The mobile technology revolution has resulted in a robust and expanding worldwide gaming market. From a payments perspective, people get hooked on playing mobile games for free, then start to spend a little money to enhance their gaming experiences. The "freemium" model has thus grown with the penetration of mobile phones in the global marketplace.
New York-based game sector researcher SuperData Research Inc., in collaboration with mobile data analyst TakingData, issued a report that said the mobile gaming market in China will shortly overtake the U.S. market. The researchers said Chinese gamers are on track to spend about $3 billion on mobile games in 2014, while the corresponding U.S. market may have plateaued at $3.2 billion.
According to the Digital Games Market Brief: United States & China, the average revenue per paying customer (ARPPU) in China has grown by 21 percent since 2013 and stands at $32.46, while the ARPPU in the United States is $21.60, up 11 percent in the same time frame.
In China, the conversion rate of turning Chinese free-to-play gamers into in-game payers rests at 2.9 percent, representing 20 percent growth since 2013, the report said. But the U.S. conversion rate of 5 percent is down by 4 percent from 2013, SuperData added, which provides evidence that the U.S. mobile gaming market may have reached saturation.
SuperData noted that Chinese game developers have substantially increased their marketing budgets. In comparing January 2013 marketing costs to January 2014 numbers, marketing costs have more than doubled. Meanwhile, in the U.S. market the cost per install – the amount of money it takes per user for game developers to get users to download and install their gaming apps – has grown by 36 percent since 2013, according to SuperData.
"Developers in both markets will need to focus on researching effective monetization mechanics and their most lucrative audiences in order to conquer an increasingly competitive and ubiquitously free-to-play market," SuperData said.
Additionally, SuperData noted that Chinese and American mobile gamers are more comfortable today in making in-game payments because mobile carriers, third-party payment providers and operators of app stores have increased payment safeguards.
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