Mobile Game Revenue Expected To Grow By 21% To $36.87 Billion This Year, To Hit $52.5 Billion By 2019
King Digital, now owned by Activision Blizzard, Inc. (NASDAQ: ATVI), was an early pioneer in mobile gaming with its popular "Candy Crush" game. The game also served as sufficient proof to investors that mobile game users had no problem dishing out $0.99 at a time to buy an extra few moves or lives.
The Wall Street Journal, citing a research report by the research firm Newzoo BV, reported that mobile game revenue is expected to grow 21 percent this year to $36.87 and surge to $52.5 billion by 2019.
The bulk of revenue will come from in app purchases, which refers to purchases that take place while the user is playing the game, rather than paying a fixed amount upfront to download and play the game.
"Pokémon GO," the newest mobile game craze, has already generated $120.3 million from users who made a purchase in the app. The figure is particularly impressive considering the game was only launched in early July.
Electronic Arts Inc. (NASDAQ: EA) said in May that its fourth-quarter revenue from mobile gaming rose 15 percent year-over-year to $173 million. Supercell Oy's "Clash of Clans" collected $2 billion in revenue last year.
Game Developers Use Complex Algorithms
The Wall Street Journal pointed out algorithms inside the games are "nudging" players to spend. Data on the players' behavior, how often they play, what mobile device they use, location and gender all play a role in determining a game's difficulty level and likely tempt a user to dish out that $0.99 to beat a level.
"You get people to spend more money if you understand their behavior," The Wall Street Journal quoted Niklas Herriger, founder and CEO of Gondola, an analytics firm that developers these algorithms for game developers, as saying. "You can trace their finger every step of the way."
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