Mobile games taking big bites out of Nintendo, Sony's handheld biz

Richard Firminger, managing director of EMEA territories at metrics firm Flurry Analytics, told a GDC Europe audience today that revenue that is coming from the iOS and Android is killing off the handheld video game market, where dedicated portable game systems like Nintendo's 3DS and Sony's PlayStation Vita currently compete. Firminger said that the share of revenue for iOS and Android games in the overall U.S. handheld and mobile game market has grown from 19 percent of a $2.7 billion market in 2009 to 58 percent of a $3.3 billion market in 2011. "It's really sort the biggest content revolution that we've ever seen. It's exciting and it shows that indies can kill a very, very established market." However, Firminger warned that, in order to tap into its incredible potential, developers had to "stop building the future of their businesses on hunches, or who speaks loudest around the table when you're discussing the next big project." He observed that app downloads, regardless of how valuable they may be, do not mean that developers have won a new, paying customer. "It's just the first in a very long process to get people to open and play your game," he said. "The retention rate is really depressing." Firminger said. "In general, after 12 months, most developers would have lost 96 percent of their audience." Given the circumstances, an understanding of the target demographic is vital. Firminger explained issues like male and female spending habits ("Women are thrifty. Men binge.") and how "generation X pays while generation Y plays." According to Firminger, these are elements that should be taken into consideration when pursuing a new project. "What's the expected male/female age distribution for your game? Where are you heading and who are you designing the game for? Are you designing for middle-aged men or are you designing for teenagers? What's the DAU you're supposed to expect if you're going to compete and you're going to compete effectively in this genre? What sort of revenue might you get back in terms of monetization from in-app purchases and advertising? "'Build them and they will come' no longer applies here. Having significant marketing is an advantage and it's not the only thing you should be doing but it should be part of your consideration if you're taking this challenge by the horns," he said. Gamasutra is in Cologne, Germany this week covering GDC Europe. For more GDC Europe coverage, visit our official event page. (UBM TechWeb is parent to both Gamasutra and GDC events.)