Gaming Industry Sees Big Revenues Going Mobile

Take-Two Interactive, maker of video games from major franchises like Grand Theft Auto and NBA 2K, this week announced plans to buy Zynga, a mobile game developer known for Words With Friends, and for kicking you back a little, FarmVille. The deal is said to be worth around $12.7 billion and demonstrates that the future of gaming isn’t limited to PlayStations and Xboxes, or even powerful gaming PCs.

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Jay Peters, who covers the story at The Verge, said given the size and money to be made in the mobile gaming industry, this acquisition makes sense. The following is an edited transcript of her conversation with Marketplace’s Kimberly Adams.

Jay Peters: Mobile gaming is really developing a lot at the moment. A gaming analytics firm called Newzoo found that the mobile gaming space grew 7.3% year-over-year last year and revenue was $93.2 billion. dollars.

Kimberly Adams: wow.

Rock : Compare that to console games, which were only 28% of the market, PC games, which were only 20% of the market, and both were down only slightly. And you can see why Take-Two is trying to step up here.

Jay Peters (courtesy Peters)

Adam: You know, it’s interesting, console games and even PC games tend to get all the attention, but mobile games are a bigger market.

Rock : There are just a lot more people walking around with very powerful cell phones in their pockets who can play a lot of these games. They are easy to access from app stores, they are almost always free to download and play. While the console and PC gaming space, while they may offer more faithful gaming experiences, they do require very expensive enclosures, and they’ve been very hard to come by with the channel’s shortage of supply, and so I think that’s why we’re seeing the mobile gaming space continue to grow.

Adam: How do most of these games make their money?

Rock : So, the majority make their money by gifting a handful of digital items or in-game currencies that cost real money to pay. Another model people might be familiar with is Fortnite, which has made a name for itself selling skins from all kinds of entertainment properties, right? You can play as Tom Holland’s Spider-Man in Fortnite, and your opponent can be someone from Street Fighter. And there are very similar types of models, in many, many mobile games. And there’s so many opportunities for maybe you or me to just buy a $1 or $3 thing here, and you expand it to the many, many, millions of people who potentially play these games, and so on. is where the money comes in.

Adam: Take-Two owns major console and PC game franchises like Grand Theft Auto and NBA 2K. Does this acquisition mean we’ll start to see mobile versions of some of these great games?

Rock : That seems to be exactly Take-Two’s goal. They talked about it extensively in an investor presentation they made shortly after the announcement of the acquisition. One game currently offered by Take-Two is Grand Theft Auto Online, which makes a lot of money in microtransactions, but is only available on consoles or PC. And so you can imagine them bringing some sort of free Grand Theft Auto version of the game that’s made with Zynga’s expertise in the mobile games market, and doing that for as many of their franchises as possible, there might be a lots of great popular mobile games based on Take-Two franchises. Take-Two expects its mobile revenue to be over 50% of its total revenue by the end of fiscal 2023, so you can see that Take-Two really expects that to have a significant impact on its results.

Adam: And do you think having some of these biggest franchises in mobile games is going to bring more people into that market, even though the market is already huge?

Rock : I think so. I mean, the games Take-Two is making as a result of the Zynga acquisition aren’t the first time Take-Two has entered the mobile game market. There are already a lot of mobile games. But I’m sure Take-Two sees the popularity of games like Pokemon Go, there’s a very popular Call of Duty mobile. And I’m sure Take-Two sees an opportunity for them to bring their biggest franchises and offer free mobile versions of them, and hopefully take advantage of the brand popularity that those franchises already have, and maybe exposing the franchises to new people too.

Adam: And do you expect more mergers and acquisitions in this area?

Rock : It seems likely. Over the past few years, a number of big game developers have jumped into the mobile space with big acquisitions. Activision Blizzard bought King, which is the maker of Candy Crush, Electronic Arts spent billions buying two mobile studios last year. It seems very likely that there will be more big and splashy acquisitions like this as the mobile gaming market continues to heat up.

Adam: What’s your favorite mobile game to play right now?

Rock : In fact, I’m a big fan of Apple’s Apple Arcade service, which is an almost entirely different market than what we’ve been talking about right now. What Apple Arcade offers is that you pay $5 per month and it offers a suite of games that you can simply download and play ad-free. And a big one that I recommend is this one called Tiny Wings, where you’re just a little bird doing little jumps, and it has very soothing and relaxing music. I find it sometimes a great way to unwind after a busy day at work.

Related Links: More from Kimberly Adams

Some of those numbers Peters was quoting about the size of the mobile gaming industry are also in a VentureBeat article, which includes more numbers from gaming and esports data company Newzoo.

Another interesting figure from this company’s research: live game streaming, watching other people play games, is also growing at a fairly rapid pace. It is on track to reach over 920 million viewers by 2024.

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