Mobile Gaming in Emerging Markets: Five-Year Forecast and Impact Analysis

Mobile gaming is enjoying solid growth. The number of gamers increased from about 55m in 2005 to about 183m in 2008, and global revenue in 2008 came to $6.9bn. Emerging markets contributed heavily, with China and India being among the most important in terms of new mobile gamers. A number of underlying factors contribute to this growth - first of all the evolving mobile technology environment: Better and faster wireless networks as well as more advanced and easy-to-use handsets are enhancing the user experience. Features such as touchscreens, 3D capabilities and online interactivity allow content developers to improve games. But apart from technological improvement and business-level innovation - which in the form of the iPhone App Store is revolutionizing the industry - the mobile gaming market is also evolving fast on account of mobile adoption. This trend is led by emerging markets, where improving economies are allowing consumers and businesses to catch up with the more advanced markets in terms of technology uptake. Although most people in emerging markets cannot afford sophisticated devices, they are eager to experiment and use mobile data services. This is true for both mobile communications and entertainment, of which mobile videogames are a major driving force. For many users, handsets are the first device they own that enables access to electronic forms of entertainment.

This report analyzes mobile videogaming market dynamics in emerging economies. This is done by analyzing these markets in the context of the overall mobile videogaming industry, taking a close look at the trends and dynamics in gaming and mobile gaming globally. This is followed by a top-level examination of emerging markets, including their mobile gaming-specific metrics, market enablers, adoption barriers, trends and opportunities. Also included are in-depth country profiles of eight emerging markets: Brazil, China, India, Mexico, Nigeria, Poland, Russia and South Africa. Each country study examines the economic background of local mobile and gaming markets, available products, pricing, barriers to adoption, current trends and overall market dynamics. The report also forecasts market growth and looks at interesting business models and initiatives.

Key findings include:

- Global mobile gaming revenue came to $6.9bn in 2008, having grown strongly in recent years. The main driver was an increase from about 55m users in 2005 to about 183m in 2008. Emerging markets contributed heavily, with China and India being among the most important in terms of new mobile gamers.
- Mobile gaming is benefiting from expanded mobile access to the Internet and content services, in both developed and emerging markets, as 3G networks are launched, the handset user experience is enhanced and data access costs are reduced.
- Growth will be fueled by the changes the iPhone App Store has brought to more developed markets, where it is stimulating competition and interest in mobile games.
- Declining handset and data access prices have been central to the increased use of data services in emerging economies. Also, because devices such as PCs and gaming consoles are less common, the mobile phone has in many emerging markets become the primary device for accessing content such as websites and games. This, combined with improving economic conditions, is resulting in increasing adoption of mobile content and data services.
- Several barriers are hampering market growth, most of them specific to local conditions but related to low income levels, the prevalence of handsets with limited functionality, network and billing platform inadequacies and other technical issues, pricing for data access and games, the inadequacy of game distribution channels, inadequate payment mechanisms or piracy.
- In addition to the ecosystem-related issues, a number of country-level issues in emerging markets encourage local players to develop innovative business models to pursue the mobile gaming opportunity. Some of the most interesting examples are advergaming, free-to-play and social gaming. As shown in the country profiles, however, these usually have local peculiarities.

Case studies:

Brazil
China
India
Mexico
Nigeria
Poland
Russia
South Africa

Key Questions Answered

- What are the revenue and user base potentials of mobile gaming?
- How does gaming fit into mobile operators' overall data business? What can operators do to boost mobile gaming adoption?
- What are the barriers to mobile gaming growth in emerging economies? How important will the availability of advanced handsets be to mobile gaming adoption? And how much of a difference will 3G make?
- Which geographical regions will see the most growth in mobile gaming users? How do the opportunities in various regions compare?
- What kinds of strategies have proven successful in emerging countries, and why? When are core games, casual games, online games or advergaming the best choices? How about application stores, social networking, off-deck distribution, viral distribution, in-game micropayments, revenue-sharing and sponsored games?
- What strategies can succeed in generating revenue from mobile gaming in markets dominated by piracy?
- Who is doing these things?

