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Mobile Gaming - US - June 2012

Between 2006 and 2011, revenue from mobile phone and tablet games increased 95% to reach $990 million and it could hit $2.6 billion by 2016. Growth is driven by dramatic sales (not yet peaked) of smartphones and tablets, the creation of games like Angry Birds or Draw Something that people want to play, and a risk-free, free-to-play business model. Today, the majority of revenue is generated by a small percentage of consumers who make in-game transactions.

As well as exploring the underlying drivers of growth for this market (e.g., smartphone penetration, app downloads), this report evaluates the free-to-play and other revenue models, and the way in which leading players are driving change through innovation and marketing/advertising strategies.

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Table of contents

  1. Scope and Themes

      • Definition
        • Data sources
          • Sales data
            • Consumer survey data
              • Abbreviations and terms
                • Terms
                • Executive Summary

                    • The market
                      • Go, go, go
                        • Figure 1: Fan chart forecast of total U.S. retail sales of mobile games, 2006-16
                      • Market factors
                        • Consumers are flocking to smartphones and tablets
                          • Figure 2: U.S. tablet sales to dealers, 2010-16
                        • Billions of apps are being downloaded each month
                          • Significant competition for gamers’ leisure time
                            • Making money from “free” games
                              • Figure 3: Number of free or paid games downloaded to mobile device in the past month, February 2012
                            • Independent standouts and a few gaming behemoths
                              • The consumer
                                • PC & consoles still rule but mobile devices make inroads
                                  • Figure 4: Primary gaming device in the home, by age, February 2012
                                • Most adults played a game in the past week on a mobile device
                                  • Figure 5: Number of game titles played—mobile phone or tablet, by gender, February 2012
                                • Tablet owners more likely to download a game than phone owners
                                  • Young adults driving revenue
                                    • Figure 6: Mobile game purchase behavior—mobile phones and/or tablets, by age, February 2012
                                  • The networking effect
                                    • Men aged 18-34 most critical target market
                                      • What we think
                                      • Issues in the Market

                                          • Is consolidation inevitable?
                                            • Will licensing become de rigueur?
                                              • Are mobile gamers social?
                                                • Where is HTML 5.0?
                                                • Insights and Opportunities

                                                  • Advertise…it pays
                                                    • Partner with OEMs/retailers of mobile devices
                                                      • Encourage recommendations
                                                        • Target consumers who use smartphones/tablets as their main gaming device
                                                          • Figure 7: Primary gaming device in the home, by age, February 2012
                                                      • Inspire Insights

                                                          • Inspire Trend: Sense of the Intense
                                                            • Inspire Trend: Click and Connect
                                                            • Market Size and Forecast

                                                              • Key points
                                                                • Hypergrowth continues
                                                                  • Mobile gaming is a bargain
                                                                    • Figure 8: Total U.S. sales of mobile games at current prices, 2006-16
                                                                    • Figure 9: Total sales and forecast of mobile games at inflation-adjusted prices, 2006-16
                                                                  • Fan chart forecast
                                                                      • Figure 10: Fan chart forecast of total U.S. retail sales of mobile games, 2006-16
                                                                  • Market Drivers

                                                                    • Key points
                                                                      • Smartphone sales
                                                                        • Figure 11: U.S. smartphone* sales to dealers, 2006-12
                                                                      • Tablet sales
                                                                        • Figure 12: U.S. tablet sales to dealers, 2010-16
                                                                      • App stores/downloads
                                                                        • Figure 13: App downloads per month, Android Market and App Store, Jan. 2010-Oct. 2011
                                                                      • Game play
                                                                      • Competitive Context

                                                                        • Key points
                                                                          • Lots of content/activity choices on a phone or tablet
                                                                            • Figure 14: Selected mobile activities in U.S., by share of total mobile audience, Dec 2011
                                                                          • Competition with other gaming platforms
                                                                            • Figure 15: U.S. video game end user spending, by segment, 2010 and 2012
                                                                          • Frequency of play on different platforms
                                                                            • Figure 16: Incidence of gameplay, by platform, July 2011
                                                                          • Competition for time
                                                                            • Figure 17: Average hours spent per day in leisure and sports activities, all adults aged 15+, 2010
                                                                        • Market Segmentation

