘Hungry Shark’ has reached No.1 in Free App charts in 48 countries* FGOL MAU of 5.5 million across all games* Within 48 hrs ‘Hungry Shark Pt 3’ reached Number 3 in the US iPhone Free Games Chart (2nd Aug 2011) after release of free version.“The success of the Freemium model leads us to believe that we will be moving away from paid apps completely,” said Ian Harper, MD of FGOL.