Target audience

Mobile operators:
This report will help you both grasp the big picture and home in on the markets that best match your capabilities and objectives. Find out what the mobile gaming opportunity is in emerging markets, and identify the strategies that are most likely to succeed where incomes are low and piracy rife. Use the case studies to discover and compare new approaches to provisioning, pricing and billing of mobile games, including distribution channels, payment mechanisms and piracy mitigation.

Game developers, publishers, distributors and aggregators:
This report examines the value chain of mobile gaming and how it is changing. Discover what is holding back adoption in emerging markets and which strategies can overcome obstacles such as piracy. Evaluate markets to target those that best suit your products and capabilities. Anticipate trends in mobile networks and handsets in order to position your products and take advantage of unmet aspirational demand among new target audiences.

Advertisers:
Assess the opportunity for branded games and advergaming to promote your brand. Learn from the experience of campaigns involving mobile gaming in a variety of emerging markets and gain insight into what made them successful. This report will help you identify how to use mobile gaming to reach new audiences with effective messages. Case studies are provided involving advergaming and sponsored games.

Investors:
Locate opportunities in challenging environments. This report will help you evaluate and develop the strategies that will position your portfolio investments to take effective advantage of upcoming developments in one of the most exciting mobile application fields.

Some 90 to 95 percent of video games in emerging markets are said to be pirated, but one company doing something about it – Chinese mobile content provider KongZhong, according to the latest forecast data and analysis from this report.

Console manufacturers and game developers have unsurprisingly avoided countries with a lot of piracy – and not only because disposable incomes there tend to be much lower, writes Jan ten Sythoff, analyst at Pyramid Research in "Mobile Gaming: A Pirate-Free Future?" "However, mobile handset penetration levels in these countries are increasing, the capabilities of mobile devices are becoming more sophisticated, and networks are gradually enabling higher data speeds. These trends are opening a big opportunity for gaming on mobile devices. Games based on virtual worlds with in-game transactions, for instance, are gaining traction, as seen by the strong performance of KongZhong."

As analyzed in the author’s recent report and the latest round of quarterly mobile data forecasts, mobile gaming is enjoying solid growth, from about 55 million gamers in 2005 to about 183 million in 2008. The global mobile gaming market is evolving fast on account of mobile adoption, and is expected to grow at a 16.6 percent CAGR during 2009 to 2014, reaching $18 billion in 2014. This growth will be the result of continued strength in emerging markets and increased usage in developed markets. A wider range of business models are gaining traction to exploit this opportunity while addressing issues such as piracy and affordability.

Mobile Gaming in Emerging Markets: Five Year Forecast and Impact Analysis is part of the author’s research report series. A blend of primary research and qualitative analysis, the research reports offer comprehensive coverage of the fixed and mobile communications space and enable those in the communications industry to stay ahead of changing market dynamics. SHOW LESS READ MORE >

Table of exhibits
Companies mentioned
Acronyms and abbreviations
Executive summary

Section 1: Introduction
1.1 Worldwide videogame industry
1.2 Global mobile gaming overview
The iPhone revolution: From user experience to business model
1.3 Definitions
Revenue and gamers
Game types
Mobile gaming business models
1.4 Study methodology

Section 2: The mobile gaming opportunity in emerging markets
2.1 Mobile service in emerging economies: Subscriber explosion expands data opportunity
Data services adoption is driven largely by affordability
2.2 Emerging markets have what it takes for mobile gaming to succeed
2.3 Barriers to mobile gaming growth in emerging markets
2.4 Major opportunities in emerging markets

