SoLoMo Gaming in 3G, LTE, Cloud, and HTML5 Ecosystem: Market Analysis & Forecast 2012 - 2017

Published: Nov 2012 Pages: 67

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The convergence of Social Local and Mobile (SoLoMo) is a powerful force with big implications for applications of all types and gaming is no exception. SoLoMo Gaming will cause no less than a revitalization of the gaming ecosystem resulting in disruption as new market players assume market share for existing providers. The growth of LTE, smartphone and tablet devices, social media/networking, mobile payment, HTML5 technology, cloud-based gaming, and brand's deeper engagement represent some key factors that are pushing this wave to make the 2013 - 2015 period explosive for SoLoMo gaming. This report is must reading for anyone with a vested interest in the mobile gaming industry or considering a market entry strategy. This research is also critical for any company in the social and/or location-based mobile application space as SoLoMo gaming is poised to become a significant source of revenue throughout the value chain for players who identify, understand, and capitalize upon these trends. Companies in Report: PopCap, GREE, Electronic Arts (EA), Playdom, Massive Damage inc., Grey Area Ltd., Yelp, DeNA, inOnRoad, Blippar, int13.net, Booyah, Zynga, Nexon, FirmVille, CityVille, Alibaba, Ubitus inc., OnLive, NHN Japan, NTT Docomo, FriendSter, AT&T, Orange, Vodafone, KDDI, Sony, Locaid, PaymentOne, Simplelifeform.com, Live Gamer, Blizzard Entertainment, America Online, Gaia, WeeWorld, CloudMade, Gaikai, Burst.ly, App.net, MoPub, W3i, Rovio, PayPal, Gameloft, France Telecom, Bouygues Telecom, SFR, NRJ, mPass, MasterCard, Everything Everywhere, Deutsche Telekom, Orange, Barclay, Giesecke, Devrient, McDonalds, Oracle, Nike, Starbucks, Nokia, H&M, Loopt, Google, Yahoo, Bing, Mixi, Facebook, Pinterest, Twitter, Foursquare, Apple, QQ Target Audience:

Mobile network operators Virtual goods solution providers Cloud gaming platform providers Mobile HTML5 solution providers Mobile Application store providers Mobile gaming investment companies Mobile social and location game platform developers Mobile gaming marketing and consultancy companies Mobile game development and publishing companies Mobile Ad network, payment solutions and content providers

Key Findings: SoLoMo gaming market value (core + market shift) is estimated to reach $6.15 billion USD by 2017 SoLoMo gaming is going to replace certain existing ecosystem market players with new entrants SoLoMo gamer-base including Core & Shifted gamer is estimated to increase 12 times by 2017 Virtual Goods will be the key for revenue monetization holding more than 50% market share 35+ age bracket is the high payer in SoLoMo gaming platform

Table of Contents: 1.0 1.1 1.2 1.3 1.4 SOLOMO MARKET OVERVIEW AND GAMING EVOLUTION CONCEPT OF SOLOMO & AUGMENTED UTILITY 7 BROWSER BASED TO APP BASED TREND AND SOLOMO EVOLUTION 7 7

MERGED SOCIAL, LOCAL SEARCH & MOBILE: WHAT INDICATES MARKET DATA 7 MOBILE GAMING ENTERED SOCIAL PLATFORM INCLUDING DATA INDICATION 8

1.5 MOBILE GAMING MEETS 3G, LTE, HTML5 ENVIRONMENT INCLUDING DATA INDICATION 8 1.6 EMERGENCE OF LOCATIVE GAMING ON SOCIAL & MOBILE PLATFORM FOR DEEPER ENGAGEMENT: THE NEXT GEN GAMING 9 2.0 2.1 LOCATIVE GAME DYNAMICS IN SOLOMO PARADIGM 11 WHAT IS LOCATION GAME 11

2.2 2.3 2.4 3.0 3.1

IDEAL FEATURES OF LOCATIVE GAMING

12 13 14

LOCATIVE GAME DYNAMICS / PRINCIPLES TO FOLLOW BALANCING BUSINESS FOCUS WITH LOCATIVE GAMING

MARKET GROWTH DRIVER ANALYSIS OF SOLOMO GAMING 16 LOCATION CENTRIC MULTIPLAYER MOBILE SOCIAL & CASUAL GAMING TREND 16

3.2 COMBINING GAMERS PSYCHOLOGICAL FLOW WITH LOCAL COMMUNITY DRIVEN DEEPER BRAND ENGAGEMENT METRICS 17 3.3 AUGMENTED UTILITY BEHAVIOR OF GAMER USING MOBILE AUGMENTED REALITY 19 3.4 IN-GAME TRANSACTION TREND AND VIRTUAL GOODS PLACEMENT BASED IN REAL TIME LOCATION 21 3.5 VIRTUAL GOODS EXPORT IN GAMING AND EXCHANGE TREND AMONG COMMUNITY 22 3.6 4.0 4.1 HTML5 & CLOUD BENEFIT IN GAMING 23

