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APP ANNIE 2015 GAMING REPORT: THE STATE OF GAMING ON MOBILE DEVICES AND WHY MOBILE LEADS OVER OTHER PLATFORMS

App Annie just released its "2015 Gaming Report" and gaming on mobile devices widened its lead over other platforms in terms of spend, comprising 40% of all consumer spending on games for the year 2015.   The reports key findings are summarized below.

Key Themes & Takeaways:  Gaming Trends

• Mobile gaming overtook both home game consoles and combined PC and Mac gaming in consumer spend for the first time in 2014; the gap widened in 2015 and shows no signs of slowing.
• Games continued to have the majority share of worldwide consumer spending on both Google Play and the iOS App Store, with each store seeing incremental year-over-year gains in gaming-related share of consumer spending.
• Home game console spending was disproportionately high in North America and Western Europe. Mobile game and PC and Mac game spending was centered in Asia-Pacific and shifted further in that direction in 2015. Asia-Pacific in particular saw explosive growth in share of consumer spending on the iOS App Store.
• The top revenue-generating titles on mobile were actually more stable year-over-year than those on handheld game consoles (partly due to handheld games being sold in physical packaging).
• Home and handheld game consoles declined marginally in consumer spend from 2013 to 2015.
• Home game consoles saw the highest consumer spend per device in 2015 at nearly 5x that of mobile games. However, given their broad appeal, mobile games have a much larger user base and therefore monetize higher overall.

Worldwide Consumer Spending on Games by Device for the Years 2013-2015

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• Mobile gaming overtook both home game consoles and combined PC and Mac gaming for the first time with the highest consumer spend in 2014.
• Mobile gaming’s lead continued to widen in 2015 over PC and Mac gaming, home game consoles and handheld game consoles.

Worldwide Consumer Spending Shares on Games, by Region, 2015

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• Asia-Pacific gained in share of game spending for iOS App Store and Google Play combined due to iOS’ explosive growth in China and the healthy growth of all major APAC markets.
• Asia-Pacific also gained in share of consumer spending for both handheld games and PC and Mac gaming.
• Home consoles didn’t see much growth in Asia-Pacific despite the 14 year ban on consoles in China being lifted in 2015. Western Europe showed growth in home game console spending in 2015.

Top 5 Worldwide Grossing Portable Games, by Platform, 2015

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Worldwide Game Spending Per Gaming Device, 2015

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• Home game consoles far and away led other gaming mediums in consumer spend per device.
• Mobile gaming saw the smallest consumer spending per device, but had the largest gaming base, reaching not only core gamers but also a significant amount of casual gamers who may not otherwise play games.

Key Themes & Takeaways: US Gamers

• There was practically an even gender split within both the mobile gaming (Android Phone and iPhone gamers) and PC and Mac gaming communities in the US in 3Q 2015. Related games represent a great opportunity for marketers to reach both male and female customers.
• In 3Q 2015, PC and Mac gamers skewed toward those aged 45+, handheld and console gamers skewed towards those aged 13–24, and mobile was more evenly distributed with the largest age bracket being 25–44.
• Android phones trailed significantly behind the other gaming platforms in typical hours of gameplay per week. (Such gamers spent less than one-third the time of those on home game consoles, handheld consoles and combined PC and Mac.)
• Appealing to a broader user base, which includes non-traditional and casual gamers, US Android Phone gamers played less time per person per week. Gamers on other devices had much higher weekly gameplay hours per person.

US Gaming Device Demographics, by Gender, 3Q 2015

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• Males and females were represented evenly among US iPhone and Android Phone gamers and combined PC and Mac gamers.
• US home console gamers skewed male (approximately 59%) in 3Q 2015.
• Handheld game consoles in the US skewed the strongest female (approximately 53%) in 3Q 2015.

US Gaming Device Demographics, by Age, 3Q 2015

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• PC and Mac gaming skewed older than other US gaming devices in 3Q15 with about 59% aged 45+.
• Handheld game consoles had the largest share of young American gamers at 36%+ under 24 years old in 3Q 2015.
• US mobile gamers were strongest in the 25–44-year-old bracket at about 40%.