Section 3: Country profiles
3.1 Brazil: The videogame culture is strong, but the mobile medium is key to the mass market
Mobile telecom in Brazil: High service adoption and gaming-capable handsets lay solid foundation for mobile gaming
The gaming industry in Brazil: Videogames are popular, but piracy is still the rule
The mobile gaming opportunity: Data access costs and operator control of distribution hinder growth
Mobile game case study: Zeebo console vs. piracy
Mobile game case study: Seda Teens and sponsored gaming
3.2 China: In the land of multiplayer online games, the key to unleashing the market‘s potential will be connected mobile gaming
Mobile telecom in China: Mobile gaming needs more affordable data access, wider 3G coverage and better handset gaming capabilities
The gaming industry in China: In-game micro-payments vs. pervasive piracy
The mobile gaming opportunity: Unleashed by 3G and connected gaming
Mobile game case study: The free-to-play model
Mobile game case study: Tencent engages its subscriber base
3.3 India: With localization critical to reaching the growing mobile Internet population, advergaming will drive market
Mobile telecom in India: Competition drives growth, but rural potential remains untapped
The gaming industry in India: Cricket, movies, mobile phones and free games open the doors for gaming
The mobile gaming opportunity: Advergaming brings wider audience, core gamers go online with 3G
Mobile game case study: Reliance‘s Zapak online gaming brand
3.4 Mexico: Operator control hinders, 3G and lower costs boost growth
Mobile telecom in Mexico: Telcel influences growth, but market saturation and 3G will bring competition
The gaming industry in Mexico: Consoles and PCs dominate a buoyant market, but piracy is pervasive
The mobile gaming opportunity: Growing gradually, but limited by hidden costs
Mobile gaming case study: Movistar‘s Gana Más ties gaming to auction
3.5 Nigeria: Affordability issues must be addressed through innovative business models
Mobile telecom in Nigeria: Non-voice services limited by device capabilities
The gaming industry in Nigeria: Non-mobile gaming is restricted to higher-income households, which represent less than 5% of the total
The mobile gaming opportunity: Much potential but yet to be established
Mobile game case study: Starfish Mobile and Zain Nigeria collect subscriber data
Mobile game case study: MTech wants to deliver more sophisticated services
3.6 Poland: Membership in the EU has brought entertainment
Mobile telecom in Poland: Mobile broadband, 3G and improved handsets will drive mobile gaming adoption
The gaming industry in Poland: Branded content, mobile phones and free games are opening the door for mobile gaming
The mobile gaming opportunity: Advergaming will open the doors to a wider audience, while 3G enables core gamers to go online
Mobile game case study: Telecom Media Sp offers free downloads
Mobile game case study: AdAction focuses on niches
3.7 Russia: On-deck vs. off-deck competition, handset replacements drive gaming adoption
Mobile telecom in Russia: 3G opens door to high penetration for value-added services and mobile Internet usage, but bigger operator push is needed
The gaming industry in Russia: High PC and Internet penetration is driving a market where piracy is still a major concern
The mobile gaming opportunity: 3G will encourage mobile gaming, as will trial, free-to-play and content discovery initiatives
Mobile game case study: Fishlabs and Iricom partner
Mobile game case study: MTS targets heavy gamers and social networkers
3.8 South Africa: Low data prices drive mobile Internet and content adoption
Mobile telecom in South Africa: High mobile penetration and low data access tariffs drive cell phones to be the most important Internet access device
The gaming industry in South Africa: PCs are a small gaming market, but high mobile penetration is opening doors for further growth
The mobile gaming opportunity: Mobile to gradually become a major gaming platform, building on high penetration, 3G and advergaming initiatives
Mobile game case study: Vodacom sponsors Thumbwars to promote 3G
Mobile game case study: MXit builds on social networking success
Related resources

Table of exhibits
Exhibit 1: Global gaming revenue by platform — 2008 and 2014 forecast
Exhibit 2: Global mobile gaming users by region, 2005 to 2008
Exhibit 3: Top five countries globally by number of users downloading games, 2008
Exhibit 4: Global operator mobile data revenue breakdown by category, 2008
Exhibit 5: Global mobile gaming market forecast, 2008-2014
Exhibit 6: Apple‘s iPhone App Store
Exhibit 7: Mobile subscription penetration of population by region
Exhibit 8: Mobile subscription growth rates by region
Exhibit 9: Global mobile revenue by region — 2008-2014
Exhibit 10: Mobile data revenue as a percentage of total mobile revenue, by region, 2005, 2008 and 2014
Exhibit 11: Mobile Internet users as a percentage of all mobile subscriptions in eight emerging markets, year-end 2008
Exhibit 12: Data network cost of downloading a typical 500KB Java game for a prepaid subscription without a data bundle
Exhibit 13: Gaming device penetration of households in selected countries, 2008
Exhibit 14: Key indicators in selected markets, 2008
Exhibit 15: GDP per capita at purchasing power parity (PPP) in eight emerging countries
Exhibit 16: Mobile gaming revenue forecast by region, 2008-2014
Exhibit 17: Typical mobile gaming value chain
Exhibit 18: The iPhone mobile gaming value chain
Exhibit 19: Brazil — Key indicators in a global context, 2008
Exhibit 20: Brazil — Mobile and 3G subscription penetration of the population
Exhibit 21: Brazil — Major mobile operators‘ mobile gaming offerings, May 2008
Exhibit 22: Brazil — Operator data revenue by category, 2008
Exhibit 23: Brazil — Mobile gaming market forecast, 2008-2014
Exhibit 24: Brazil — Zeebo, a console that uses 3G for software distribution
Exhibit 25: Unilever‘s Seda Teens campaign, with banner ads, a dedicated WAP portal, branded phones and content such as games
Exhibit 26: China — Key indicators in a global context, 2008
Exhibit 27: China — Mobile and 3G subscription penetration of the population
Exhibit 28: China — Major mobile operators‘ mobile gaming offerings, May 2008
Exhibit 29: China — Operator data revenue by category, 2008
Exhibit 30: China — Mobile gaming market forecast, 2008-2014
Exhibit 31: 3GQQ mobile games — Fantasy Westward Journey and casual games
Exhibit 32: India — Key indicators in a global context, 2008
Exhibit 33: India — Mobile and 3G subscription penetration of the population
Exhibit 34: India — Operator data revenue by category, 2008
Exhibit 35: India — Major mobile operators‘ mobile gaming offerings, May 2008
Exhibit 36: India — Mobile gaming market forecast, 2008-2014
Exhibit 37: Zapak.mobi offers free advertising-sponsored games
Exhibit 38: Mexico — Key indicators in a global context, 2008
Exhibit 39: Mexico — Mobile and 3G subscription penetration of the population
Exhibit 40: Mexico — Operator data revenue by category, 2009
Exhibit 41: Mexico — Major mobile operators‘ gaming offerings, June 2008
Exhibit 42: Mexico — Mobile gaming market forecast, 2008-2014
Exhibit 43: Nigeria — Key indicators in a global context, 2008
Exhibit 44: Nigeria — Mobile and 3G subscription penetration of the population
Exhibit 45: Nigeria — Operator data revenue by category, 2009
Exhibit 46: Nigeria — Mobile gaming market forecast, 2008-2014
Exhibit 47: Poland — Key indicators in a global context, 2008
Exhibit 48: Poland — Mobile and 3G subscription penetration of the population
Exhibit 49: Poland — Operator data revenue by category, 2008
Exhibit 50: Poland — Major mobile operators‘ mobile gaming offerings, June 2009
Exhibit 51: Poland — Mobile gaming market forecast 2008-2014
Exhibit 52: Download for free (Sciagaj za darmo)
Exhibit 53: Mobifree — games for nothing for your phone (gry za friko do twojego telefonu)
Exhibit 54: Java game ?Play! Kill the ticks and win prices? (Zagraj! Zabij kleszcza i wygraj nagrody)
Exhibit 55: Russia — Key indicators in a global context, 2008
Exhibit 56: Russia — Mobile and 3G subscription penetration of the population
Exhibit 57: Russia — Major mobile operators‘ gaming offerings, May 2009
Exhibit 58: Russia — Operator data revenue breakdown by category, 2008
Exhibit 59: Russia — Mobile gaming market forecast 2008-2014
Exhibit 60: MTS‘s virtual discount card at its Planet of Games portal
Exhibit 61: South Africa — Key indicators in a global context, 2008
Exhibit 62: South Africa — Mobile and 3G subscription penetration of the population
Exhibit 63: South Africa — Operator data revenue by category, 2008
Exhibit 64: South Africa — Major mobile operators‘ gaming offerings, May 2008
Exhibit 65: South Africa — Mobile gaming market forecast 2008-2014
Exhibit 66: Vodacom Thumbwars TV show, showcasing data services

The global mobile gaming market will grow at a 16.6 percent CAGR to reach $18 billion in 2014, driven by the explosive mobile subscriber growth in emerging markets, according to this latest report.

In Mobile Gaming in Emerging Markets: Five Year Forecast and Impact Analysis, the author analyzes mobile videogaming market dynamics in emerging economies. This is done by putting emerging markets in the context of the overall mobile videogaming industry, taking a close look at the trends and dynamics in gaming and mobile gaming, globally. This context analysis is followed by a top-level examination of emerging markets, including their mobile gaming-specific metrics, market enablers, adoption barriers, trends, and opportunities. Also included are in-depth country analyses of eight emerging markets: Brazil, China, India, Mexico, Nigeria, Poland, Russia, and South Africa. We also forecast market growth and look at interesting business models and initiatives.

