Global mobile gaming revenue set to reach $18.3bn in 2016
Mobile operators could take advantage of the growing mobile gaming market, including taking a share of revenues from in-game purchases, according to Juniper Research, which on Tuesday predicted that total mobile gaming revenues will reach $18.3 billion in 2016.
The analyst firm forecasts that in-game purchase revenues for smartphones alone are set to more than double to $4.8 billion in 2016 from $2.1 billion last year. In-game purchases could include a user paying for weapons or armour in a role-playing game, for example.
"Both Google and Apple take the same share from in-app purchases that they do from download revenues," Charlotte Miller, research analyst for Juniper Research, told Total Telecom. "For operators, it's more about creating their own app store to share in the revenue.
"Setting up an app store, much in the same way as Amazon has, offers great potential, providing that the operator gets the model right and attracts sufficient numbers of developers," she explained.
"There is no reason why the owner of a HTML5 app store couldn't also share revenues from in-app purchases."
Operators will need to make sure that they provide a service that distinguishes them from their competitors, Miller said. Amazon managed to attract developers by waiving the first year's fees, and gained customers through promotions like its Free App of the Day.
Working in partnership is beneficial to both operators and developers. While operators can gain additional revenue from in-game sales, developers want to have their application on more than one store as it gives them a wider audience.
Furthermore, operators can benefit from the download revenue itself. According to Juniper Research, smartphone downloads will account for 41% of total mobile gaming revenue in 2016.
Yet it is important for operators not to rely on download revenues alone, as an increasing number of developers take to offering 'freemium' products - where the initial download is free and instead is funded through advertising or in-game purchases.
"As the freemium model becomes more dominant and tablet games begin to gain traction in the market, what we will see is download revenues accounting for a smaller proportion of total end-user revenues," Miller said.
Indeed, others have picked up on the same trend across all types of mobile application.
In October Berg Insight predicted that app store downloads will reach 98 billion in 2015, but warned that revenues will not keep pace with download rates.
"App monetisation will be a challenge for developers", warned Johan Svanberg, senior analyst at Berg Insight, in a research note. "Free to download monetisation strategies such as in-app advertising and in-app purchasing will be increasingly important," he said.
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