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Globally, digital gaming now represents 27% of video games sales in 2013, with mobile gaming being one of the most dynamic categories within digital gaming, growing by 10% in value terms. Japan is the largest mobile gaming market globally at US$1.1 billion, making up 20% of the global mobile games category. However, growth is forecast to plateau in Japan for mobile gaming, allowing the US to overtake in 2015. This is primarily because Japan’s social media players have helped facilitate the growth of free-to-play games proportionally more, impacting the growth of mobile games in a negative way over the forecast period.
Free-to-play games has played a significant role in the growth of mobile games through social media in Japan, mainly due to a new app called LINE. LINE, originally a platform for free instant messages on smart phones and PCs, focuses its games on convenience and competition amongst users in their friends’ list. With 50 million members in Japan alone, LINE is likely to continue to be the leader in free-to-play games, as more third party developers, such as Konami Corp and Capcom Co Ltd, are co-developing mobile games connected to the LINE app. Third party developers can tap into an abundance of users, who can enjoy well-known branded games for free, such as LINE POP and LINE Bubble, whilst LINE can benefit from more mobile games available, helping to retain users and increase a growing, untapped consumer base.
In the US, the performance of mobile gaming was reasonable in 2013, with 6% growth. However, this is in sharp contrast to the phenomenal growth that took place in 2011 and 2012, at 50% and 30%, respectively. This slowdown could be attributed to the fact that most games made revenue from a free-to-play model or a partial free-to-play model. The biggest free-to-play game is Candy Crush Saga. In the paid world, Angry Birds remains popular, but Minecraft, Plague Inc., and Temple Run had fairly good years as well, suggesting that there is room for both pay-to-play and free-to-play games to co-exist in the US market.
Mobile gaming in Japan is forecast to post more or less static growth. Most growth is expected to come from free-to-play gaming taking place on the dominant LINE social media platform. The high number of users on LINE mixed with well-established gaming partners is driving growth here, at the expense of pay-to-play games in Japan. The US, however, does not currently use the social media platform model to drive free-to-play games to the same extent as in Japan. Therefore, there is no additional restraint on the US mobile gaming category, which is expected to result in it overtaking Japan in 2015. Although growth in mobile games is still conservative in comparison to a number of other countries, and the free-to-play model is significant in the US, both pay-to-play and free-to-play games seem to have significant room to grow over the forecast period.