Richard Firminger, managing director of EMEA territories at metrics firm Flurry Analytics, told a GDC Europe audience today that revenue that is coming from the iOS and Android is killing off the handheld video game market, where dedicated portable game systems like Nintendo's 3DS and Sony's PlayStation Vita currently compete.
Firminger said that the share of revenue for iOS and Android games in the overall U.S. handheld and mobile game market has grown from 19 percent of a $2.7 billion market in 2009 to 58 percent of a $3.3 billion market in 2011.
"It's really sort the biggest content revolution that we've ever seen. It's exciting and it shows that indies can kill a very, very established market."
However, Firminger warned that, in order to tap into its incredible potential, developers had to "stop building the future of their businesses on hunches, or who speaks loudest around the table when you're discussing the next big project."
He observed that app downloads, regardless of how valuable they may be, do not mean that developers have won a new, paying customer. "It's just the first in a very long process to get people to open and play your game," he said.
"The retention rate is really depressing." Firminger said. "In general, after 12 months, most developers would have lost 96 percent of their audience."
Given the circumstances, an understanding of the target demographic is vital. Firminger explained issues like male and female spending habits ("Women are thrifty. Men binge.") and how "generation X pays while generation Y plays." According to Firminger, these are elements that should be taken into consideration when pursuing a new project.
"What's the expected male/female age distribution for your game? Where are you heading and who are you designing the game for? Are you designing for middle-aged men or are you designing for teenagers? What's the DAU you're supposed to expect if you're going to compete and you're going to compete effectively in this genre? What sort of revenue might you get back in terms of monetization from in-app purchases and advertising?
"'Build them and they will come' no longer applies here. Having significant marketing is an advantage and it's not the only thing you should be doing but it should be part of your consideration if you're taking this challenge by the horns," he said.
Gamasutra is in Cologne, Germany this week covering GDC Europe. For more GDC Europe coverage, visit our official event page. (UBM TechWeb is parent to both Gamasutra and GDC events.)
So, an analyst is telling developers that they need to hire an analyst to analyze their audiences? Sigh.
I'm actually becoming quite concerned about the continuing need for analysts and pundits to use death-related words to describe the dedicated-handheld market. Kill, death, doom... Honest economists would talk about changes in a market, not utter destruction. It would be as if I was describing the death of the analyst market and the death of video game forums because so many analysts and pundits were inaccurate in the previous console game generation and so many were inaccurate about the iOS market's success. They should be less absolute in their analyses.
How's this for analysis? From their own numbers, the market has grown 19% in two years, and the iOS/Android market has grown 39%. That's an increase from $513m to $1.9m. That means the dedicated-handheld market has gone from $2.18m to $1.38m, so the dedicated-handheld market has lost 36.6% over those two years. Is that a death? Sounds like a big dip, but not a death, and it doesn't include the increase in income due to the 3DS/Vita releases. Markets have survived much larger drops in the long-term. Markets change and adjust.
I think there is some confusion about the handheld & mobile markets. They are two different markets with two completely different sales models. The target audience has some overlap, but they are not really the same things. It's like motorcycle and bicycle purchasers. Whether bicyclists can be converted to motorcyclists remains to be seen. There is a trend towards that, but the predictions of the appstore becoming the games market are not entirely accurate. Some analysts pointed to that data and said based on the trajectory of the current data the trend appears to be X... others announced the death of everything as we know it.
Everything from "However" on down is good information, the rest seems pretty speculative. IMO
Don't have a handheld computer or a handheld computer with calling/texting, but I assume the Nintendo/Sony handhelds can get on the Internet? Have some calling/texting programs? And also don't require the two year contract...
Don't know about developing for these platforms, but Microsoft's Windows Phone 7/8 with XNA seems really easy and cheap
@Tyler I own a WP7 but I can't buy apps because Rogers Wireless wont let me pay for them via my bill and wants me to use a credit card which I don't have nor do I want such a thing.
A generation of my friends - wasted in the city. Friends were apologising to me for selling out by joining the ranks of the financial analysts. A friend of mine in the financial sector was explaining to me that his group was scooping up all the engineers and scientists who had just been made redundant by the recession his business had created. What a circular waste of human life.
Predicting the future is about two things - what's obvious and what's non-obvious. The analysts are never right at the non-obvious predictions making them redundant, and the obvious things are obvious, making them redundant. As it stands, analysts are usually poor at predicting even obvious things, or even quantifying the present state of the market.
In the game sector, for several years you could accurately predict the trends of the industry by taking the prevailing analyst view and inverting it. Wrong isn't the opposite of right, because there're many ways to be wrong, but only one way to be 'anti-right'. That's an incredible property to possess.
