Back in March FierceMobileContent and others reported that widely respected telecoms & media analyst Juniper Research had estimated that the worldwide mobile games market had reached $5.4bil in 2008. That's crazy good, right?....or, perhaps it's just crazy.
As I've mentioned recently, I'm generally pretty cynical about big numbers from analysts, pundits, etc...especially when they just don't feel right. As part of the process of digging into this further I recently put together a Top 10 list of mobile games publishers worldwide. It's missing some numbers and the order may need some tweaking (audience participation, please), but I'm very confident about the Top 3, and pretty sure that Namco and G-Mode belong on this list. There could be a place for Capcom Mobile or maybe Konami, but I have no good data on their mobile operations... and I think I may be being generous to Hands-On (which has kinda dropped off the radar recently). Anyway, here's what I came up with (#s are annual revs or 4 most recent quarters):
My feeling is, that if I fill in the blanks here, that the total revenue for the Top 10 comes out to about $700mil. Soon after this list (and some of the companies I mentioned above) the revenue drop-off is pretty steep, with a bunch of companies generating low single digit $millions. If I make a small leap and assume that this group of industry leaders represents 70% of the wholesale revenue in the business...then the wholesale (before distribution channel) value is $1bil. If publishers are keeping 60% of the retail (consumer) price blended across all distribution platforms then the retail mobile games business is worth close to $1.7bil...not anywhere close to $5.4bil. Even if this group represented 30% of worldwide wholesale revenue (which is absurd!) the business would still be over a billion dollars short of the Juniper estimate. (As usual, let me know if there's something I'm missing!) So what's my point here? I believe that those of us who are vested in mobile entertainment have an obligation to aggressively scrutinize the numbers associated with it, in the interest of clarity and accuracy. It's impossible to properly assess the opportunities in its various sectors (like games), or measure success within them, without proper industry metrics. Hyperbole and froth have not helped this business...in fact they've exacerbated the numerous (too numerous for a young business) boom and bust cycles we've all experienced since the late 90s and fueled substantial skepticism about mobile entertainment amongst those who are generally motivated to invest capital or intellectual property in new media.
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ReplyDelete"Even if this group represented 30% of worlwide wholesale revenue (which is absurd!)...."
Why would that be absurd ? The overall mobile entertainment market is much more fragmented than you seem to realize. There are still lots of local developers, catering to local tastes. And there is also the question of "pink" aka erotic games - sells like hell on any portal (Sex sells, in case anyone still had a doubt), but big publishers don't want to get associated (too much) with this part of the business.
If you count the revenue of all those Sexy Poker, Sexy Puzzles and what not into your calculation, your assumption of the TOP10 adding up to only 30% is not THAT absurd anymore. My guess would be in the middle, that is ca. 50% aggregate market share for the top10.
Same thing for your assumption of 60% of the consumer price, which, in this case, is likely to be too optimistic.
The market is probably somewhere inbetween grossly inflated analyst numbers, but certainly bigger than your rough estimate.
The sad truth is: there are too many players sticking their fingers into the wallet and yet do nothing (....operators, anyone ?).
A last factual info: you can almost skip Konami: they are distributed via GLU (except for the iPhone).... so their numbers are accounted for in your list :-)