SOLOMO GAME DEVELOPMENT TECHNOLOGY PLATFORM TREND 26 ANDROID VS. IOS GAMING MARKET & PROFIT SHARE TREND 26

4.2 FACEBOOKS MOBILE-PLUS-OPEN-GRAPH COMBINATION IN GAMING VS. UNIFIED GOOGLE GAMES PUBLISHING PLATFORM 27 4.3 5.0 5.1 5.2 5.3 EMERGING CLOUD AND HTML5 BROWSER BASED PUBLISHING 28 29

ECO-SYSTEM AND VALUE CHAIN IN SOLOMO GAMING ENVIRONMENT ECO-SYSTEM STRUCTURE AND MAIN ACTIVITIES VALUE CHAIN PARTNERSHIP MODELING 30 30 29

ROLE OF NEW ENTRANTS IN ECO-SYSTEM / VALUE CHAIN

5.3.1 TECHNICAL & LEGAL ROLE OF LOCATION TECHNOLOGY PROVIDER / PUBLISHER 30 5.3.2 VIRTUAL GOODS PROVIDER WILL PLAY CRITICAL ROLE ON GAME SUCCESS 31

5.3.3 MICRO TRANSACTION SOLUTION PROVIDER TO PROVIDE MONETIZED PLATFORM FOR USER & GAME DEVELOPER 31 5.3.4 5.4 5.5 CLOUD GAME PLATFORM PUBLISHER TO ENSURE LAAS STANDARD ECONOMIC DRIVER OF SOLOMO GAMING VALUE CHAIN 33 33 32

APPSTORE, SNS PORTAL & CLOUD PUBLISHING FRAMEWORK

6.0 6.1

SOLOMO GAME DISTRIBUTION TREND 34 OTI VS. OTA DISTRIBUTION: WHERE IS SOLOMO GAME 34

6.2 OTI VS. OTA FRAGMENTATION AND APPSTORE, SNS PORTAL, HTML5 & CLOUD PLATFORM 34 6.3 GOOGLE PLAY VS. APPLE STORE: HOW APPLE WILL BE LOSING MONEY FROM SOLOMO GAME? 35 6.4 MITIGATING FRAGMENTED DISTRIBUTION CHALLENGE OF BILLING, COST, MARKETING AND CROSS-CHANNEL PUBLISHING 36 6.5 7.0 7.1 7.2 7.3 7.4 CONSUMER RESPONSE AND FUTURE OF OTI VS. OTA DISTRIBUTION SOLOMO GAME MONETIZATION METRICS 38 38 36

GAMER MONETIZATION METRICS: HOW TO CONNECT? SAMPLE GAMER CONVERSION FUNNEL 39 GAME LIFE CYCLE MODEL: WHAT TO MANAGE? KPI MANAGING FRAMEWORK OF GAME LIFE CYCLE 39 40

7.5 SOLOMO GAME ANALYTICS APPROACH: HOW TO MANAGE SEQUENTIAL STEPS? 40 7.6 7.7 7.8 7.9 7.10 VIRAL VS. RETENTION: WHAT TO FOCUS? 40 41

CHECKLIST FOR RETENTION METRICS MANAGEMENT CHECKLIST FOR VIRALITY METRICS MANAGEMENT 41

CHECKLIST FOR ACQUISITION METRICS MANAGEMENT CHECKLIST FOR BUSINESS MONETIZATION METRICS 43

42

7.11 SAMPLE CUSTOM METRICS TO DERIVE ACTIONABLE INSIGHTS FOR BETTER MONETIZATION 43 7.12 BRAND MONETIZATION METRICS IN SOLOMO GAME: WHAT A BRAND MANAGER NEED TO FOCUS? 43 8.0 8.1 8.2 8.3 8.4 SOLOMO GAMING BUSINESS & PRICING MODEL ANALYSIS 46 STRATEGY CONSIDERATION TO DESIGN RIGHT BUSINESS MODEL 46 PRICING MODEL: FACTORS INFLUENCE DECISION 47 48 49

