Mobile Gaming: Casual Games Sector Report 2012

Mobile Gaming

2012

C A SUAL G AME S SEC TOR REP OR T

What are mobile games?

What makes mobile games special?

1. Mobile games can integrate GPS, camera, microphone, position sensors and video.

2. Mobile devices are always on and always within arms reach.

3. Potential audience is enormous with nearly one mobile device per person.

Games that run on a mobile device such as a mobile phone, smartphone or tablet computer.

Devices such as iPhone, Playbook, Galaxy Tab, Windows Phone and Android devices.

Keep in mind Smartphones don’t rule the world… yet. As smartphone penetration increases, so will the potential audience for high value games.

smartphone penetration Global 15% feature phone penetration Global 85%

MOBILE GAMES

smartphone penetration China (urban) 35% smartphone penetration U.S. 31% smartphone penetration Russia 25% smartphone penetration India (urban) 23% smartphone penetration Turkey 14% source: ourmobileplanet.com

Device Fragmentation Lots of different phones, means varying gaming capabilities, operating systems, processing power, screen sizes and graphics.

IPHONE 4S 3.5” screen OS: iOS 5

XIAOMI M1 4” screen OS: Andriod OS 2.3

SAMSUNG WAVE Y 3.2” screen OS: Bada 2.0 OS

NOKIA 3.2” screen OS: Symbian Belle

KINDLE FIRE 7” screen OS: Andriod OS 2.3

iOS dominates mobile gaming but Android will claim the top spot in the near future as developers embrace Android and Google continues to iron out its payment process.

Revenue by smartphone OS iOS 50% Android 30% others 20%

Mobile Gaming Report 2012 CA S UA L G A M E S A S S O C I AT I O N

The Players 25-34

USA eCPM = $12.92

Male ages eCPM source Flurry

Female ages

mobile games - avg. player

25-34

USA eCPM = $7.80

mobile gaming audience - size and projections (millions)

Russia Brazil

250

U.S.

200

150

100

50

0

2011

2012e

2013e

2014e

2015e

eCPM source Flurry

mobile social games - avg. player

The Payers

MOBILE GAMES

Revenue Models % of Market Revenue Models % of Market 2012E 2013E 2014E 2015E 2012E 2013E 2014E 2015E Freemium 55.0% 59.0% 63.0% Freemium 55.0% 59.0% 63.0% 62.0% Ad Supported Games 6.0% 10.0% Ad Supported Games 6.0% 10.0% 13.0% 14.0% DLC 37.0% 27.0% 19.0% 17.0% DLC 37.0% 27.0% 19.0% 17.0% (ex. Subscription) 2.0% Other (ex. Subscription) 2.0%Other 4.0% 5.0% 7.0% TOTAL 100.0% 100.0% 100.0% TOTAL 100.0% 100.0% 100.0%

How Mobile Games are Monetized Revenue Models: 1. Ad supported.

Example: Angry Birds on Android devices.

Reported $1 to 6 million per month in revenue.

2012E 2013E Revenue Models % of Marketmodels Revenue Models of Market 2012E revenue % of%market 2012E 2013E 2014E 2015E 2012E 2013E 2014E 2015E Freemium 55.0% 59.0% 63.0% 62.0% 55.0% 59.0% 63.0% Freemium Ad Supported Games 6.0% 10.0% 13.0% 14.0% Ad Supported Games 6.0% 10.0% 2012e DLC 37.0% 27.0% 19.0% 17.0% DLC 37.0% 27.0% 19.0% 17.0% Other (ex. Subscription)2% 2.0% 5.0% 7.0% Other4.0% (ex. Subscription) 2.0% TOTAL 100.0% 100.0% TOTAL 100.0% 100.0% 100.0% 100.0%

2. Microtransactions & Virtual Goods.

2012E 2012E 2013E Example: Tiny Tower.

Reported $3 million in first year from in-app purchases of ingame currency.

37%

2013E 2014E

201

5% 4.0% 5.0% 7.0% 100.0% 100.0% 19%

55%

63%

13%

2014E 2015E

2013e

2015e

4%

7% 17%

3. Paid download.

Example: Fruit Ninja in Apple App Store for 99¢.