The Economist (iirc) had an article recently with some numbers that showed that the more an analyst was quoted in the media, the less accurate their predictions.
So the guys you want to listen to are the guys who don't talk to the media.
Funny to read this analysis from Flurry again and again without any mention, that this company, that predicts the rise of iOS and Android gaming and the death of Nintendo's and Sony's handheld gaming for years now is in fact selling app analytics for iOS, Android, Windows Phone, HTML5, BlackBerry and JavaME to developers.
They pretent to do analysis, but when talking about Nintendo and Sony and their handheld business, they are talking about competitors, nothing else, this is no analysis, it's PR.
I sure as hell won't stop playing my Vita just for some shallow smartphone games with terrible control input options. Swipe, tap and pinch/pull paired with gyroscopes will never replace all of that PLUS physical controls. The last dedicated handheld game system to have controls as simplistic as a modern smartphone was the Gameboy Advance(though you could debate Gameboy Color, honestly), but it's been over a decade since the Gameboy Advance released and we've had handhelds with analog control since 2005, we're already onto dual-analog portable gaming paired with all the inputs a smartphone can provide.
Plants vs Zombies and Angry Birds will never be sufficient, worst-case-scenario is that I'd have to stick to older games to get my fix while the general public stupidly embraces shallow, soulless casual games. I just don't see that happening, hardcore gamers haven't gone anywhere and even many casuals(like my parents) think it's absurd to think of swipe-to-win games replacing games like Uncharted, Zelda and Deus Ex.
The Flurry guy who made those statements has an agenda, of course he's going to talk down on the competition and act as if his chosen section of the market is the only one with a valid future. It's the exact same way with the statements that Nvidia representative made about their cloud gaming initiative, something about console and PC gaming dying out to cloud gaming in the future. It's speculative, and if you ever tell that to a group of hardcore gamers you'd be laughed out of the room or beat up for lying/trying to ruin the greatest entertainment industry in the world. The fact that there's so much resistance to change like this is proof enough that it won't murder any sector of the market, it's just wishful thinking from some guy who desperately wants it to be true.
I'm actually becoming quite concerned about the continuing need for analysts and pundits to use death-related words to describe the dedicated-handheld market. Kill, death, doom... Honest economists would talk about changes in a market, not utter destruction. It would be as if I was describing the death of the analyst market and the death of video game forums because so many analysts and pundits were inaccurate in the previous console game generation and so many were inaccurate about the iOS market's success. They should be less absolute in their analyses.
How's this for analysis? From their own numbers, the market has grown 19% in two years, and the iOS/Android market has grown 39%. That's an increase from $513m to $1.9m. That means the dedicated-handheld market has gone from $2.18m to $1.38m, so the dedicated-handheld market has lost 36.6% over those two years. Is that a death? Sounds like a big dip, but not a death, and it doesn't include the increase in income due to the 3DS/Vita releases. Markets have survived much larger drops in the long-term. Markets change and adjust.
Everything from "However" on down is good information, the rest seems pretty speculative. IMO
Don't know about developing for these platforms, but Microsoft's Windows Phone 7/8 with XNA seems really easy and cheap
Predicting the future is about two things - what's obvious and what's non-obvious. The analysts are never right at the non-obvious predictions making them redundant, and the obvious things are obvious, making them redundant. As it stands, analysts are usually poor at predicting even obvious things, or even quantifying the present state of the market.
In the game sector, for several years you could accurately predict the trends of the industry by taking the prevailing analyst view and inverting it. Wrong isn't the opposite of right, because there're many ways to be wrong, but only one way to be 'anti-right'. That's an incredible property to possess.
So the guys you want to listen to are the guys who don't talk to the media.
They pretent to do analysis, but when talking about Nintendo and Sony and their handheld business, they are talking about competitors, nothing else, this is no analysis, it's PR.
Plants vs Zombies and Angry Birds will never be sufficient, worst-case-scenario is that I'd have to stick to older games to get my fix while the general public stupidly embraces shallow, soulless casual games. I just don't see that happening, hardcore gamers haven't gone anywhere and even many casuals(like my parents) think it's absurd to think of swipe-to-win games replacing games like Uncharted, Zelda and Deus Ex.
The Flurry guy who made those statements has an agenda, of course he's going to talk down on the competition and act as if his chosen section of the market is the only one with a valid future. It's the exact same way with the statements that Nvidia representative made about their cloud gaming initiative, something about console and PC gaming dying out to cloud gaming in the future. It's speculative, and if you ever tell that to a group of hardcore gamers you'd be laughed out of the room or beat up for lying/trying to ruin the greatest entertainment industry in the world. The fact that there's so much resistance to change like this is proof enough that it won't murder any sector of the market, it's just wishful thinking from some guy who desperately wants it to be true.