 US Gaming Device Demographics, by Hours of Gameplay Per Person, 3Q 2015

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• US Android Phone gamers played less than 3 hours per week on average in 3Q 2015. (This mobile gaming community is larger and includes a significantly higher share of casual gamers.)
• 41% of PC and Mac gamers played less than 5 hours per week versus 22% on consoles.
• 14% of PC and Mac gamers played greater than 20 hours per week versus 8% on consoles.

Key Themes & Takeaways: Wrap-Up

• Mobile gaming surpassed both home game console and PC and Mac gaming to become the top global platform by consumer spending in 2014, furthering this lead over other gaming devices in 2015. Mobile gaming grew to over 40% of total consumer spend on games last year, up from about 35% in 2014.
• More than 80% of combined iOS and Google Play consumer app spending in 2015 was derived from games, which enjoyed significant spending growth. On iOS, this share topped 75% in the second half of 2015.
• The Asia-Pacific region saw the greatest growth in share of game consumer spending worldwide on iOS and Google Play app stores, handheld gaming, and combined PC and Mac gaming, a testament to the cultural gaming tradition of many countries in the region as well as the ongoing expansion of China as an increasingly large and viable market for game monetization.
• Home console gaming saw more than double the consumer spend per device than any other gaming platform. Mobile gaming saw the lowest consumer spend per device, but had the largest audience, giving it the highest overall consumer spend in 2015.
• In the US, there is a significant opportunity across all platforms to attract male and female gamers. Console gamers skewed decidedly male. Android Phone and iPhone along with PC and Mac gaming represented near-even gender divides for gamers.
• Across handheld, PC and Mac and home console games, users spend roughly the same amount of time per week playing games on average.
• PC and Mac gamers have much more variance in the amount of typical gameplay per week compared to home console gamers, with almost double the size of the user base at both extremes (less than 5 hours per week and greater than 20 hours per week).
• Hours of gameplay per user per week on Android phones was significantly lower than other gaming platforms, a result of the wide appeal and broadened user base from casual gamers.

Courtesy of an article dated March 29, 2016 appearing in App Annie Blog

WHY VR HARDWARE MAKERS CO-EXIST IN PEACE, CREATE VR AWARENESS AND AVOID CUTTHROAT COMPETITION, FOR NOW

Facebook CEO and co-founder Mark Zuckerberg having fun test driving the new Oculus Rift VR headset after its launch last month. (Click Image To Enlarge)

VR hardware makers seem to know that, for now anyway, it's in their mutual interest not to tear each other down.

Competition in the video game world can be pretty cut-throat—they don't call it the console war for nothing.  Whenever a new generation of home video game machines emerges, it sometimes almost feels as though the manufacturers—behemoths like Microsoft, Sony, and Nintendo—delight in trying to eviscerate each other.

But at the moment, the virtual reality world is a bit different. With the first Oculus Rifts showing up on doorsteps today, four years after one of the most famous Kickstarter campaigns of all time, the consumer virtual reality era truly begins. But instead of mirroring the video game industry’s pitched battlefronts, VR hardware makers seem to know that, for now anyway, it's in their mutual interest not to tear each other down.

Richard Marks, who heads up VR efforts for Sony, says.  

"The attention Oculus brought to VR was great.  The fact that there are multiple VR platforms all coming to market, that is really good for the timing of VR, because it does create more of a critical mass. It is challenging for any one platform to create a new medium."

That’s a sentiment I hear again and again during conversations with leading VR community figures. What’s clear is that industry insiders believe consumer virtual reality needs to get off the ground before major players can start worrying about which company will "win" the medium.

Anthony Batt, the cofounder and executive vice president of Wevr, a leading virtual reality content production company, says.

"This reminds me of the early days of the Internet.  Everyone’s best interest right now is to grow the pie so VR becomes a widely adopted industry."

Oculus Rift VR headset (Click Image To Enlarge)

Virtual reality, of course, is not a new technology, having been around in one extremely expensive form or another for decades. But with the arrival of the $599 Rift, HTC’s $799 Vive next month, and Sony’s $399 PlayStation VR in October, we’ve reached the point where deeply immersive, high-fidelity, high-quality VR experiences are actually arriving in people’s living rooms.

