1) The global mobile market is huge, but there remains room for growth
In the past decade, mobile software has grown enormously. The sector has gone from a niche opportunity open to a small number of users to arguably the dominant way for consumers to interact with the world around them.
So it’s no surprise to see Newzoo’s research reflect the enormity of the mobile market opportunity. Mobile apps and games now generate $92.1bn in revenues each year, with each sector powered on by the habits of over three billion users across the world.
However, while this is clearly a significant market already, Newzoo’s research indicates that the market is only likely to grow bigger. For example, only 27.1% of smartphone users are using a high-end device – suggesting room for revenue growth in the existing market.
And the overall size of the smartphone user base is still set to grow further, with Newzoo forecasting that nearly four billion people will be using smart devices by 2021. This suggests there is real room for further growth in the sector, something which should cause optimism across the market.
2) Apple and Samsung rule the roost, but Chinese handsets are on the up
Samsung and Apple remain the dominant players in the global smartphone market. The two companies take up 26.8% and 24% of overall market share respectively, meaning that roughly 1.6bn people use these companies devices worldwide.
However, their hegemony is being challenged on multiple fronts by a number of Chinese manufacturers. According to Newzoo, five of the top ten smartphone brands are now Chinese (Xioami, Oppo, Vivo, Huawei and Lenovo) and they take a combined market share of 34%.
It is, of course, unlikely that any single brand will overtake Samsung or Apple in the immediate future. But with many of the insurgent brands targeting growth markets like India and China with affordable high-end devices, the overall market share for Chinese made handsets is only likely to increase further in the coming years.
3) Tencent shows how important China is to iOS app and game success
While iOS may have emerged from the West, its biggest software superpower is the largest tech company in China.
Tencent dominates proceedings on iOS in a number of categories. It has a well-established lead in mobile gaming revenues, with the company generating $2bn in revenues in the first half of 2018 worldwide (even with Supercell – one of its biggest purchases – having its revenue excluded from the figure).
But Tencent also has remarkable joy in the iOS app market too. Despite having to contend with heavyweight global app superpowers like Tinder, Google, Netflix and HBO, the power of Tencent’s WeChat platform in China – and the role it plays in connecting Chinese consumers to the country’s digital economy – secured the company the spot as the top grossing app company in half one of 2018.
Interestingly, the company doesn’t have any footprint in the top ten grossing charts for Google Play in either the gaming or app spaces. The obvious reason for this is that Google Play has no meaningful presence in China, meaning that Tencent’s Android revenues come from alternate internal sources.
But this also throws into contrast how much revenue Tencent is able to generate in China through iOS alone. This shows how important the Chinese market is in the overall global app and mobile gaming economy, making it a priority for future growth opportunities.
4) Mobile and PC gaming get closer together
Finally, companies should expect mobile and PC gaming to come closer together as a result of two important global trends identified by Newzoo.
The emergence of a new generation of gaming smartphones from the likes of Razer and the rise of competitive gaming on mobile, facilitated by services like Amazon GameOn, has changed the tastes of hardcore mobile gamers.
Rather than settling for simpler looking games with finely tuned core loops, the most popular mobile games now bear strong resemblances to the most popular titles on PC.
In China, Honor of Kings (Arena of Valor in the West) is the top-grossing mobile game in the country and is a MOBA – a genre normally associated with PC’s wildly popular League of Legends and DOTA2.
In Europe and North America, the release of Fortnite on mobile devices with the option of cross-play across platforms has reduced the barrier between devices.
And recent ports of PC strategy titles like Rome: Total War, Football Manager Touch and Prison Architect have shown how mobile devices have both the correct inputs and correct hardware requirements to run processor intensive titles.
This suggests that there are more opportunities emerging in the mobile market for PC game developers (and potentially vice versa) over the next four years.