The Rise of Mobile Apps in Gaming

The Rise of Mobile Apps is an ongoing series by Raelyn Thompson, focused on the integration of mobile technology into our everyday lives. Read Part One, Part Two and Part Three here.

While banking is being transformed into a more digital existence, an industry that has existed digitally for decades is also being transformed. The mobile entertainment industry is valued to be worth over $33 billion. By 2015, it is expected to hit $54 billion. The mobile gaming industry is expected to bring in $8 billion this year, and $11.4 billion in 2014. Mobile apps impact more than the job market and the banking industry.

Mobile gaming has revolutionized the entire gaming industry. While games have traditionally taken the form of a physical cartridge or CD, mobile gaming is powered by the ease of downloading software on the go. Apps for phones and tablets are also considerably much cheaper than the blockbuster gaming console games.

Traditional console games often have blockbuster budgets for the larger games, and with this current generation of consoles, games commonly require budgets of $15 million to $20 million. In contrast, the blockbuster hit Angry Birds had a budget of roughly $300,000 and reportedly makes $1 million per month simply from ad revenue. Also, a growing trend in mobile video games are freemiums, which is software given away for free with revenues coming from ads, additional feature charges, in-game purchases or from only allowing the user to use an app for a limited time period.

Nintendo, which has dominated the games industry for years with its DS handheld game machines and Wii home consoles, has struggled to win popularity for its next-generation 3DS gadget as casual gamers turn to smart phones and tablets. Nintendo is expected to post a recurring loss of about 100 billion yen ($1.32 billion) in the first half ending on September 30, much worse than the 55 billion yen loss the company had forecast.

While the mobile gaming industry is a powerful player now, it certainly did not start out that way. Apple's iPhone successfully upended the mobile gaming industry, ushering in an era of innovation and enabling developers of any size to have access to a massive audience, largely composed of people that were new to gaming. Apple solved four key issues that had been plaguing the mobile gaming industry for years: fragmentation, by releasing a limited range of devices that could be addressed by a single game build; content discovery and quality, replacing myriad chaotic storefronts with the highly curated and easily browsed App Store; content purchase, requiring customers to sign up for iTunes and register a credit or pre-paid card instead of relying on finicky carrier billing; and connectivity, allowing players to interact with anyone on the platform and giving third parties the tools to provide seamless services.

Check back soon for the next installment on the app’s role in the economy and job creation!