HTC Vive VR headset begins shipping in May 2016 (Click Image To Enlarge)

Although the Vive at launch will outpace the Rift by including a set of sensor-laden hand-held controllers that lets users see and incorporate their hands in 3-D VR games and other experiences, Oculus is expected to soon keep pace when it releases its Touch controllers later this year as a separate product.

Sony PlayStation VR headset begins shipping in October 2016 (Click Image To Enlarge)

Still, with those two devices’ launches, on top of Google’s $15 Cardboard VR player and Samsung’s $99 mobile Gear VR, which are already on the market, it’s fair to say the full spectrum of the consumer virtual reality age is now upon us.

 

Samsung Gear VR Launch video

Google's Cardboard DIY headset is made out of cardboard (Click Image To Enlarge)

FEW EXCLUSIVES -- YET

The dawn of this age comes with big expectations. Analysts at Digi-Capital predicted last fall that VR would be a $30 billion industry by 2020, while Piper Jaffray pegged the value of VR content—everything from games to rich cinematic experiences, live events, real estate applications, surgical training tools, and more—at $5.4 billion by 2025. There are already hundreds of VR experiences available for platforms like the mid-range Gear VR—which is powered by Oculus software—and low-end Cardboard, but if one thing is clear at this moment in VR’s evolution, it’s that the industry will go nowhere if there isn’t a steady flow of great new content at every quality level, and at least some level of mutual support. Beating the other guy today isn’t the primary motivation.

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Chris Dixon, a general partner at Andreessen Horowitz and an early investor in Oculus, says.

"For so many people in this industry, VR has been this childhood dream of nerds and sci-fi fans, and of course, VR had a couple false starts in the past.  So most people think the biggest risk is that VR will not work, not be good enough, not gain wide adoption, and think only a secondary risk [is] that their competitors get a better position."

Nick DiCarlo, the vice president and general manager of immersive products and virtual reality at Samsung, maker of the Gear VR, concurs.

"Right now, the VR industry is much more focused [on] building awareness of VR as an idea, and how cool it is, rather than competing. The VR community really works together to build . . . momentum in the space."

While it’s unclear if companies like Oculus (which Facebook bought for $2 billion in 2014), HTC, Sony, and Google are actually and actively cooperating with each other, many industry experts say their impression is that those companies are mostly playing nice with each other at this point. In the video game industry, one mark of the cut-throat attitude between competitors is their thirst to be the only platform on which big-name game titles are available—especially at launch. But with a few notable exceptions, such as Minecraft and Rock Band being available only for the Rift, or Gran Turismo launching solely on the PlayStation VR, that doesn’t appear to be happening much in the VR world.

Linc Gasking, the cofounder and CEO of 8i, a developer of VR production technology, says

"For Oculus to succeed, VR needs to succeed, and everyone is in it together.  You see that playing out more and more, where the big [hardware makers] are not asking for exclusivity on content yet, which really helps that process."

Gasking reasserts, pointing out that at this early stage,

"The success of VR floats all boats.  VR is the platform, not any individual device."

Chris Milk, the founder of the highly regarded VR content developer Vrse, which teamed with the New York Times and Google on the publication’s highly publicized distribution of more than a million Cardboard headsets to subscribers, agrees.   Milk says.  

"I’ve seen a lot of collective support from one another in the community.  I haven’t seen [platform makers] walling their gardens off. . . . We haven’t seen anyone saying 'we want an exclusive on this for us, and you can’t do it for others.'"

When asked on Twitter about the possibility of Oculus or Sony having exclusive content, Oculus founder Palmer Luckey responded,

"I am glad Sony invests in the VR ecosystem, and encourage others to do the same!"