                                                                            • Operating Systems: Android and iOS dominate
                                                                              • Smartphone OS Market Share
                                                                                • Figure 18: Worldwide smartphone operating system market share, Q1 2012
                                                                              • Tablet OS Market Share
                                                                                • Figure 19: Worldwide tablet operating system market share, Q4 2011
                                                                              • Revenue models: In-app purchases lead the way
                                                                              • Leading Players

                                                                                • Key points
                                                                                  • App stores
                                                                                    • Mobile games primarily distributed by app stores
                                                                                      • App Store
                                                                                        • Amazon Appstore
                                                                                          • Google Play
                                                                                            • Game developers
                                                                                              • Rovio’s Angry Birds still rules
                                                                                                • Life is short and standing out is tough
                                                                                                  • Figure 20: PocketGamer.Biz Top 10 Game Developers 2012
                                                                                              • Innovations and Innovators

                                                                                                • Burn calories, save the world
                                                                                                  • Team spirit
                                                                                                    • Educational notes
                                                                                                      • Just in time
                                                                                                        • Simply engaging
                                                                                                        • Marketing Strategies

                                                                                                          • Key points
                                                                                                            • Overview
                                                                                                              • Figure 21: The app discovery process, February 2012
                                                                                                            • Social media
                                                                                                              • Figure 22: Selected mobile game companies, by number of friends, fans/followers on Facebook and Twitter
                                                                                                            • App stores
                                                                                                              • Mobile gaming sites
                                                                                                              • Primary Gaming Device in the Home

                                                                                                                • Key points
                                                                                                                  • PCs and consoles lead the way at home
                                                                                                                    • Figure 23: Primary gaming device in the home, by gender, February 2012
                                                                                                                  • Main gaming device at home varies based on age
                                                                                                                    • Figure 24: Primary gaming device in the home, by age, February 2012
                                                                                                                  • Income not a strong predictor of home gaming choice
                                                                                                                    • Figure 25: Primary gaming device in the home, by household income, February 2012
                                                                                                                • Number of Game Titles Played

                                                                                                                  • Key points
                                                                                                                    • Six in 10 adults played a game in the past week on a phone or tablet
                                                                                                                      • Figure 26: Number of game titles played in past week—mobile phone vs. tablet, February 2012
                                                                                                                    • Men play more titles on a phone than women
                                                                                                                      • Figure 27: Number of game titles played—mobile phone or tablet, by gender, February 2012
                                                                                                                    • Phone game play correlates with age
                                                                                                                      • Figure 28: Number of game titles played—mobile phone or tablet, by age, February 2012
                                                                                                                    • Wealthiest adults likeliest to play a game title in the past week
                                                                                                                      • Figure 29: Number of game titles played—mobile phone or tablet, by household income, February 2012
                                                                                                                  • Game Download Behavior

                                                                                                                    • Key points
                                                                                                                      • Free vs. paid
                                                                                                                        • Free game downloads trounce paid
                                                                                                                          • Tablet owners more likely to download a game than phone owners
                                                                                                                            • Figure 30: Number of free or paid games downloaded to mobile device in the past month, February 2012
                                                                                                                          • Free downloads
                                                                                                                            • Most adults aged 45+ did not download a free game in the past month
                                                                                                                              • Figure 31: Number of free games downloaded to phone and/or tablet in the past month, by age, February 2012
                                                                                                                            • Low-income households more likely to download 10+ free games
                                                                                                                              • Figure 32: Number of free games downloaded to phone and/or tablet in the past month, by household income, February 2012
                                                                                                                            • Paid downloads
                                                                                                                              • Men more likely to download six or more paid games in a month
                                                                                                                                • Figure 33: Number of paid games downloaded to mobile device in the past month, by gender, February 2012
                                                                                                                              • Paid game downloads purview of younger adults
                                                                                                                                • Figure 34: Number of paid games downloaded to mobile device in the past month, by age, February 2012
                                                                                                                            • Mobile Gaming Behaviors

                                                                                                                              • Key points
                                                                                                                                • Free play
                                                                                                                                  • Some trial behavior
                                                                                                                                    • Social? Perhaps not
                                                                                                                                      • Figure 35: Mobile gaming behaviors, by gender, February 2012
                                                                                                                                    • Cross-platform gaming of interest to adults aged 18-24
                                                                                                                                      • Adults aged 18-34 experiment with independent app stores
                                                                                                                                        • Figure 36: Mobile gaming behaviors, by age, February 2012
                                                                                                                                    • Mobile Game Purchase Behavior

                                                                                                                                      • Key points
                                                                                                                                        • Most mobile gamers do not make in-app or related purchases
                                                                                                                                          • Figure 37: Mobile game purchase behavior, phone vs. tablet, February 2012
                                                                                                                                        • Men more likely to purchase in-game enhancements
                                                                                                                                          • Figure 38: Mobile game purchase behavior—mobile phones and/or tablets, by gender, February 2012
                                                                                                                                        • Young adults are the ones spending money on in-game purchases
                                                                                                                                          • Figure 39: Mobile game purchase behavior—mobile phones and/or tablets, by age, February 2012
                                                                                                                                      • App Downloads by Category

                                                                                                                                        • Key points
                                                                                                                                          • Game apps second only to weather apps in popularity
                                                                                                                                            • Figure 40: Types of app downloaded vs. used on phone or tablet, February 2012
                                                                                                                                          • Women are much more likely than men to download a game app
                                                                                                                                            • Figure 41: Types of app downloaded on phone or tablet, by gender, February2012
                                                                                                                                          • Game apps are popular across all age groups
                                                                                                                                            • Figure 42: Types of app downloaded on phone or tablet, by age, February 2012
                                                                                                                                        • The App Discovery Process

                                                                                                                                          • Key points
                                                                                                                                            • Gamers learn about games from other gamers
                                                                                                                                              • Men give weight to more sources of information
                                                                                                                                                • Figure 43: Methods of discovery for most recently acquired game, by gender, February 2012
                                                                                                                                              • Recommendations are more important source for older gamers
                                                                                                                                                • Figure 44: Methods of discovery for most recently acquired game, by age, February 2012
                                                                                                                                            • Impact of Race and Hispanic Origin

                                                                                                                                              • Key points
                                                                                                                                                • Primary gaming device
                                                                                                                                                  • Figure 45: Primary gaming device in the home, by race/Hispanic origin, February 2012
                                                                                                                                                • Game titles played
                                                                                                                                                  • Figure 46: Number of game titles played—mobile phone or tablet, by race/Hispanic origin, February 2012
                                                                                                                                                • Free vs. paid game downloads
                                                                                                                                                  • Figure 47: Number of free games downloaded a phone and/or tablet in the past month, by race/Hispanic origin, February 2012
                                                                                                                                                  • Figure 48: Number of paid games you downloaded to your phone and/or tablet in the past month, by race/Hispanic origin, February 2012
                                                                                                                                                • Mobile gaming purchase behavior
                                                                                                                                                  • Figure 49: Mobile game purchase behavior—mobile phones and/or tablets, by race/Hispanic origin, February 2012
                                                                                                                                                • Game app popularity
                                                                                                                                                  • Figure 50: Types of app downloaded on phone or tablet, by race/Hispanic origin, February 2012
                                                                                                                                              • Teens

                                                                                                                                                  • Key points
                                                                                                                                                    • Mobile Device Ownership
                                                                                                                                                      • Figure 51: Cell phone vs. tablet ownership, by teens, October 2010-November 2011
                                                                                                                                                    • Cell phone/wireless phone ownership
                                                                                                                                                      • Figure 52: Cell phone ownership among teens, by gender and age, October 2010-November 2011
                                                                                                                                                      • Figure 53: Cell phone ownership among video gaming teens, by gender, October 2010-November 2011
                                                                                                                                                    • Tablet ownership
                                                                                                                                                      • Figure 54: Tablet ownership among teens, by age, October 2010-November 2011
                                                                                                                                                      • Figure 55: Tablet Ownership among teens, by age, October 2010-November 2011
                                                                                                                                                    • Services Used on Cell Phones
                                                                                                                                                      • Figure 56: Services used by teens on a cell phone in the last 30 days, by gender and age, October 2010-November 2011
                                                                                                                                                    • Frequency of internet usage away from home
                                                                                                                                                      • Figure 57: Frequency of teen internet usage at home and away from home, by gender, October 2010-November 2011
                                                                                                                                                      • Figure 58: Frequency of teen internet usage at home and away from home, by age, October 2010-November 2011
                                                                                                                                                    • Attitudes toward video games
                                                                                                                                                      • Figure 59: Teens’ attitudes toward video games, by gender, October 2010-November 2011
                                                                                                                                                      • Figure 60: Teens’ attitudes toward video games, by gender and age, October 2010-November 2011
                                                                                                                                                  • Custom Consumer Groups

                                                                                                                                                      • Consoles still king with men aged 18-34
                                                                                                                                                          • Figure 61: Primary gaming device in the home, by gender and age, February 2012
                                                                                                                                                        • Men aged 18-34 play and download the most titles
                                                                                                                                                          • Figure 62: Number of game titles played—mobile phone or tablet, by gender and age, February 2012
                                                                                                                                                        • Men aged 18-34 most likely to download paid or free games
                                                                                                                                                          • Figure 63: Number of free games downloaded to phone and/or tablet in the past month, by gender and age, February 2012
                                                                                                                                                          • Figure 64: Number of paid games downloaded to phone and/or tablet in the past month, by gender and age, February 2012
                                                                                                                                                        • Men and women aged 18-34 are interested in cross-platform gaming
                                                                                                                                                          • Figure 65: Mobile gaming behaviors, by gender and age, February 2012
                                                                                                                                                      • Appendix—Other Useful Consumer Tables

                                                                                                                                                          • Figure 66: Most popular activities on smartphones vs. tablets, February 2012
                                                                                                                                                        • Primary gaming device in home
                                                                                                                                                          • Figure 67: Primary gaming device in the home, by gender, February 2012
                                                                                                                                                          • Figure 68: Primary gaming device in the home, by age, February 2012
                                                                                                                                                          • Figure 69: Primary gaming device in the home, by race/Hispanic origin, February 2012
                                                                                                                                                          • Figure 70: Primary gaming device in the home, by gender and age, February 2012
                                                                                                                                                        • Number of game titles played—phone
                                                                                                                                                          • Figure 71: Number of game titles played—mobile phone, by gender, February 2012
                                                                                                                                                          • Figure 72: Number of game titles played—mobile phone, by age, February 2012
                                                                                                                                                          • Figure 73: Number of game titles played—mobile phone, by household income, February 2012
                                                                                                                                                        • Number of games played—tablet
                                                                                                                                                          • Figure 74: Number of game titles played—tablet, by gender, February 2012
                                                                                                                                                          • Figure 75: Number of game titles played—tablet, by age, February 2012
                                                                                                                                                          • Figure 76: Number of game titles played—tablet, by household income, February 2012
                                                                                                                                                        • Free or paid downloads
                                                                                                                                                          • Figure 77: Number of free games downloaded to phone and/or tablet in the past month, by gender, February 2012
                                                                                                                                                          • Figure 78: Number of paid games downloaded to a mobile device in the past month, by household income, February 2012
                                                                                                                                                        • Number of games downloaded to phone and/or tablet
                                                                                                                                                          • Figure 79: Number of games downloaded to phone and/or tablet, by gender and age, February 2012
                                                                                                                                                          • Figure 80: Number of games downloaded to phone and/or tablet, by gender, February 2012
                                                                                                                                                          • Figure 81: Number of games downloaded to phone and/or tablet, by age, February 2012
                                                                                                                                                          • Figure 82: Number of games downloaded to phone and/or tablet, by household income, February 2012
                                                                                                                                                          • Figure 83: Number of games downloaded to phone and/or tablet, by race/Hispanic origin, February 2012
                                                                                                                                                        • Mobile gaming behavior
                                                                                                                                                          • Figure 84: Mobile gaming behaviors, by household income, February 2012
                                                                                                                                                          • Figure 85: Mobile gaming behaviors, by race/Hispanic origin, February 2012
                                                                                                                                                        • Mobile gaming purchase behavior
                                                                                                                                                          • Figure 86: Mobile gaming behaviors, free vs. paid game choices, by number of game titles played, February 2012
                                                                                                                                                          • Figure 87: Preference for playing games “by myself”, by number of game titles played, February 2012
                                                                                                                                                          • Figure 88: Mobile game purchase behavior—mobile phones and/or tablets, by household income, February 2012
                                                                                                                                                        • Purchase behavior—smartphone owners
                                                                                                                                                          • Figure 89: Mobile game purchase behavior—smartphone, by gender, February 2012
                                                                                                                                                          • Figure 90: Mobile game purchase behavior—smartphone, by age, February 2012
                                                                                                                                                          • Figure 91: Mobile game purchase behavior—smartphone, by household income, February 2012
                                                                                                                                                          • Figure 92: Mobile game purchase behavior—smartphone, by race/Hispanic origin, February 2012
                                                                                                                                                          • Figure 93: Mobile game purchase behavior, by number of game titles played, February 2012
                                                                                                                                                        • Purchase behavior—tablet owners
                                                                                                                                                          • Figure 94: Mobile game purchase behavior—tablet, by gender, February 2012
                                                                                                                                                          • Figure 95: Mobile game purchase behavior—tablet, by age, February 2012
                                                                                                                                                          • Figure 96: Mobile game purchase behavior—tablet, by household income, February 2012
                                                                                                                                                          • Figure 97: Mobile game purchase behavior, by number of game titles played, February 2012
                                                                                                                                                        • App downloads by category
                                                                                                                                                          • Figure 98: Types of app downloaded on phone or tablet, by household income, February 2012
                                                                                                                                                        • The App Discovery Process
                                                                                                                                                          • Figure 99: Methods of discovery for most recently acquired game, by household income, February 2012
                                                                                                                                                        • Frequency of internet usage at home and away from home by teens
                                                                                                                                                          • Figure 100: Frequency of teen internet usage at home and away from home, by gender, October 2010-November 2011
                                                                                                                                                          • Figure 101: Frequency of teen internet usage at home and away from home, by age, October 2010-November 2011
                                                                                                                                                          • Figure 102: Frequency of teen internet usage at home and away from home, by race/Hispanic origin, October 2010-November 2011
                                                                                                                                                        • Incidence of teen video game play
                                                                                                                                                          • Figure 103: Incidence of teen video game play, by gender, October 2010-November 2011
                                                                                                                                                          • Figure 104: Incidence of teen video game play, by age, October 2010-November 2011
                                                                                                                                                          • Figure 105: Incidence of teen video game play, by gender and age, October 2010-November 2011
                                                                                                                                                          • Figure 106: Incidence of teen video game play, by race/Hispanic origin, October 2010-November 2011
                                                                                                                                                        • Time spent playing video games by teens
                                                                                                                                                          • Figure 107: Time spent playing video games by teens, by gender, October 2010-November 2011
                                                                                                                                                          • Figure 108: Time spent playing video games by teens, by age, October 2010-November 2011
                                                                                                                                                          • Figure 109: Time spent playing video games by teens, by gender and age, October 2010-November 2011
                                                                                                                                                          • Figure 110: Time spent playing video games by teens, by race/Hispanic origin, October 2010-November 2011
                                                                                                                                                        • Teen console internet connectivity and activities
                                                                                                                                                          • Figure 111: Teen console internet connectivity and activities, by gender, October 2010-November 2011
                                                                                                                                                          • Figure 112: Teen console internet connectivity and activities, by gender and age, October 2010-November 2011
                                                                                                                                                      • Appendix—Trade Associations

                                                                                                                                                        Companies Covered

                                                                                                                                                        • Amazon.com Inc
                                                                                                                                                        • Apple, Inc
                                                                                                                                                        • AT&T Inc.
                                                                                                                                                        • Barnes & Noble (video game & entertainment software stores)
                                                                                                                                                        • Casual Games Association (CGA)
                                                                                                                                                        • Consumer Electronics Association
                                                                                                                                                        • Electronic Arts, Inc
                                                                                                                                                        • Entertainment Software Association
                                                                                                                                                        • Facebook, Inc.
                                                                                                                                                        • Foursquare
                                                                                                                                                        • Google, Inc.
                                                                                                                                                        • International Game Developers Association
                                                                                                                                                        • LG Electronics Inc (USA)
                                                                                                                                                        • Microsoft USA
                                                                                                                                                        • Netflix, Inc.
                                                                                                                                                        • Nintendo of America Inc.
                                                                                                                                                        • Nokia Corporation (US)
                                                                                                                                                        • PricewaterhouseCoopers
                                                                                                                                                        • Samsung Electronics (USA)
                                                                                                                                                        • Sanyo North America Corporation
                                                                                                                                                        • Sony Corporation of America
                                                                                                                                                        • The New York Times Company
                                                                                                                                                        • Twitter, Inc.
                                                                                                                                                        • U.S. Bureau of Labor Statistics
                                                                                                                                                        • U.S. Bureau of the Census
                                                                                                                                                        • Verizon Communications Inc.
                                                                                                                                                        • YouTube, Inc.

                                                                                                                                                        Mobile Gaming - US - June 2012

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