As anyone who has been even remotely interested in it knows, video games are traditionally played on consoles after a short but memorable period in arcades.
Since the debut of the Atari (PONGF) 2600 in 1977, we have sat at home (and as children, on the floor, often our necks up in awkward positions) playing our games, watching the action go by on the television, mesmerized by the battle against an evil wizard or just hoping to make it to the next castle to save the princess.
While Milton Bradley (HAS) was the first to attempt to make this experience portable with the Microvision handheld in 1979, the first real success of a portable video game was Nintendo’s (NTDOF) . After the Gameboy was released in 1989 in Japan and a year later in the US, a new way to play games opened up – a way that we could play them on the go.
It’s funny to think that 33 years ago this chapter in video game history marked the beginning of today’s mobile market, but that’s exactly what happened. And today, the mobile gaming market is a $119 billion industry, expected to reach $338 billion by the year 2030.
Another interesting change is that a once console-dominated activity is quickly moving in a new direction. A joint May 2022 study by IDC and data.ic found that 60% of today’s gaming market is dominated by mobile gaming. Just as we once saw a shift from arcade to console, now another is taking place from console to mobile – and it could permanently change the way we play video games.
Activision’s shift to mobile with ‘Diablo Immortal’
Activision Blizzard (ATVIA) is old when it comes to making video games. Since 1993, when it was known as Blizzard Entertainment, the company has built its reputation through highly successful franchises for PC (and much later, for console) such as ‘Warcraft’, ‘Starcraft’ and ‘Diablo’.
Although Activision Blizzard had ported some of its previous games to mobile, it went all-in with its first-ever franchise title made exclusively for mobile in June 2022. The game, dubbed “Diablo Immortal”, and free-to-play, caused immediate controversy due to are microtransactions, which can lead players to spend more than six figures through a lottery system.
Under the tumult, however, people were playing – and spending. During its second quarter earnings call, Activision Blizzard announced that mobile contributed 51% of the company’s total revenue in the second quarter, amounting to $831 million. To be clear, much of that came from King’s “Candy Crush Saga”, ($684 million, to be exact). Activision Blizzard acquired King in 2016 for $5.9 billion.
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Compare these numbers to Activision Blizzard’s console revenue, which totaled $376 million, and it’s pretty easy to see where consumers are most willing to spend — on their phones.
What this means for the game industry
The writing on the wall here all points in one direction: mobile is the future for the video game industry. That doesn’t mean all games will go mobile and consoles will disappear, but with the advent of cloud-based streaming and subscription models, it’s quite possible that video game consoles could become a nostalgic memory in the next decade.
While other big players in the space like Microsoft (MSFT) Sony (SNEJF) and Tencent (TCEHY) Also making clear strides in mobile, Activision Blizzard’s financial results shed light on how critical it will be to make faster progress on that path.
Microsoft had huge success with “Minecraft”, which it acquired when it bought Mojang in 2014. It made $160.7 million for the company in 2021, which is great — but a faint shadow of what Activision Blizzard made in the second quarter alone.
Sony also announced a goal to bring 20% of its popular PlayStation games to mobile by 2025. While it only has a few mobile titles, such as its “God of War” spin-off, which it published in 2007, it may have gone the furthest along this road to pursue all it has to offer.
But of all the game companies out there, Tencent has the least concerns when it comes to mobile. Not only does it make more money than all of the above publishers, but the “Honor of Kings” mobile title is the highest-grossing mobile game of all time, generating $13 billion in revenue since its 2015 release in China. Thanks to its success, an international version is in the works and will be released before the end of the year.
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