The most significant mobile games news of 2017

Trends behind the headlines

• CCP lays off 100 staff as it quits VR to focus on PC and mobile

  

  If 2016 was all about the potential for VR, 2017 was the year where some of the shine came off the vision.

  One story that characterised this was the news early VR proponent CCP was pulling out of VR games development, shutting down its Atlanta, US, and Newcastle, UK, studios with the loss of 100 jobs.

  “We will continue to support our VR games but will not be making material VR investments until we see market conditions that justify further investments beyond what we have already made,” commented CEO Hilmar Petursson.

  The flipside of the news, however, was CCP's deal with Finnish developer PlayRaven to develop a mobile MMORPG based in its EVE Online universe, which is currently called Project Aurora.

  Interestingly the move also highlighted a pivot for PlayRaven, from single-player and gameplay-heavy mobile games to metagame-oriented experiences. 

  
  

• Super Mario Run was the most downloaded new game on Google Play in 2017

  

  Given he’s the jewel in Nintendo’s crown, perhaps the news Super Mario Run was the most downloaded new game from the Google Play store during 2017 shouldn’t have been a surprise.

  No figures were provided by Google but in October, Nintendo had revealed the game had hit 200 million downloads across iOS and Android, of which 90 per cent were located outside of Japan.

  More significant for Nintendo, however, was its admission that the ‘free-to-start’ game, which provides players with a limited number of missions, requiring a single in-app purchase to unlock the entire game, has “not yet reached an acceptable profit point”.

  Not to worry though. Both Fire Emblem Heroes and Animal Crossing: Pocket Camp have a complete F2P economy and are monetising very well, both in Japan and internationally.

  Oh, and Nintendo’s Switch console isn’t doing badly either.

  
  

• Apple unveils augmented reality development framework ARKit for iOS devices

  

  While 2017 saw the shrinking band of VR enthusiasts fighting a rearguard action to preserve the technology’s relevance, AR’s cheerleaders were everywhere.

  Of course, there are still plenty of questions to be answered in terms of how AR will overcome its ‘gimmick’ tag, not to mention whether anyone beyond early adopters will pay for such content.

  Yet, its inclusion as part of iOS 11 meant a hundred million devices gained access to the technology overnight, and that number will double when the Android-equivalent ARCore is released in 2018.

  Given building any sort of mass audience has been the main weakness of VR, you have to say AR is off to a better start.

  
  

• Pokemon GO developer Niantic making Harry Potter: Wizards Unite mobile game

  

  During the early excitement of Pokemon GO’s launch, there was already a clamour for the developer to make a Harry Potter location-based AR game - and one year on - that’s exactly what Niantic has announced.

  Entitled Harry Potter: Wizards Unite and due for release in 2018, the game is a co-development with Warner Bros. Interactive and its new studio Portkey Games, which is dedicated to making games within the Wizarding World universe.

  Not that Niantic is limiting its options. As well as keeping its $1 billion Pokemon GO game updated, it’s relaunching its original location-based AR game Ingress as Ingress Prime.

  Good thing it recently raised $200 million.

  
  

• South Korea mobile games publisher Netmarble launches IPO with valuation of over $12 billion

  

  An Initial Public Offering is a strange beast. The process by which a company transitions from being privately owned to having some of its shares available for anyone to buy is always tricky.

  For one thing, companies have to open up their finances, letting bankers, lawyers and analysts see what were once secret numbers.

  On the other hand, setting the right valuation and choosing the right time to IPO are crucial, especially for games companies. Some of them - notably King and Zynga - got one or both of these wrong, severely impacting their reputation with investors.

  South Korean mobile games outfit Netmarble seems to have successfully managed this process though. Buoyed by the continuing success of Lineage II: Revolution, its share price is risen 25 per cent since its May IPO, now valuing the company at almost $15 billion.

  Perhaps what’s been more significant in 2017, however, is the number of smaller - in some cases much smaller - companies that have floated.

  Nordic newbies

  These have particularly been concentrated in Finland and Sweden, which has seen companies ranging from Angry Birds developer Rovio (c. $1 billion market cap) and Next Games (c.$200 million), to Mag Interactive (c.$120 million) and Nitro Games (c.$10 million) making the leap.

  The good news is all have raised cash from their now new shareholders for future growth, whether that be in acquiring companies for growth or scaling their existing activities. 2018 will demonstrate whether they managed this successfully or not.

  
  

• Summoners War clears $1 billion in lifetime revenues three years after launch

  

  It’s a mark both of the size of the global mobile games market and the power of its games-as-a-service operating model to suck up revenue that Com2uS’ RPG Summoners War has finally passed the $1 billion lifetime revenue mark.

  The game itself is interesting. Released in 2014, it didn’t stand out as an obvious winner and to some degree its success has been a case of slow and steady, albeit driven by a sustained UA campaign.

  Even now, it’s not a game that like Pokemon GO, Clash of Clans or Candy Crush Saga - other $1 billion titles - generates a lot of mass market coverage.

  Going deeper

  Also significant is its broad market appeal: its revenues come almost equally from the key North American, European, Japanese, Chinese and Korean markets. And this will provide the platform for the game’s drive towards $2 billion.

