Data.ai, an app analytics startup, found that when users became more price-conscious in reaction to growing inflation, they spent less money on mobile games.
Data.ai, previously known as App Annie, said on Wednesday, Jan. 11, in its State of Mobile report that worldwide expenditure on mobile games dropped by 5% in 2022 to $110 billion. The analysis takes a wider look at industries such as mobile advertising, online shopping, and social networking applications.
However, total mobile game installations increased by 8% to a record peak of 90 billion, with hypercasual games driving the growth.
The Shift That Affects Mobile Gaming Industry
According to CNBC, Data.ai head of analytics Lexi Sydow said they are seeing the broad pattern emerge of consumers being more price sensitive and financially more cautious. She also emphasized that the gaming sector had the greatest impact on app spending.
People are reducing their consumption of non-essentials due to economic headwinds such as skyrocketing inflation and borrowing expenses. Plus, gaming has been under scrutiny, in particular.
As of July, industry intelligence company Ampere Analysis predicted that global sales of games and services, including console and PC games, will fall 1.2% year-over-year to $188 billion in 2022.
Notably, mobile gaming has dominated the games business in the past years, with major publishers betting large on mobile game creators.
Take-Two paid $12.7 billion to acquire mobile game company Zynga at the beginning of 2022. Candy Crush Saga's developer, the King, was acquired by Activision Blizzard in 2016 for a reported $5.9 billion.
Meanwhile, Microsoft, a digital titan in the US, is proposing to acquire Activision Blizzard for $69 billion, betting on the continuous expansion of mobile gaming.
However, macroeconomic challenges have slowed that expansion, including the higher cost of living and borrowing rates.
With the release of Microsoft and Sony's successor consoles in 2020, mobile gaming has new competition.
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Competition and Headwinds
According to Data.ai's analysis, non-gaming apps fared better in 2022, with the value of sales in such apps increasing by 6% year over year to $58 billion. Subscriptions and in-app purchases in streaming platforms, dating apps, and short-form video services like TikTok were the primary drivers of this development.
Non-game app downloads increased by 13% yearly, reaching 165 billion.
Even then, overall app store expenditure fell by 2%, to $167 billion, which did not mitigate the decline in mobile gaming spending.
Data.ai sees that this year, due to falling disposable income and shifting privacy norms, worldwide app spending on games will fall by another 3% to $107 billion.
The industry is forecast to encounter more challenges from Apple's newly announced privacy safeguards from this day forward.
In 2021, Apple released an App Tracking Transparency feature, which displays a message asking users whether they want to be targeted by advertising.
Meanwhile, Google plans to provide privacy controls comparable to those used by Apple to lessen the scope of monitoring inside Android applications.
Advertisers will find it more difficult to target "big whales," or players that spend a lot of money on games when targeting options are restricted.
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