Why are you on the phone?

The video games market has been a dynamic landscape in recent years, a development driven by noteworthy trends and developments taking place across the tech industry. Notably, the growth of the mobile gaming market has superseded other digital platforms, as it has spearheaded recent industrial growth due to a series of advancements. Today, we are looking at the appeal of mobile gaming, and why its market share has grown compared to alternatives, sparking questions about how effective traditional gaming structures are in attracting consumers.

The growth of the gaming market has been unprecedented, yet it can be attributed to its expansion through accessibility, extensive hardware, and software development. According to Statista, the mobile games market is projected to grow by 10.6% in 2024 with an estimated revenue of US$98.74 billion worldwide. These digital games are created for mobile platforms, such as everyday smartphones, wearable technologies, and tablets. However, these software packages require intensive processing units and specifications, so it brings into question how its revenue growth has risen as much as it has.

The [Covid-19 pandemic] played into the gaming industry’s hands

A significant motivator for the market’s expansion is the extended use of smartphones, with people depending on them in everyday life. Therefore, the smartphone market’s capability to become an essential good over the last two decades for both personal and work uses has complemented the gaming industry’s growth through a new avenue of mobile gaming. Every year, consumers set aside disposable income to purchase cell phones, which incentivise these production companies to develop better technologies for their products. As a result of this, there is an array of mobile hardware available and accessible to a wide range of income groups, with the most innovative technologies being deployed in the market. This consistent rise in research and development has enabled gaming houses to take advantage of mobile technology, giving rise to an abundance of quality digital games. According to the Pew Research Centre, an American think tank, the proportion of Americans owning a smartphone reached 85% in 2021, which is a massive growth from 35% in 2011. These developments and accessibility options have expanded the market, where an everyday consumer can be considered a gamer, in comparison to the monetary restrictions in the past of purchasing consoles as the only avenue to exclusively access games. There is no doubt that the growth of smartphone penetration has driven the attraction of the mobile gaming market.

A second contribution to the market’s expansion coincides with the shift in everyday lifestyle, which has seen individuals become more on-the-go due to work and school routines requiring more commutes than ever before. This shift was amplified during the Covid-19 crisis in 2020, which compelled many industries to focus on digital and internal services. Stated otherwise, the crisis played into the gaming industry’s hand, with record numbers of people playing games as they were left to their own devices whilst being stuck in their homes. Because of this, smartphone penetration has created immense demand for mobile gaming, as these devices have become multipurpose, with extensive usage for playing games and an avenue to spend one’s leisure time.

This universal shift towards smartphones has interested developers beyond the field of mobile gaming, where some of the gaming industry’s biggest studios have slowly integrated development of titles onto these mobile platforms. Key studios penetrating this market include Activision Blizzard, Electronic Arts, Microsoft Corporation, CyberAgent, and GungHo Online Entertainment. Having considered smartphone penetration and changing lifestyles, these companies have understood the potential for new customers by expanding their discoverability through iOS and Android platforms. To illustrate, Apple reports that there are over a billion active iPhones which is an
extortionate amount compared to next-generation consoles sold in 2023, which totalled 36 million units across the PlayStation 5, Xbox Series X/S, and Nintendo Switch. An illustrative example can be found with Electronic Arts, a company that publishes game for consoles, PCs, and mobile devices, acquiring Glu Mobile in 2021. This M&A deal has expanded the firm’s mobile portfolio, which benefits the company as it enables new mobile experiences for users.

Apps have been able to maximise profits by taking advantage of the ‘freemium’ system

Finally, the prioritisation of the mobile gaming market in the industry can be attributed to its basis in its business model, where gaming apps have been able to maximise profits by taking advantage of the ‘freemium’ system, which makes access to the base game free of charge whilst allowing in-game purchases that allow users to improve their experiences through visual changes or upgrades. This business strategy has become a game changer in the gaming industry, as flagship AAA titles which used to have a recommended retail price (RRP) of $60 must compete with new titles that have no upfront cost to the user. This model lowers the barriers to entry on a considerable level and allows games to display their value to an expanded audience. This initial gateway opens the desire to enhance their gaming experiences through in-game purchases, which adds a layer of service between the user and developer by constantly requiring new content, monetisation techniques, and in-game items to make the game feel consistently fresh and relevant.

It is only a matter of time before we see the mobile gaming market continue to expand or stagnate, as the opportunities within the technology industry also coincide with its own challenges, like competition from other forms of entertainment. In the case of smartphones, streaming services like Netflix are competing against traditional gaming firms by complementing their subscriptions with their own catalogue of mobile games, a free addition to the current subscription for entertainment. Additionally, the accessibility and range of media compete not only through monetary means but also through time and attention, which could pose challenges with conventional gaming platforms to grow as services need to distinguish and attract people from the wide range of options online.