  Alongside a partnership with Skybound Entertainment to take the IP to non-gaming formats such as animations and comics, Com2uS is heavily investing to integrate esports-features into the game, as well as developing a MMOG based on the IP.

  
  

• Dots CEO Paul Murphy to step down at the end of 2017

  

  At first take, the decision of someone you’ve likely never heard of to step down from a small US indie developer seems misplaced in this list of billion dollar this and billion download that.

  And, yes, on its own, Paul Murphy’s decision to replace himself as CEO of New York studio Dots Inc isn’t an earth-shattering trend. Yet reading his thoughtful post about why does highlight a deep trend affecting mobile games entrepreneurs.

  After many years riding the mobile games explosion, the Western market is now fairly mature. Sure, the rewards remain massive, but there’s a lot of competition, costs are rising and it’s now very hard to differentiate your game purely through design or art innovation.

  As Murphy puts it: “Our studio is profitable and scaling. Still, an inconvenient question looms over us: What’s next?”

  He concludes: “We need to dig deeper. We need to go beyond simply ‘launch another game’. We want Dots to help shape the future of the gaming industry  -  and to do that, we need the most creative people working on their most passionate projects, with enough patience to let new markets, platforms and business models form.”

  As one door closes

  Others travelling similar paths include ex-NaturalMotion CEO Torsten Reil, who left the company he co-founded after 15 years, while Canadian mobile incubator Execution Labs shut its doors after deploying all its funds.

  Of course, there are always plenty of new opportunities - ex-Kabam CEO Kevin Chou has re-invented himself as Korea’s Mr Esports for example - but as demonstrated by Swedish indie Simogo’s decision to concentrate on console games in future, mobile gaming has certainly lost something of its freshness.

  
  

• Has MZ just pulled all its legacy game marketing to focus on Final Fantasy XV?

  

  2017 was a year that saw many changes when it came to the apps at the top of the top grossing charts.

  Subscription apps such as Pandora, Netflix, Tinder and HBO muscled their way into the top five in the US and many other Western markets, while the top grossing games changed from midcore battlers to more casual match-3 fare such as new release Homescapes and a reinvigorated Candy Crush Saga.

  Compared to 12 months ago, the biggest losers were MZ’s alliance-heavy titles Game of War and Mobile Strike, but in a story that became clearer as the year went on, this was no accidental occurrence.

  Instead, following the July launch of  Final Fantasy XV: A New Empire - its co-development with Square Enix - MZ pulled all user acquisition spend for its old games, instead focusing its well-honed marketing machine on its new title.

  

  The result was Game of War and Mobile Strike collapsed out of the download charts and more slowly dropped down the top grossing charts. But MZ’s goal appeared to be accomplished as Final Fantasy XV rose strongly to meet them, passing their top grossing position in October.

  The wider assumption that MZ is swapping revenue for profit remains open to speculation, however.

• Glu Mobile's revenues grow to $81.8 million as Design Home scores another 8.7 million downloads in Q3

  

  Even in a year when almost all publicly-owned games companies experienced rising stock prices, Glu Mobile was a rocketship. It started 2017 under $2 a share but spent the last three months approaching $5, although given it remains loss-making there was also plenty of volatility in the mix.

  The wider point, however, was most companies involved in the mobile games business had a great 2017, even if unlike Glu Mobile - which saw its annual sales grow by more than 50 per cent on the back of Design Home’s success - they didn’t release anything new.

  Sweating assets

  The prime example of these new levels of efficiency was King. It turned around its fortunes and justified Activision Blizzard’s $5.9 billion acquisition by firing  Candy Crush Saga back into the US top five grossing charts and posting improving quarter-on-quarter revenues, and this despite declining monthly average user numbers.

  

  Another company which demonstrated what its CEO Frank Gibeau labels ‘bold beats’ was Zynga, which became sustainability profitable for the first time since 2011 on the back of optimising its existing game experiences and hence better monetising their audiences.

  Basically put, then, 2017 was the year the growing sophistication of analytics and live operations collided with rising marketing costs. The result was mobile game developers focused more on what they already had than the oft-unfulfilled promise of new games.

• Global games market now expected to grow to $116 billion in 2017

  

  Although I had plenty to say this year on the lack of agreement from market intelligence companies about just how big the mobile games market is, there was no getting away from the fact they all said it was big and getting bigger faster than they thought.

  To take one example, Newzoo uprated its 2017 estimate given in June from $46 billion to over $50 billion.

  It’s a huge number and pretty meaningless in-and-of-itself. What’s more significant is its global distribution both in terms of size and growth, and in both cases Asia is the beating heart.

  Pacific Rim

  Thanks to monsters such as Tencent’s League of Legends clone Honor of Kings (Arena of Valor in the West), which could have generated $2 billion from its domestic market this year, growth in the $15 billion Chinese mobile game market has been reignited.

  Throw in the current competition between Tencent and NetEase when it comes to mobile battle royale games based around  Playerunknown’s Battleground and it’s hard to judge just how much bigger the biggest mobile game market could get.

  But it’s not just China. Helped in part by Nintendo's new mobile offerings, Japan is experiencing double-digit growth, while the South Korean market has been buoyed by the release of standout franchises such as Lineage 2: Revolution and Lineage M.

  In contrast, the North American and European markets are growing much more sedately.