In recent years DFC Intelligence has focused on segmenting the diverse base of game consumer types. The most important trend that is emerging in the game market is the growth of consumers that play on multiple platforms. For example, almost all console players also play on PC to some extent. Increasingly both console and PC gamers are playing on mobile devices.
DFC Intelligence has great news for the video games industry. For the second time this year, they have significantly raised their five year forecast. They now expect game software revenue to increase from $64 billion in 2014 to $100 billion in 2018. This includes only the revenue coming from PC games, mobile games, and console games, and does not include purchases of game devices.
The market is growing on all fronts, according to DFC analyst David Cole, with new console systems doing well, but much of the anticipated growth coming from mobile platforms and BRIC countries. He says, “The game market in 2018 is likely to be split fairly evenly between console, PC, and mobile platforms.”
The mobile games market in particular is expected to soar from $10 billion in 2013 to $29 billion in 2018; 30 percent of total games software revenue. But this market remains both fragmented and overcrowded, even as it continues to grow. DFC analyst Jeremy Miller says, “Companies need to be very cautious about their platform strategy and understand which markets and platforms are best suited to their product.”
DFC intelligence takes a closer look at the freemium mobile game business as part of a more detailed report on business models, using actual usage data to offer revenue business models for the different game genres. The report is part of DFC’s custom game forecasting service, which gives clients the ability to build game revenue forecasts across multiple platforms to an individual country or region level.
They have changed their forecast for the console market considerably, raising it for Sony’s Playstation 4 and Nintendo Wii U and lowering it for the Microsoft Xbox One. Cole believes the main challenge for console systems is expanding beyond the core market. He says, “The Xbox One should carve out a solid share among dedicated action gamers, but due to some questionable business decisions, Microsoft’s broader entertainment strategy is in disarray despite the release of the new Kinect-less SKU.” They expect Playstation 4 to be the market leader in games systems for the next few years, but Cole questions whether Sony can continue to build on initial PS4 sales to reach an installed base similar to what they did with Playstation 2.
DFC Intelligence now is tracking hardware and software spending separately. Later this year, they will be releasing a new hardware forecasting service. Cole notes, “Core gamer spending on high-end PCs, dedicated game devices and accessories is starting to soar. When you add in mobile devices, the impact of the gaming consumer on total hardware spending is huge.” He expects this spending to impact all major players in the consumer electronics space.
These forecasts are part of DFC Intelligence’s Worldwide Marketing Forecasts for the Video Game and Interactive Entertainment Industry Service. The service offers a complete look at the overall market while providing information by region, country, platform, business model, genre and other dimensions. With individual reports and online analysis tools, the service can be customized to each client.
DFC Intelligence is a strategic market research and consulting firm. Their focus is on interactive entertainment and video game, online game, interactive entertainment and portable game markets.
Involved in the entertainment industry since 1993, DFC Intelligence researches the digital entertainment markets and provides an analysis of issues and trends in many different parts of the world. They also provide data and consulting services to many companies in the global digital entertainment business. They share some of their thoughts and findings on their recent brief on Candy Crush Saga and mobile games.
On May 7, King announced results for the first quarter of 2014. These results were quite strong, even if investors may not have been ecstatic. With Candy Crush Saga, King has shown that casual games can not only generate huge amounts of revenue, but also that they can have long legs, which is clearly the holy grail of the game industry.
Earlier this month, DFC Intelligence published a brief entitled “Candy Crush Saga and What it Means for Mobile Games“. That brief took a detailed look at Candy Crush Saga and how King built it into a mega-hit, including an overview of how King’s extensive knowledge of casual games and experience with delivering social games set them in a position to have one of the biggest success stories in game industry history.
This article looks specifically at how Candy Crush Saga and King performed in the first quarter of 2014. The focus is on mobile revenue and usage, where King has seen the most rapid growth. We have done our best to let the numbers speak for themselves, but as an editorial comment, we note that Candy Crush Saga has had very long legs, even if it does show signs of slowing.
For the first quarter of 2014, Candy Crush Saga had gross bookings of $430 million, which was down about 13 percent from the fourth quarter of 2014, where gross bookings were $493 million. Investors clearly don’t like to see declines, but these numbers remain staggering for a casual game that is two years old. Overall, it is a great sign for the casual game industry. It shows that when a company has a hit, they can have a nice period of time to deliver a second act.
Going forward, the Candy Crush Saga numbers look very positive for any sequels and spin-offs King may look to release. There is also potential upside as Candy Crush Saga has now gone into China via a partnership with Tencent. Of course, very few, if any, casual games will be the next Candy Crush Saga. Nevertheless, there are many lessons that can be learned from King. At the very least, it is a clear message that successful casual games have greater distribution and revenue potential than ever, and most importantly, they can generate revenue for quite a long time.
Candy Crush Saga Monthly Mobile Downloads 2013-2014
Candy Crush Saga is an interesting case, because it built an active user base over time, even though a large portion of downloads were in the first part of the year. According to Priori Data, Candy Crush Saga was downloaded 268 million times during 2013. Nearly 60 percent of those downloads occurred in the first half of the year. However, it is clear that downloads have leveled off versus plummeting, which is good news for a game that wants to have longevity
Candy Crush Saga Monthly Active Mobile Users 2013-2014
The Monthly Active User (MAU) base for Candy Crush Saga remained remarkably steady from June 2013 onward, even as downloads started to decline significantly. What this means is that users continued to play the game and there were probably even a great deal of lapsed users that came back.
Candy Crush Saga Monthly Mobile User Churn 2013-2014
Mobile User Churn is a measurement of how many users were lost month over month. The lower the number, the better. It is clear that after starting with a high churn, Candy Crush Saga had low churn while adding users. DFC attributes this to the social network snowball effect that helped keep users engaged.
King Revenue by Platform: 2012-2014
In the first quarter of 2014, gross bookings for King were fairly flat versus the previous quarter. Bookings on mobile were up, while web/Facebook bookings were down slightly. Candy Crush Saga revenue was down 13 percent, but it was replaced by growth in Farm Heroes Saga.
King Monthly Active Users and Monthly Unique Users: 2012-2013
Monthly Active Users (MAU) is the number of people that played a specific game within a given month. With MAU, there will be double counting of users that play multiple games. Monthly Unique Users (MUU) is the number of people that played any game within a given month. This eliminates the double counting. Because Candy Crush Saga was the dominate game for King, MUU was incredibly high.
King DAU by Game
King Monthly Unique Payers: 2012-2013
Monthly Unique Payers (MUP) is the number of people that purchased an item from one of King’s games in a given month. Clearly the number of MUP is on a downward trend, but it remains very high.
In order to receive a complimentary copy of the brief “Candy Crush Saga and What it Means for Mobile Games” from DFC Intelligence, click here.
