As we wrapped up Q1 2017, let’s look back to 2016 for a bit.
2016 was a year that global mobile app ecosystem experienced some major changes. As I shared in my previous article (1), China became the largest iOS App Store revenue generator worldwide, with accelerated growth rate. In the meanwhile, other than big and mature markets like China, new markets including India, Indonesia, Mexico, and Brazil were also showing impressive growth rate. Obviously, game is still the major driver of the app store revenue.
For the game industry, there were several noticeable M&A deals closed in 2016, including Tencent’s acquisition of Supercell, Activision Blizzard’s purchase of King, Vivendi’s purchase of Gameloft, Playtika’s acquisition by a Chinese consortium led by Giant Interactive, and Zhongji Holding, a Chinese listed company, acquired Jagex as its new core business. It is noticeable that Chinese companies are very active in acquisition in the game field.
While AppAnnie just released its 2016 global mobile market retrospective report. I would like to share some information here and provide some insights for 2017.
According to the data of last year, the mobile market has been growing rapidly and becomes more mature. From 2015 to 2016, the worldwide downloads of mobile app increased 15%, and the time that user spent on apps increased 25%. As a result, Google Play and iOS App Store increased their paid out revenue to publishers by 40%.
2016 Average iPhone Apps Used per User per Month 2016 (Source: AppAnnie)
As more and more innovative mobile apps getting into the market, the mobile app economy was able to keep the strong growth trend through 2016. There are a lot of “standard” metrics out there for tracking how well apps are doing in the market.
2016 Worldwide Total Time Spent in Apps (Excluding China) (Source: AppAnnie)
While download is one of the keys, it does not reflect the big picture. Instead, usage is the crucial factor which tells how frequently and how long do the users engage with apps, and we believe total time spent is the most relevant metrics to evaluate usage. In 2016, global total time spent in apps reached 900 billion hours, increasing more than 150 billion hours compared to 2015.
The 2016 global download remains similar growth rate to 2015, with annual downloads reached more than 90 billion. The total increase of iOS App Store and Google Play downloads was more than 13 billion. Taking a closer look, we can see the growth rate of iOS increased in 2016 compared to 2015. China market contributed 80% to this growth.
2016 Worldwide App Store Downloads (Source: AppAnnie)
In 2016, publishers generated more than $35 billion from iOS App Store and Google Play, with 40% growth rate which surpassed 2015. The iOS App Store alone increased its revenue by 50% compared to 2015, keeping its leading position among all the platforms. Again, China shared nearly 50% of the revenue growth of the iOS App Store. Game, as the leading revenue generator, shared 75% and 90% of all app store revenue on the iOS App Store and Google Play in 2016, with RPG alone generated half of all revenue growth on iOS App Store.
What is more encouraging is that the dramatically growing app store revenue consists less than 50% of the entire app economy. When taking third-party Android stores and advertising revenue into account, the 2016 total amount paid to publishers was as high as $89 billion.
2016 Worldwide App Store Revenue (Source: AppAnnie)
China reached over $2 billion in its publisher revenue in Q4 2016, creating the new worldwide record in App Store history.
2016 Top 3 Countries by Quarterly iOS App Store Revenue (Source: AppAnnie)
China performed impressively with its 10 times growth since 2014. As with Japan, RPG has been the core driver in China, and on top of that, MMORPG has been playing an important role in this growth. There are several MMORPGs ranked top 30 in terms of revenue in China market.
2016 Average iPhone Monthly ARPU (USD) of Top 30 Games by Revenue (Source: AppAnnie)
Japan is another remarkable market which largely driven by RPG. In 2016, the revenue generated by top 30 games in Japan was twice as the revenue from top 30 in US. Two-thirds of Japan's top 30 games revenue came from RPG.
Although the market is growing, a fact that cannot be denied is the competition in the mobile game market is much more fiercer. As the mobile market reaches its saturation and the marketing costs increases, the mobile game companies have to try harder to gain a good ROI. On the other hand, mobile game players are becoming harder to serve as they have too many options nowadays. Data shows that CPI is three times higher than it was in 2010, while day-one retention drops 50% and 74% of the players do not open a game post install (2).
That makes game developers need to refine their strategies in order to thrive in this growing and rapidly changing market.
I believe the strategies should include Product, UA, and Market aspects.
Regarding Product, there are hundreds of new games released every day. In 2016, only iOS App Store alone had more than 500 games submitted per day (3). While CPI is so much higher than it was in 2010, the good old day when developers can buy users to win is gone. Game developers should focus on retention and monetization strategies in their mobile games to maximize it’s LTV and ROI. Besides, if you are still thinking about what genre for your next mobile game, you should consider RPG as it is the number one genre that drives revenue in many countries. You can check out my previous article about RPG as the number one driver of ARPU in China (4).
For UA, developers or publishers who have multiple titles should first consider their existing players and put them on the top priority, since the existing players are already in the database with all the required user information available for user activities pattern analysis. So that acquiring internal users are more cost-effective and efficient compared to acquiring new players.
Regarding Market, it is obvious to me that, if you have not stepped into China market yet, you may be missing out. For strategy to get into the China market, you can refer to my old article (1).
While Japan is very close to China in terms of culture and style, they are two totally different markets. You cannot simply think that if your game is penetrating into China market and, with the same strategies, your game can get into the Japanese market at the same time. Similar to getting into the China market, you’d better find a reliable partner to work with you in localization, payment, and distribution channels, to name a few. You can find more details about building relationships with right partners from my previous article (5).
References: