Gaming for profits

If it weren’t for my early years with JT (Jack Tramiel) during the Atari era, I probably wouldn’t track video games – mobile, console or PC. But it’s amazing to see how much broader the industry is today.

Our son — like most serious gamers we know — swears that a well-equipped PC is still the weapon of choice. Second best is the console; but that’s hooked to the big TV for IP viewing, so he doesn’t get his hands on it too often.

When he’s outta’ his room, he’s busy on his smartphone and tablet.

The daughter was an on-again/off-again gamer until she got her iPhone and downloaded a bunch of the free stuff. Now, she needs a new iPhone with a faster processor and more storage to hold all her photos, videos, games.

If I was really serious about the game industry, I probably would have been in Cologne, Germany in August. With 340,000 people from 88 countries attending, it makes E3 look anemic!

Business at Play – Gamescon drew a record crowd this year with people coming from 88 countries to see what’s going to be new and hot in games. Serious gamers attend or track what happens at this and other shows such as Blizzcom and Quakecon. The people who create these wonders attend GDC (Game Developers Conference). Then there are companies like Sony, Microsoft, EA, Ubisoft, AMD, Nvidia and other hardware/software people who deliver the wow factor and test tomorrow’s mainstream products on gamers.

For something you’re just supposed to play, video games are a big business!

True, it’s in a slump right now because consumers are waiting for the new consoles.

Ours is fine for the TV connection, so why change?

According to NewZoo’s most recent global games report, the market will grow to more than $70B this year and the number of gamers will increase to more than 1.2B, or about one out of every four people on the planet.

What I’m glad to see is that Gamescom (as at GDC) had a growing presence of Indie developers and games that were available on all platforms, including mobile devices.

In the past, you’d see Indie projects stuck over in the back corner.

If it became a modest hit, Microsoft and/or Sony would throw the developer a few bucks and he/she would port it to their platform.

Today, the design framework is much more PC-like, so the incremental cost of porting is minimal.

Microsoft gives Indies lip service but Sony is doing more to help them in their endeavors, as is Wii (they need all the friends they can get).

Even with all the games being offered, I still feel like Peeta Mellark, “I have no chance of winning!”

A lot of this year’s Gamescom games also had baby smartphone versions that were free or freemium.

We think that’s a smart move because then if you get hooked on the smartphone download you want it also on your tablet, console and PC.

Market by Region

NewZoo’s is very reliable in calculating the absolute numbers of players, payers and average spent for about 90 percent of the gamer population.

They report that the Asia-Pacific arena remains the biggest market, over $25B; North America $22.8B; EMEA (Europe, Middle East, Africa) $19.5B and Latin America $3B.

Consoles rack up about $30.6B or 43 per cent of all global game revenues, which includes downloadables and second-hand/used product sales.

While the download/box PC game industry is at $6B and MMO (massively multiplayer online) game play produced about $15B last year.

The relatively new tablet/smartphone market is over $12B, which is 18 percent of the global market and nearly twice as big as the handheld consoles market.

Long-Term Health – The game market is projected to deliver an eye-popping six percent year-over-year growth in sales this year. The freemium smartphone and tablet market have shown a significant increase and have probably exposed more people to games on other platforms.

NewZoo sliced the results a different way, by screen size:

  • Large screen (computer) – download/box, casual, social, MMO – 39 per cent of sales;
  • TV/entertainment screen – 36 per cent;
  • Personal or smartphone – 22 per cent growth, 12 percent of total sales;
  • Floating screen originally covered the handhelds but today most of those sales – 78 per cent – are for tablets.

The mobile market (smartphones and tablets) gets most developers’ motors running because it’s a little easier to enter and the ROI (return on investment) can be good.

Across the Board – Video game play continues to grow in every platform category; and even though console game sales are in a temporary lull – awaiting new devices, industry analysts expect the market to increase this year. Mobile devices have given people something to do when things get dull.

Apple’s and Google’s app stores are flooded with games that are free or cost so little that people download them, play them for awhile and move on to another game.

I’ve seen smartphone games played while waiting for meetings; and yes, during meetings or presentations.

Admit it … they can be more interesting.

On-the-Go Play – The device that is always with you, your smartphone, is drawing in more game players – young/old, male/female. It’s no wonder battery life is a major concern for most users as they text, watch videos, play games, grab photos and occasionally make calls.

The market for smartphone games is growing so rapidly because people always have their phone with them. The cost of the game is modest and it’s a great way to fill time between texting.

Parents also find games are a great way to shut the kids up (all ages) when they’re driving somewhere or just crave some Me time … BAM!! The kids are quiet and everyone is happy.


Way back in our Marketing 101 class, we learned that free is a fantastic way to get a consumer interested. But until the free-to-play smartphone games we’d never seen it carried out so profitably.

Pile ‘em On – Tens of thousands of free and ultra-reasonably priced games are available on the iOS, Android and yes, even the MS platforms. Perhaps that’s why manufacturers are testing 6-inch screen smartphones and phablets are of interest to consumers … it’s all about screen real estate.

According to an analysis of the iTunes App Store, 82 of the top 100 grossing iPhone games are FTP (free-to-play). With 13 of the remaining games, you pay via in-app purchases so they’re really cheap on the front end and you pay as you play.

So where do they make their money? They have it worked out to a fine science:

  • Flow theory or maximizing the amount of time you spend in the game, the deeper the involvement the easier it is to help/encourage you to hunt, gather, build, collect things for money;
  • Virtual goods purchases that are obtained by real world money blurring the cost and enhancing the value of the virtual whatever; and
  • Dynamic pricing is triggered by timed events that offer you  multiple conversion rates between real/in-game currency giving the gamer a better deal than the game … yeah, right.

It doesn’t take long for you – or the kids – to rack up a big real world bill for that virtual stuff on your FTP game.

Games like Angry Birds and Candy Crush, are part of our everyday lives.

Sponsored Games

Companies have long worked to place their products in games as they have in movies and TV shows.  In addition to their own self-serving apps, more have gotten smart — and creative — by introducing good free games built around their products/brands.

My brother-in-law, a retired airline guy, pointed one out to me recently that’s really, really good … KLM’s Aviation Empire.

Tighter Relationship – While an app that helps me book and monitor my flight/hotel/car reservations is useful, more companies are adding a new way to keep their name/product/service in front of the consumer with well-designed games. Some even give you awards (redeemable with them) for skill-level achievements. It’s an immersive marketing tool.

Want to know about the trials, tribulations and challenges of running an airline? The 3D strategic game lets you call the shots, make the decisions. You select the flight destinations, lease aircraft and keep fine-tuning your airline as times and technologies change.

It’s just one of a growing number of brand mobile games that builds a relationship between the company and consumer that in-your-face ads can’t do. The game gives you something to do when your flight is delayed!

Companies that add good games can do a lot for their customer relations effort … how can you hold a grudge against someone you play with every day?

Would you recommend this article?


Thanks for taking the time to let us know what you think of this article!
We'd love to hear your opinion about this or any other story you read in our publication.

Jim Love, Chief Content Officer, IT World Canada

Featured Download

Related Tech News

Featured Tech Jobs


CDN in your inbox

CDN delivers a critical analysis of the competitive landscape detailing both the challenges and opportunities facing solution providers. CDN's email newsletter details the most important news and commentary from the channel.