What’s next for mobile games? Challenges and opportunities

Hot from PGC London 2018

What’s next for mobile games? Challenges and opportunities

My talk Mobile Games: What’s Next? at Pocket Gamer Connects London 2018 covered a lot of ground.

From the fundamental need to question data and to think more holistically about the impact of products on growth, to the rise of non-gaming apps and the decoupling of the ‘global mobile games market’ into at least four discrete markets, there was a lot of scene-setting.

That’s because I think it’s important to understand what the mobile games industry was and is now before tackling the almost impossible task of thinking what’s next.

Hostage to fortune

But, let’s face it, making predictions is exactly what the audience for such a talk expected. So post-talk, I’ve expanded that section into this article to describe some challenge and opportunity scenarios.

More importantly - in true Nate Silver-style - I’ve attempted to judge the likelihood of these scenarios happening and impacting the market in terms of their probability over a 2018 to 2019 timeframe.

We can come back in January 2020 and see how I got on!

Click here to view the list »
  • 1 Opportunity: Hardware innovation

    Likelihood of happening before 2020: 50 per cent
    Impact on mobile games sector: Zero

    It’s ironic that since the first iPhone was released, there’s been incredible technological innovation inside of smartphones. On the outside, however, very little has changed.

    That is about to change as radical experiments such as flexible and foldable screens become cheap enough to enter mass market production.

    But while device manufacturers and the supply chain are pushing for such innovation, it’s not clear consumers are. Steve Jobs famously didn’t believe in bigger phones but public demand forced change on post-Jobs Apple.

    No doubt early adopters will love bendy screens, but I don’t see any wider demand to replace the de facto candy bar design.

    Indeed, we can gauge something of how this situation might play out by looking at what happened with the wearables market.

    Before Apple Watch and Google’s software-focused Android Wear launched, there was a lot of interest in terms of how many units would be sold and the potential for a new genre of gaming.

    Despite a lot of Apple Watches being sold, nothing really happened with respect to mobile gaming, however.

  • 2 Opportunity: HTML5 gaming

    Likelihood of happening before 2020: 100 per cent
    Impact on mobile games sector: Low

    “Opportunity” and “HTML5 gaming” weren’t phrases I could imagine writing in the same sentence without also including the word ‘not’’ inbetween them.

    Nevertheless, in the form of platforms such as Facebook’s Messenger and Instant Games, it appears HTML5 has finally found its place in the world of mobile gaming.

    Notably, this is because these incarnations play to HTML5's strengths: cross-platform distribution, instant access and simple games.

    This is why such HTML5 games are driving high levels of engagement, especially as they can leverage players’ social graph. In that regard it’s like 2010’s golden age of Facebook gaming all over again.

    There are some issues, of course. Because they’re not apps, these games can easily get lost and forgotten about, and monetisation is almost impossible.

    That makes the space interesting for start-up innovation, but only sustainable in the long run for larger developers using it to increase engagement for existing mobile games that can be monetised through app stores.

  • 3 Opportunity: Driverless cars

    Likelihood of happening before 2020: 10 per cent
    Impact on mobile games sector: High

    As cited by Tribeflame CEO Torulf Jernstrom in a 2016 opinion piece, time is a key constraint in terms of how the mobile games sector can grow. Indeed, average daily device usage has been broadly static since 2015.

    Hence any increase in the amount of time available to the population has a strong potential to grow mobile game revenues.

    One such innovation would be the widespread adoption of driverless cars, which could increase commuters’ free time by two hours a day.

    This would particularly have a big impact in the key North American market, which has a much higher proportion of car commuters than more public transport-oriented countries such as the big cities in Japan, South Korea and western Europe.

    But if the potential is high, it seems likely the transition to a large scale driverless world is more than two years away.

  • 4 Opportunity: Blockchain

    Likelihood of happening before 2020: 90 per cent
    Impact on mobile games sector: Very high

    Without falling down the rabbit hole of the value of this cryptocurrency against that one, what’s clear is the blockchain technology underlying Bitcoin etcetera has incredible potential to disrupt all digital ecosystems, with the games industry likely to be in the vanguard of change.

    Already there are a number of companies developing blockchain-based exchanges, in which everything from skins and other virtual items, to entire games will be blockchain-based assets to be acquired, played and sold on.

    More ambitious initiatives foresee integrated development ecosystems based on blockchains: think Unity-meets-Steam on Bitcoin (with steroids).

    Throw in the likelihood of dozens of existing and start-up games companies combining this sort of platform approach with the launch of their own currencies - EA Coins, Blizzard Bucks, Rockstar Razzles - and the stage is set for the most interesting period in the the business of gaming since the rise of free-to-play.

    And we’re already seeing the first small shoots of this in mobile games. Swiss outfit EverdreamSoft runs Book of Orbs, its Android-based digital asset exchange which supports a number of mobile games, including its own Genesis of Dreams, and other assets.

    Meanwhile, UK-based Reality Clash recently raised $3.5 million to develop its eponymous location-based AR mobile shooter, which will enable gamers to trade in-game guns, priced in its RCC cryptocurrency, even before the game goes live sometime in Q3 2018.

    That said, there is a small chance - maybe 10 per cent - that widespread loss of confidence in some of the key cryptocurrencies, or concerted government action, could result in a financial collapse, which, although not directly related to blockchain technology, could seriously set back its adoption.

  • 5 Challenge: VR/AR

    Likelihood of happening before 2020: 100 per cent
    Impact on mobile games sector: Low

    It wasn’t too long ago you could make a strong case for virtual reality being an opportunity for the mobile games industry.

    With expensive and complex hardware such as Oculus Rift and Vive stalling, commentators looked to Google Daydream and Samsung’s Gear VR to kickstart the sector.

    Despite their much lower price points, however, this just hasn’t happened and the emphasis in VR has switched to cheaper non-mobile options such as the forthcoming Oculus Go.

    Similarly with augmented reality. Despite a hyped launch with iOS 11 - and admittedly with Android support still to come in 2018 - the mobile AR revolution is yet to ignite.

    Most likely this means the undoubted potential of VR and AR technologies won’t be realised by mobile hardware but through more expensive, dedicated headsets.

    That could provide a challenge to the mobile game sector, but one that's more to do with mindshare than blunting growth.

  • 6 Challenge: Nintendo Switch

    Likelihood of happening before 2020: 50 per cent
    Impact on mobile games sector: Medium

    Given Nintendo expects to sell over 17 million Switches by the end of March 2018 and 40 million by the end of March 2019, its long-term prediction of outselling the lifetime total of 102 million Wiis doesn’t now sound so outrageous.

    But what does this mean for the mobile games industry?

    Probably not much in terms of direct competition, although there could be a direct transfer of time and money from mobile to Switch gaming in the highly lucrative Japanese market.

    More generally, however, the likelihood is Switch’s impact will be indirect, stealing both gamer and developer mindshare and perhaps shifting what would have been innovative, small-scale indie mobile games into Nintendo’s embrace.

  • 7 Challenge: Loot boxes

    Likelihood of happening before 2020: 50 per cent
    Impact on mobile games sector: Low

    For much of 2017, the issue of loot boxes in $60 console games bubbled under and sometimes above the surface chatter. But it wasn’t until EA prepared to release Star Wars: Battlefront 2 that it hit the headlines hard.

    Certainly this was partly the result of a vocal minority of US gamers who love to hate the company, but there was also substance in the grievances in terms of the implementation of what effectively was a free-to-play monetisation method within a premium game.

    Now, the question becomes, so emboldened, what future impact will this player power have?

    Also previously in the spotlight, Bungie has already been backtracking in terms of Destiny 2’s loot box system, and it will be interesting to see how the almost-completed Red Dead Redemption 2 deals with the situation.

    More generally across the sector, many now see government legislation as unavoidable. I, however, am more sanguine. While loot boxes offer random rewards, they are not gambling (you can’t win cash), and with mobile games already free-to-play, there can be no further backlash in this particular case from annoyed gamers.

    If anything, all this fuss will likely encourage is console and PC developers to move quicker towards a general acceptance of free-to-play.

  • 8 Challenge: Screen time

    Likelihood of happening before 2020: 100 per cent
    Impact on mobile games sector: Medium

    As with the impact of Star Wars: Battlefront 2 on hardcore gamers so, more generally, Western society is starting to rethink its relationship with technology, especially mobile tech.

    Part of a wider malaise involving issues ranging from digital privacy to the impact of social networks on mental health, books such as Adam Alter’s Irresistible: The Rise of Addictive Technology and the Business of Keeping Us Hooked are providing a framework to people - especially parents and children - to moderate their use of such highly accessible technology.

    Of course, a more deliberate engagement with technology doesn’t mean mobile games revenues will fall. As King demonstrated in 2017, despite Candy Crush Saga’s declining MAU base, it significantly increased revenues quarter-on-quarter.

    Yet, the concern remains that the era of mobile games as a sector with a growing and enthusiastic mass market audience- as seen with the likes of Angry Birds and Candy Crush Saga - is probably over.

  • 9 Challenge: Xi Jinping

    Likelihood of happening before 2020: 10 per cent
    Impact on mobile games sector: High (in China)

    Increasingly the global mobile games market is better described as the West, South Korea, Japan and China; with China as its epicenter.

    That’s no surprise given its population and rapidly maturing economy, of course, but another characteristic of the middle kingdom gives rise to a challenge that is difficult to quantify.

    What we can say is that in recent years, openness in China - both politically and technologically - has been in retreat as Xi Jinping, the general secretary of the Communist Party of China, has consolidated his power.

    Examples include a crackdown on VPNs and streaming video services, the requirement to use real names to comment online and new legislation requiring the approval of digital products including mobile games before release.

    Meanwhile the official party newspaper recently labelled Tencent’s top grossing game Honor of Kings as a poison and a drug. The amount of time under 18s could play the game was also restricted.

    Now, it seems highly unlikely Xi Jinping personally cares about mobile games, nor is it easy to make a case the sector is any threat to the state. But the care with which even giant companies such as Tencent and Netease are operating can be seen from Tencent’s game Such a Great Speech: Applaud Xi Jinping and the patriotic slogans that punctuate Tencent’s PUBG clone Rules of Survival.

    Clearly they are keen to keep onside of the one organisation (and man) that could - for whatever reason or none - crater their business with a stroke of the pen.

Contributing Editor

A Pocket Gamer co-founder, Jon is Contributing Editor at PG.biz which means he acts like a slightly confused uncle who's forgotten where he's left his glasses. As well as letters and cameras, he likes imaginary numbers and legumes.