Reported 200,000 sales in first month of release.

27%

4. Subscription.

Example: Gameloft Subscription.

In the U.S., $7/month for two games per month, in the U.K., £.99/week for one game per week.

Microtransactions & Virtual Goods Ad Supported Paid Download Other (ex. subscription)

5. Hybrids.

Example: Infinity Blade.

Paymium: paid download and microtransactions. In Apple App Store for $5.99 and players can make in-app purchases such as a Bag of 150K Gold Coins for $4.99.

Reported revenue of $23 million within first year of release.

4.0% 100.0

62.0% 13.0% 2014e 14.0%

2013E2014E

6%

62.0% 13.0%

59%

14%

10%

62%

Between 3.5% and 10% of a Mobile Free-to-Play game audience will convert to paying users.

Most users spend between $8 and $15 per month.

Mobile Gaming Report 2012 CA S UA L G A M E S A S S O C I AT I O N

2015

Notable Content Providers EA Mobile www.eamobile.com

EA has been very vocal about their aggressive mobile gaming strategy. And their aggressiveness is paying off. They recently reported that mobile gaming revenues are up 19% from 2010 to 2011.

Gameloft www.gameloft.com

Gameloft primarily develops for mobile platforms. They recently reported a 18% YoY sales increase (2010 to 2011). Currently, Gameloft is developing games for GREE, as the mobile gaming network moves west.

Zynga company.zynga.com/games/mobile-games

Industry insiders speculate that mobile is Zynga’s weak spot since Facebook doesn’t dominate and competitors are already gaining market share. As of January, Zynga reached 15 million daily active mobile gamers and have plans to roll out more mobile than Facebook games this year. To help with that effort, they acquired four mobile gaming companies.

Rovio www.rovio.com

Rovio’s success with Angry Birds is phenomenal.

They continue to release new Angry Birds installments and now their game comes preinstalled on the Nokia C7 and LG Optimus. But it looks like it’s time to diversify. Rovio states that a new non-Angry Birds game will be released in 2012.

Nexon www.nexon.net

Nexon is also gearing up for the mobile gaming battle. They recently merged with Nexon Mobile in order to streamline operations and bought a 20% stake in a mobile gaming company. Nexon plans to launch more than 10 smartphone games this year.

NOTABLE PLATFORMS GREE

gree-corp.com

DeNA (ngmoco)

dena.jp/intl and blog.ngmoco.com

Right now there is an intense race to become the top mobile gaming platform. DeNA and GREE are two of the biggest contenders. Both companies originated in Japan and have upwards of 30 million subscribers to their mobile gaming networks. They also both opened global offices in North America and Singapore.

he World World

$2.5 $2.0

Revenue

$1.5

MOBILE SOCIAL GAMES

$1.0 $0.5 0.0

Europe (billions)North America revenues by Asia individual market

Latin Am

$2.5

revenues - worldwide (billions) Revenues - Worldwide Revenues - Worldwide

$1.83 $2.72 $7.50 $4.55 $6.62 $5.54

$2.0

Revenues Revenues - Worldwide Revenues 2011 2012E 2013E 2014E 2015E Revenues2010E - Worldwide TOTAL2010E $1.832011 $2.722012E $4.552013E $5.542014E $6.622015E $7.50 TOTAL $1.83 $2.72 $4.55 $5.54 $6.62 $7.50 Revenues - By Region ($, billions) 2010E 2011 2012E 2013E 2014E 2015E Revenues - By Region $1.012010E $1.472011 $2.272012E $2.662013E $2.982014E $3.232015E ($,Asia billions) Europe$1.01 $0.27 $1.47 $0.41 $2.27 $0.63 $2.66 $0.89 $2.98 $1.13 $3.23 $1.31 Asia North $0.27 America $0.49 $0.89 $0.76 $1.13 $1.16 $1.31 $1.72 $2.12 $2.48 Europe $0.41 $0.63 LatinAmerica America $0.04 $0.49 $0.05 $0.76 $0.10 $1.16 $0.17 $1.72 $0.22 $2.12 $0.30 $2.48 North RestAmerica of World $0.04 $0.02 $0.05 $0.03 $0.10 $0.05 $0.17 $0.09 $0.22 $0.13 $0.30 $0.19 Latin TOTAL $1.83 $0.02 $2.72 $0.03 $4.55 $0.05 $5.54 $0.09 $6.62 $0.13 $7.50 $0.19 Rest of World TOTAL $1.83 $2.72 $4.55 $5.54 $6.62 $7.50