Another reason why VR companies haven't been chasing exclusives as hard as they do on the traditional video game console front is that they are keenly aware that bad VR experiences on any platform or any device can turn people off to the entire technology forever. That’s especially troubling to executives if the person who has the bad VR experience is a decision-maker at a Hollywood studio or an ad agency. Those people, after all, are the ones who have the budgets to finance big VR projects, the very projects that will become a financial lifeblood for this nascent industry. All the virtual reality hardware makers need fantastic developers to create fantastic content for their devices.

That said, though consumer VR is still in its earliest stages and no one really knows how large the businesses being built around it will get, there’s no shortage of work for people developing VR content. Milk argues.

"The thing now is that there’s more work than any of us can handle.  We’ve had to learn how to say no, because in the last few years, we’ve gone from banging on doors and saying, ‘You should do something in VR, this is going to be really important,’ to everyone with a marketing budget banging on our door saying, ‘We need to do a virtual reality experience.’"

Gasking agrees that VR has reached the phase where people are desperate not to miss the boat, despite the fact that most of the consumer hardware is only just starting to come online.  Gasking says.  

"We’re seeing all the increase in press create a surge of interest.  We got a FOMO call from an ad executive concerned his clients were missing out on the VR wave and wondering how to start to buy advertising for his clients."

There's yet another reason why VR hardware makers may also be more flexible about exclusivity right now: They really need developers who produce games (such as Half-Life and Mortal Online) that are already wildly popular on non-VR platforms to create VR versions that can quickly draw customers to their devices. So, in some ways, VR hardware makers need established game developers more than established game developers need the hardware makers.

THE LOOMING VR CONSOLE WAR

Make no mistake, however:  Hardcore competition between the likes of Oculus, HTC, Sony, and others may already be bubbling beneath the surface.

One reason, says Jeffrey Greller, an agent at William Morris Endeavor who specializes in VR, is that because hardware like the Rift and the Vive is expensive—especially when many buyers will also have to purchase a gaming-quality PC to power their new gear—consumers are likely to pick one platform and stick with it.

Greller says.  

"Once you’ve committed to a hardware platform in VR, it’s going to be very difficult for another hardware brand to have you purchase their technology."

That could very well end up being a problem on the higher end of the VR spectrum; devices like Samsung’s Gear VR, Google’s Cardboard, and others are substantially cheaper than the Vive and the Rift.

And, since the Rift and the Vive offer very similar features, that’s where the really heavy competition is likely to brew, posits Bruce Wooden, the head of developer and community relations at VR development company AltSpaceVR and the cofounder of conference and meetup organizer Silicon Valley Virtual Reality.

Wooden said.  

"If there’s any kind of competitive spark at this stage, it would have to be between Oculus and HTC. They have two high-end headsets that are generally targeting the same audience."

Still, while he notes that it’s "unavoidable" for there to be some level of competition in the VR industry, it’s not even close to the ferocity of the console wars. At least not yet.

In the meantime, today’s launch of the Rift and the imminent launches of the Vive and PlayStation VR can only be a good thing for the broader VR ecosystem, especially because each of those systems, along with lower-end platforms like Gear VR, Cardboard, and others, together meet the full range of people’s VR needs.

Sony's Marks said.

"Having multiple platforms in VR is good, especially at this early stage.  Serving the customers of those platforms with VR in [each company’s] unique way makes sense."

So are all the big VR companies actually rooting for each other?

Dixon said.  

"I think they are.  Obviously, Oculus and Valve and everyone want to be the leader. But I think everyone agrees that for the next few years, [the most important thing] is that everyone succeeds."

(Neither Oculus, Google, nor HTC would comment for this story.)

COMMENTARY:  Virtual reality could be big soon. Augmented reality could be bigger, but might take longer to get there. How big and how soon? Let’s look at what we learned in the last year and how that changes the mix and timing of AR/VR forecasts.

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Timing Is Everything

At the start of last year it looked like consumer AR could launch in 2016. AR now appears largely focused on enterprise users this year, with most consumer AR expected to launch around 2017 (although wild cards like Magic Leap could change that). This effectively pushes AR consumer market revenue back by 12 months, with AR now forecast to hit $90 billion by 2020. VR’s topline remains largely unchanged, with $30 billion forecast by the end of the decade. The timing change also moves the tipping point for AR passing VR from 2018 to 2019. So where our internal numbers hit similar revenue to last year’s forecasts, they now do so a year later.

