Riding Out the Storm: Key Takeaways from the Mobile Gaming Market's Downturn

The gaming industry was long considered a recession-proof sector, with the videogames market experiencing growth over the past 30 years, including during the 2007-2008 financial crisis. However, 2022 marked a turning point, with the global video game industry declining by 5% to $193 billion, according to data.ai. The mobile gaming segment, which accounts for over half of the market, was hit particularly hard, with a 7% decline. In contrast, console and PC games saw decreases of 3.4% and 1%, respectively. So, what went wrong in a market that had been thriving for over a decade? To understand this, we need to examine the factors that contributed to the decline. Over the past decade, the mobile sector has driven the growth of the video game industry. However, 2022 saw a pause in this rapid expansion. Several factors affected the market's decline, including changes in player spending behavior, increased competition from short video services and streaming platforms, the long-term impact of Apple's IDFA depreciation, and rising competition within genres. These challenges have affected not only small and medium-sized studios but also large players, making it difficult to launch new games in the current market environment. To better understand the situation, we analyzed the evolution of mobile market trends on a subgenre basis, using data from data.ai. The results show that while some genres, such as RPG, Strategy, and Match, experienced significant declines, others, like Action and Party games, saw growth. The global mobile gaming market's decline was driven primarily by the Western region, which accounted for $25 billion in revenue and saw a 12% drop in 2022. In contrast, emerging markets saw a 5% increase in mobile gaming revenue, with Party and Match games being the key drivers of growth. Looking ahead to 2023, the market appears to have reached a plateau, with Newzoo predicting a 0.8% increase in the mobile gaming market. However, our analysis suggests that the market declined by 1% in the first half of 2023, with the Party and Match genres being the only bright spots. The investment environment in the gaming industry has also become more cautious, with investors raising their expectations for companies and projects. The volume of late-stage and M&A transactions decreased in early 2023, as investors found it challenging to further monetize their investments in a turbulent market. Nevertheless, recent deals, such as Savvy Games Group's acquisition of Scopely and Sega's acquisition of Rovio, suggest that the M&A market may be reviving. In conclusion, 2022 marked a new chapter in the history of the mobile gaming industry, bringing challenges but also opportunities. To succeed, developers must focus on creating fun and engaging gameplay experiences that keep players coming back.