Gaming Market - Growth, Trends, Covid-19 Impact, And Forecasts (2021 - 2026)

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- The growing smartphone penetration, and technology advancement with the increasing adoption of trending technologies for developing games are some major factors developing the market for mobile gaming industry.
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- Gaming industry worldwide is expanding, and smartphone is playing a significant role in this expansion. The development of mobile games has resulted in scalability for the gaming industry. Platforms, like Facebook and Instagram, have also started to develop innovative mobile games, to ensure high product differentiation and benefit from engaging games to enhance their advertisement strategies.

- Many governments around the globe are also establishing funds to support local gaming industry, which is also expected to develop space for mobile games. For instance, in 2019, the German government allocated EUR 50 million for the creation of a games fund. The Sweden Game Arena in Sweden is a public-private partnership that helps students develop games using government-funded offices and equipment.

- In-game purchase, i.e. option to purchase additional privileges within the games, is one of the ...
... significant revenue generating channels for mobile gaming industry. The flexibility for in-game payment methods is also facilitating the growth of the mobile gaming revenues worldwide.

- Despite geo-political tensions, the growing smartphone penetration and increasing gaming options are also increasing the mobile gaming penetration in many parts of the world. For instance, in Iran, with population of 82 million and smartphone penetration rate of about at 35% (in 2018), there are more than 30 million active mobile gaming players in the country, according to White Designers Game Studios.

- As most countries globally are under lockdown to control the spread of the virus, there has been a significant growth in consumption of digital entertainment, including the mobile games. The major gaming vendors have witnessed a strong growth in downloads of multiple types of mobile games in the COVID-19 affected markets.

Key Market Trends

Free-to-play Pricing Model Offers Potential Growth

- Free-to-play is the pricing model that is preferred by most of the mobile game developers because of its unlimited potential and can be downloaded without any charge. This allows players to sample a game before deciding whether they want to commit time or money, and tend to accrue higher revenues.

- Games such as Pokémon GO are following a free to play game model, and according to Bank of America, in the United States in 2016, 27 million users were playing this. It is estimated to cross 67 million by 2020. And in the Asia Pacific region, the number of players is set to expand from 84 million to 311 million in the same timeframe. Therefore the increasing number of users is expected to have a positive outlook on the market.

- Further, Hyper Casual games mostly monetize through advertising and captured more than half of all gaming app downloads by 2017. Seeing the future in such games, Zynga acquired Gram Games for USD 250 million in 2018, and in the same year, Goldman Sachs also invested USD 200 million in Voodoo.

- Moreover, this model is expected to evolve with the development of technologies such as augmented reality and 5G. With the deployment of 5G, coupled with faster download speeds, it is expected by the advertising videos to increase in quality and engagement.

- For instance, in April 2019, Hatch, together with Samsung, launched 5G cloud gaming to the United States with the launch of the Hatch for Samsung app. With Samsung's first flagship 5G phone, the Galaxy S10 5G, customers were able to play popular games like Hitman GO, Monument Valley, and Arkanoid Rising instantly over streaming.

- Therefore, due to the factors mentioned above, the free-to-play pricing model is expected to drive mobile gaming in the future.
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Asia-Pacific to Witness Highest Growth

- The increasing smartphone penetration, rapidly changing consumer preferences, increasing competition, and untapped demographics are major factors driving the gaming companies to invest in the Indian mobile gaming market.​

- India is one of the fastest-growing smartphone markets globally, with the number of smartphones expected to double by 2022 nearly. Much of this active user base comes from rural India, where mobile gaming is still gaining popularity.​

- Online gaming is also fueling smartphone games' penetration, with more than 90% of millennials preferring smartphones over gaming PCs and other devices in India. This is motivating many vendors to launch new technologies that enable mobile games to gain a competitive advantage in the country. In July 2019, the Indian Air Force launched a new mobile 3D video game, themed on various aerial combats and missions, including airstrikes.​

- According to Google, more than 60% of India's online gamers are in 18-24 age group. Young users play online games on their smartphones, leading to a surge in gaming apps downloads. The company also estimates that there will be 310 million online gamers in India by 2021, mainly due to ease of access to gaming payment options and the high occurrence of smartphone use.

- Due to affordable gaming experience, India is now in the top five markets in the world based on the number of users for online and mobile gaming. According to NASSCOM data estimates, the Indian mobile gaming market will reach 628 million users by 2020. However, this number is expected to increase due to positive impact resulted by coronavirus.

- As per AppsFlyer's report released in April 2020, India has been experiencing a gradual increase in game app installs and sessions since March 7, when the number of reported COVID-19 cases in the country started to climb. User sessions were reported to have increased by 65%, and organic installs by 50% in April 2020.

Competitive Landscape

The mobile gaming market is competitive in nature because of the presence of major players like Tencent Holdings Limited, Activision Blizzard, Inc, and Zynga, Inc., amongst others. Major companies are developing advanced technologies and launching new products to stay competitive in the market. Seeing the growth opportunity in the market, companies are entering the market. For example, in India, the number of game-developing companies grew from 25 in 2010 to over 250 in 2018. Some of the recent developments in the market are:

- Jan 2020- China-based ByteDancehas built a gaming division to enter into hardcore or non-casual games. This will help in developing a recurring revenue stream for the company. The company is building multiple game studios by acquiring experienced game developers and talent.

- July 2020- Sentons teamed up with Lenovo, Asus, and Tencent to create gaming smartphones with virtual buttons, which use controllers that sense gestures such as presses, swipes, and taps. Thus Tencent and Asus created the Rog Phone 3 using Sentons' tech.

- In April 2019 - Vodafone, in collaboration with Hatch, launch the first 5G-optimised cloud gaming service in Germany. That is, Hatch's mobile games streaming service were made available for Vodafone 5G customers across Germany.

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