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Mobile First

We now know that the CPU/GPU requirements for high-end VR come at a premium. Sony Playstation VR and mobile VR (from Samsung and others) are expected to be the initial consumer VR market drivers, changing installed base forecasts in favor of mobile VR. There isn’t a material impact on topline VR revenue forecasts, but the revenue mix looks a bit different by sector. VR largely remains an entertainment market driven by hardware, games, video and theme parks, with non-entertainment apps driving a meaningful minority of revenue by 2020 as the market develops. (See original VR sector approach here)

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Changes to consumer market launch timing had a significant impact on topline AR forecasts, but the sector mix looks broadly similar to last year’s numbers. AR hardware revenue will drive the market, followed by augmented commerce, data, voice, video, enterprise, theme park, advertising, apps and games revenues. (See original AR sector approach here)

Go East, Young Man

The weight of innovation for AR and VR is in America today, with an unsurprising bias towards the West Coast. There are significant concentrations of development in Asia, with the Chinese market in particular giving rise to many home grown competitors. Where higher than average AR/VR revenue per user is likely to come from North America, Western Europe, Japan and South Korea, installed base is generally the ultimate driver of long term revenue. Combining our forecasts by sector and country/region indicates that Asia (China, Japan, South Korea, others) could drive AR/VR revenue by 2020, followed by Europe and North America. This geographic potential has not escaped the notice of entrepreneurs and investors, as everyone tries to figure out where to place their bets. 

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Plus ça change, plus c’est la même chose

What does this mean for established players and startups? The short version is that everything has changed and nothing has changed. Despite Apple buying Metaio, it might take 18 to 24 months for a consumer market large enough for it to enter. Facebook, HTC/Valve, Sony and others will push forward with PC/console VR, as Facebook now explores AR in parallel. Samsung (with Facebook) and dozens of competitors will drive mobile VR. Google’s friends Magic Leap will do what they’re going to do, as Microsoft, ODG and others focus on Enterprise AR in 2016 ahead of consumer AR next year. Mobile VR will see hardware prices fall driven by Chinese competitors like Letv, and everyone hopes Moore’s Law brings high-end VR within reach of the average consumer.

The direction remains the same, it’s just a question of timing. We’ll keep updating as hard market data becomes available this year.

You can find out more about AR/VR sector and geographic revenue forecasts in Digi-Capital’s new Augmented/Virtual Reality Report 2016

Courtesy of an article dated March 28, 2016 appearing in Fast Company and an article dated January 2016 appearing in Digi-Capital Blog

TRACKMAVEN B2B STUDY: INSTAGRAM HAS HIGHEST SOCIAL MEDIA B2B ENGAGEMENT RATES

While LinkedIn leads as a business-to-business platform in terms of penetration and scale, B2B social media engagement is actually highest on hip photo-sharing platform Instagram, according to a new study by TrackMaven, based on an analysis of 316 B2B brands across the major social networks.

Unsurprisingly, B2B brands have been busy on LinkedIn, building relatively large followings of vendors and customers; thus brands in the professional services category have a median LinkedIn audience of 1.2 million followers. They’re also active on Facebook, Twitter, and Pinterest, with varying rates of success: for example, the median number of Pinterest followers was less than 3,000 for most of the brand categories studied.

However Instagram – not necessarily most people’s first example of a B2B medium – stood out for delivering high engagement across a range of categories, with measurement defined by TrackMaven as the number of interactions per post per 1,000 followers.

Here are the B2B engagement rates for the major social media networks according to TrackMaven:

• Instagram yielded an engagement rate of 22.53.
• Pinterest at 15.88.
• Facebook at 5.99.
• LinkedIn at 1.09.
• Twitter at 0.86.

Instagram was the biggest source of social engagement for 15 out of 17 categories, including aerospace and defense, chemicals, computer hardware, construction, electrical equipment, energy, engineering, logistics, machinery, medical, motor vehicles and parts, pharma, professional services, software, and wholesales.

