Navigating the Challenges: Key Takeaways from the Mobile Market Downturn

The gaming industry, once considered immune to economic fluctuations, faced a significant downturn in 2022. According to data.ai, the global video game market decreased by 5% in 2022, with the mobile segment being the hardest hit, declining by almost 7%. This decline can be attributed to several factors, including changes in player spending habits, increased competition from short video services and streaming platforms, and the long-term effects of Apple's IDFA depreciation. The mobile market's decline had a ripple effect on the entire gaming industry, with small and medium-sized studios, as well as large players, struggling to adapt to the new landscape. To better understand the impact of the decline, we analyzed the evolution of mobile market trends on a subgenre basis, using data.ai taxonomy. Our analysis revealed that RPG, Strategy, and Match genres, which accounted for more than half of the market, all experienced significant declines. However, some genres, such as Action and Party, showed positive growth, with the revenue of Action games increasing by 21% thanks to the strengthening of MOBAs. The Western markets, which accounted for 44% of the global industry, experienced a 12% drop in revenue, while the emerging markets showed more positive dynamics, with a 5% increase in mobile gaming revenue. China, a significant player in the global mobile gaming market, saw a 19% increase in in-app revenue on iOS. Looking ahead to 2023, the market is expected to reach a plateau, with a predicted 0.8% growth, according to Newzoo. However, our model, based on data.ai data, indicates a 1% decline in the first half of 2023 compared to the same period in 2022. Despite the challenges, there are opportunities for growth, particularly in the Party and Match genres, which continue to show positive dynamics. The investment environment in the gaming industry has also undergone significant changes, with investors becoming more cautious and conservative. The volume of late-stage transactions and M&A deals has decreased, but the examples of Scopely and Rovio deals suggest that the market may be on the verge of revival. In conclusion, the mobile gaming industry has faced significant challenges in 2022, but by learning from the past and adapting to the new landscape, developers can create even better games and drive growth in the industry. The foundation of a successful product remains a fun gameplay and an exciting gaming experience that keeps players engaged.