Evolving along with the increasing penetration of mobile service and handsets, mobile gaming is a promising industry, notes Jan ten Sythoff, manager of mobile content at Pyramid Research and coauthor of the report. "Global mobile gaming revenue reached $6.9 billion in 2008, having grown strongly in recent years, with emerging markets contributing heavily," says Sythoff. "Today, apart from technological improvement and business-level innovation, the global mobile gaming market is also evolving fast on account of mobile adoption, and is expected to grow at a 16.6 percent CAGR during 2009 to 2014, reaching $18 billion in 2014," he adds. This growth will be the result of both continued strength in emerging markets and increased usage in developed markets.

"Although most in emerging markets cannot afford sophisticated devices, they are eager to experiment and use mobile data services; this is true for both mobile communications and entertainment, of which mobile videogames are a major driving force," explains Sythoff. "For many users, handsets are the first device they own that enables access to electronic forms of entertainment," he adds. "Declining handset and data access prices have been central to the increased use of data services in emerging economies; also, because devices such as PCs and gaming consoles are less common, the mobile phone has become the primary device for accessing content such as Websites and games," he says. "This, combined with improving economic conditions, is resulting in increased adoption of mobile content and data services."

The increased usage in developed markets will be fueled by the changes the iPhone App Store has brought to these markets, where it is stimulating competition and interest in mobile games.

Mobile Gaming in Emerging Markets: Five Year Forecast and Impact Analysis is part of the author’s report series. A blend of primary research and qualitative analysis, These reports offer comprehensive coverage of the fixed and mobile communications space and enable those in the communications industry to stay ahead of changing market dynamics.

- 1C Company
- Abragames
- AdAction
- Adidas
- Airtel India (Bharti Airtel)
- América Móvil
- Apple
- Bharti Airtel
- Brazil-US Business Council
- BSNL
- Cadbury
- Capcom
- Castrol
- CD Projekt
- Cell C
- China Mobile
- China Telecom
- China Unicom
- Chomikuj.pl
- City Interactive
- Claro Brasil
- Club Ringy
- Dynamic Pixels Software
- EA Games
- EA Mobile
- eBay
- Electronic Arts (EA)
- Era
- Esmas Móvil
- Etisalat
- Etisalat Nigeria
- eXactmobile
- F.biz
- First National Bank of South Africa
- Fishlabs
- Gadu-Gadu
- Gameloft
- gazeta.pl
- Glo Mobile
- Glocell
- Glu Mobile
- Greystripe
- Gry online
- Hands-On Mobile
- HandyGames
- HeroCraft
- Hoplon Infotainment
- Hungama
- IAB Brasil
- Idea Cellular
- i-Free
- Indiagames
- Infon (aka Zed Russia)
- Iricom
- JUUP
- KongZhong
- LG Electronics
- Maybelline
- MegaFon
- Merial
- Micel
- Microsoft
- Movicool
- Movilaction
- Movistar
- MTech Communications
- MTN Nigeria
- MTN South Africa
- MTNL
- MTS
- MXit
- nasza-klasa.pl
- Nikita Mobile
- Nintendo
- Nokia
- Odsiebie.com
- Oi
- Orange World
- Petrobras
- Play
- Playfon
- Playmobil
- PopCap
- Pringoo.com
- Procter & Gamble
- PTC (Polska Telefonia Cyfrowa)
- Reliance Communications
- Reliance Group
- Samsung
- Sega
- Shanda Interactive Entertainment
- Sony
- Sony Ericsson
- Standard Bank of South Africa
- Starfish Mobile
- Tata Teleservices
- Tectoy
- Telcel
- Telecom Media Sp
- Telefónica
- Tencent
- Terra Móvil
- THQ Wireless
- TIM
- TIM Brasil
- Torrenty.org
- Unilever
- VimpelCom
- Vodacom
- Vodafone Essar
- Zain Nigeria
- Zapak Digital Entertainment
- Zeemote
- Zouk Mobile