$1.5 $1.0

revenues - mobile social (billions) Revenues - Mobile Social Revenues - Mobile Social

$0.55

Revenues - Individual Markets ($, billions) 2010EMarkets 2011 2012E 2013E 2014E 2015E Revenues - Individual $0.442010E $0.682011 $1.042012E $1.552013E $1.912014E $2.232015E ($,US billions) $0.073$0.68 $1.04 $0.122$1.55 $1.91 $0.227$2.23 $0.277 USChina $0.44 Japan $0.073 $0.64 $0.95 $0.122 $1.73 $1.77 $0.227 $2.05 $2.25 $0.277 China Japan $0.64 $0.95 $1.73 $1.77 $2.05 $2.25

$0.364 $0.364

$0.413 $0.413

$1.09 $3.37

$2.05

$0.5

Revenues - Mobile Social ($, billions) 2010 2011 2012E 2013E 2014E Revenues - Mobile Social $0.552010 $1.092011 $2.052012E $2.772013E $3.372014E ($,TOTAL billions) TOTAL $0.55 $1.09 $2.05 $2.77 $3.37

0.0

$2.77

US

China

Japan

revenues by region (billions) $3.5

2010 2011 2012e 2013e 2014e 2015e

$3.0 $2.5 $2.0 $1.5 $1.0 $0.5 0.0

$2.5

Asia

Europe

North America

Latin America

Rest of the World

Mobile Gaming Report 2012  CA S UA L G A M E S A S S O C I AT I O N

Key Terminology ARPPU Average Revenue Per Paying User.

ARPU Average Revenue Per User.

COST PER ACQUISITION (CPA)/ CUSTOMER ACQUISITION COST

FREEMIUM Offering a game, product or service free of charge (such as software, web services or other) while charging a premium for advanced features, functionality, or related products and services.

Cost of acquiring leads or customers. CPA is calculated by dividing the cost of a campaign by the number of new application installs attributable to that campaign.

LIFETIME VALUE (LTV)

DAILY ACTIVE USERS (DAU)

MICROTRANSACTIONS

The number of unique users that have used an application at least once over the course of a day.

DLC

Total amount that a player will spend with a particular game during his or her lifetime with the game.

Low value transactions at a high volume.

MONTHLY ACTIVE USERS (MAU)

Downloadable Content.

The number of unique users that have used an application at least once over the course of a month.

eCPM

SMARTPHONE

Effective Cost per Thousand Impressions is a measure of total revenue (or cost) per impression. eCPM is calculated by dividing total earnings (or total costs) by total number of impressions.

FEATURE PHONE Category between mobile phone and smartphone. These devices have more features than a standard call and text capable mobile but less features than a smartphone.

Feature phones tend to be less expensive than smartphones and have limited third party application support and integration.

Mobile phone with computer enabled features, such as data storage, high speed internet access, media players and e-mail capability. Smartphones also support third party application integration.

VIRTUAL GOODS In-game items or game-related services, such as virtual currency, premium content, or a temporary subscription, that enable or enhance game play.

ABOUT THE CASUAL GAMES ASSOCIATION When it comes to the health of your business, the more things that work together, the better. Which is why the Casual Games Association is a critical portion of the success of your company and the industry as a whole. It means that you and your team have access to cutting edge educational resources and are connected to thousands of other game industry professionals, members of the press and service providers around the globe.

Learn more at http://www.casualgamesassociation.org/

For press inquiries, please email jessica@casualconnect.org Learn more about the mobile games industry with the best speakers, networking, lectures and data to help you succeed in a crowded market at Casual Connect Asia: May 22-24 and Casual Connect Seattle: July 24-26.