Just two categories did better elsewhere, with biotech seeing bigger engagement on Facebook, while financial services’ highest engagement came on Pinterest.

The rise of digital, including social media, has had a disruptive effect on B2B publishers similar to the impact on consumer media. According to figures from Connectiv (formerly ABM), from 2008 to 2014 B2B print ad revenues declined from 34% of the industry’s total revenues to 24.4%, while over the same period, digital advertising increased from 10.3% to 21% of the total business. Data and business information services rose from 5.8% to 10.2%, and events increased from 42.8% to 44.4%.

COMMENTARY:   TrackMaven's B2B brand social media study included a grand total of 508,060 social media posts and over 100 million social interactions. The 316 brands featured in their analysis include the leading B2B brands in the Global 500 and B2B leaders on social media as identified by the TrackMaven platform across 17 industries.

Which B2B industry has the best social media strategy?

Let’s start with a view of the complete B2B landscape on social media in one summary graph from the report. The graph below plots the average follower growth, average engagement ratio, and median social media audience size for B2B brands by industry across 2015.

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In a nutshell, you should aspire to land in the top right of this graph. Score high on the y-axis (follower growth) but low on the x-axis (content engagement), and your brand is growing but not engaging your audience. Score high on the x-axis but low on the y-axis, and your audience is interacting with your brand on social, but not bringing anyone new to the table.

So which B2B industries excel on social media? Here are just a few of the key takeaways:

• Biotech, engineering, and financial services brands are in the social media sweet spot. Brands in these industries have both substantial audience growth and high content engagement on social media, indicating impactful social content. The financial services industry’s 81.77 percent average follower growth per brand is especially impressive given the industry’s large median social following.
• Machinery manufacturers are adept at growing their audiences. Across the B2B landscape, brands in the machinery sector see the highest social media audience growth, with average annual follower growth across all five major networks of 129.02 percent. Engaging content is a correlated factor; social media content from machinery brands is ahead of the B2B pack, as indicated by its high engagement.
• Biotech brands know how to engage audiences. Across the B2B landscape, biotech brands have the most engaged social media audiences with an average engagement ratio of 12.46. Financial services brands are a distant second at 9.94
• Are software brands in a social media bubble? Software brands see fantastic social media growth — up 82 percent of total followers across 2015, on average — but the worst content engagement with a 2.62 engagement ratio. Is the allure of Silicon Valley attracting followers to top software brands without the content to back it up?

How to create a B2B social media strategy that works

Our analysis points to a major contradiction in B2B brand popularity. If you look at brand popularity based on follower count, then LinkedIn is the big B2B winner. Overall, B2B brands have the largest audiences on LinkedIn, according to our research. The median social media audience size for B2B brands is:

• 109,000 followers on LinkedIn;
• 34,000 page likes on Facebook;
• 18,000 followers on Twitter;
• 3,000 followers on Instagram;
• and 420 followers on Pinterest.

This finding probably comes as no surprise. After all, LinkedIn is B2B marketers’ social channel of choice. It’s used by 94% of B2B marketers, and the 10 most-liked brands on LinkedIn are all B2B brands. But is this a case of a self-fulfilling social media prophecy? I’m a B2B brand, therefore LinkedIn is my primary social channel?

Our research indicates that this might be the case — and it’s likely holding B2B brands back from newer, more impactful networks.

Let’s look at B2B brand popularity by a different parameter: content engagement. When we analyzed the average engagement ratio (number of interactions per post per 1,000 followers) for B2B brands on each social network, Instagram is by far the B2B powerhouse. The average engagement ratio for B2B brands is:

• 22.53 on Instagram;
• 15.88 on Pinterest;
• 5.99 on Facebook;
• 1.09 on LinkedIn;
• and 0.86 on Twitter.

We cover this finding (and many more) in detail in our report, but here’s the quick and dirty bottom line: Challenge the LinkedIn legacy effect for B2B brands. Explore newer, visual-oriented networks where there are high levels of engagement and less competition.

Courtesy of an article dated April 4, 2016 appearing in MediaPost Social Media Marketing Daily The Social Graf