The gaming market has reached a tipping point with more than half of the total revenue coming from mobile games in 2018. The majority of new potential gamers are located in mobile-first emerging markets. This puts PC and console game developers in a tough spot: revenue on their core platforms is growing 8x slower than the mobile segment.
This isn’t to say everything is picture perfect on mobile: lower income markets bring their own challenges. Converting users with less disposable income means additional resources need to be invested in localization. But it’s quite clear that mobile will dominate the future of gaming due to the sheer volume of new users.
There are great examples of game developers making a successful shift from desktop games to mobile. Blizzard’s Hearthstone has cornered the card game market and Epic Games’ port of Fortnite to mobile is seeing over $2 million in revenue per day. Epic Games’ approach is also notable as they have chosen a different user acquisition strategy than most other developers.
Desktop game developers thus have two options if they wish to profit from mobile platforms: either create a completely new game for mobile (as Blizzard has done with Hearthstone) or port their existing game (like Epic Games with Fortnite). The first is much more expensive, the second assumes PC-quality games are able to run on smartphones and provide meaningful engagement for users.
Fortunately, modern smartphones are becoming powerful enough to support lighter versions of traditional PC games as well which means both options are viable. But developing the game itself of only part of the challenge. Where will the users come from?
For desktop game developers starting to look into mobile platforms, telco partnerships are the most logical choice for user growth. In mobile-first markets, telcos have a connection with the majority of the population through device sales, providing them with mobile data and for service access. The only thing they are missing from the perspective of the gamer is the content itself. This is why Vodafone, Movistar, Globe and Singtel (among others) have launched projects to enable their subscribers better access to gaming content.
For game developers, the model through which to work with telcos on user growth has already been laid out. Bundling, a standard approach for telco, music and video streaming service partnerships also enables game developers to grow their audience. Streaming services usually give away free access for a limited amount of time in return for promotions on the telcos side. The same can be done by game developers: free promotions in exchange for telco subscribers getting a discounted battle pass, card packs or other in-game content.
But why should telcos care about promoting games? Simply put, that’s where the money is. Telcos have so far focused almost exclusively on streaming partnerships as it supports their own business strategy (heavy mobile data usage), games still generate a significantly bigger amount of revenue.
Compared to the $27 billion that video and music services generate, gaming stands at above $100 billion. Bundle partnerships coupled with converting consumers into paying customers through carrier billing mean telcos are also able to take their share of each payment. Our own recent experience with Kinguin and Orange in Poland showed that when gaming content and telco promotions meet, great things can happen.
When starting to look into telco partnerships, game developers should keep in mind that not all telcos are created equal. The commercial and technical capabilities of mobile operators differ vastly across different regions of the world.
Fortunately, streaming and other major digital content companies have done the heavy lifting here as well. The capability of telcos can be judged based on what other partnerships they have already launched. In short, MENA, South-East Asia and Eastern Europe are regions where telcos are best able to support game developers in user growth.
In the mobile gaming category, app stores will remain the primary source of new users and revenue for a long time to come. But for developers looking to accelerate their growth beyond these channels, partnerships with telcos are the next logical choice.