BUSINESS & PRICING MODEL FOR SOLOMO GAMING BUSINESS REVENUE & COST ITEMS FOR ECO-SYSTEM MARKET PLAYER

8.5 SOLOMO GAME BALANCING & MONETIZATION IN VIRTUAL GOODS DRIVEN MICRO TRANSACTION & FREE-TO-PLAY MODEL 50

8.6 MARKET CHALLENGES & SOLUTIONS IN FREE-TO-PLAY & VIRTUAL GOODS DRIVEN MICRO TRANSACTION MODEL 51 8.7 UG (USER GENERATED), CLUB BASED, AND RESEARCH & GAMIFICATION CENTRIC BUSINESS MODEL: FEW FRESH POTENTIAL CONCEPT 52 9.0 SOLOMO GAMING MARKET PROJECTION 2012 - 2017 54

9.1 WORLDWIDE SOLOMO GAMING MARKET VALUE (CORE + SHIFTED MARKET) AND CAGR PROJECTION 2012-2017 54 9.1.1 MARKET VALUE BREAKDOWN INTO CORE VS. SHIFTED MARKET PERCENTAGE FROM MOBILE SOCIAL GAMING 2012 2017 54 9.2 9.3 9.4 TOP COUNTRIES IN SOLOMO GAMING 56

REVENUE SHARE % ACROSS SOLOMO GAMING VALUE CHAIN PARTNERS 56 REVENUE GENERATING SOURCES (%) FROM ECO-SYSTEM MARKET PLAYER 57

9.5 NEW ENTRANT VS. EXISTING PLAYER IN ECO-SYSTEM / VALUE CHAIN: WHO IS LOSING / GAINING MONEY? 57 9.6 AD FUNDED VS. MICRO TRANSACTION BUSINESS MODEL WISE REVENUE TREND COMPARISON 2012-2017 58 9.7 TABLET VS. SMARTPHONE VS. FEATURED PHONE REVENUE PERCENT (%) TREND 2012 2017 58 9.8 9.9 9.10 SOLOMO GAMING ARPU TREND 2012 2017 59 60

AVERAGE VIRTUAL GOODS PRICING TREND IN SOLOMO GAME

SOLOMO GAMERS AVERAGE SPENDING PATTERN VIRTUAL GOODS CATEGORY 60

9.11 FREE-TO-PLAY VS. PAID VS. OTHERS GAME TREND IN SOLOMO PLATFORM 2012-2017 60 9.12 AD FUNDED VS. MICRO TRANSACTION ON VIRTUAL GOODS VS. HYBRID GAME MARKET SHARE 2012-2017 61 9.13 HTML5 & CLOUD TECHNOLOGY ADOPTION TREND IN SOLOMO GAMING PLATFORM 2012 2017 62 9.14 9.15 GPS TECHNOLOGY ADOPTION TREND IN MOBILE DEVICE 2012 - 2017 SOLOMO GAMERS PROJECTION (CORE + MARKET SHIFT) 2012 - 2017 62 62

9.15.1 MOBILE SOCIAL GAMERS SHIFTING TREND TO SOLOMO GAMERS 2012 2017 63 9.16 CASUAL VS. REGULAR GAMING PERCENT IN SOLOMO PLATFORM 2012-2017 64

9.17 SOLOMO GAMERS BUYING HABIT OF VIRTUAL GOODS BASED ON DEMOGRAPHY 65 10.0 10.1 10.2 10.3 WHAT NEXT IN SOLOMO GAMING EVOLUTION? 66 NFC PAYMENT INTEGRATION 66

AUTO LIFE LOGGING PLATFORM 66 DISTRIBUTED MASS SOCIAL EXPERIENCE 67

List of Figures: Figure 1: Market data of Social Networking, Mobile Facebook population, Mobile LBS user and smartphone LBS user 8 Figure 2: Market Data of 3G, LTE & HTML5 user & aopdtion and mobile data traffic 9

Figure 3: iPhone Screenshot of Please Stay Calm-Zombie Apocalypse: the best SoLoMo game (copyright: Massive Damange, Inc.) 10 Figure 4: iPhone screenshot of Shadow Cities: a true SoLoMo Game (copyright: Grey Area Ltd.) 14 Figure 5: MMG & Mobile Social Gaming Market Data Figure 6: Top 4 SoLoMo Game with Player Number 17 Figure 7: Psychological game-play pattern of SoLoMo Gamer 17 16

Figure 8: Sample trail map of SoLoMo gamer: How do they chase 18 Figure 9: Market data related to Brand Virality & Engagement via Mobile Social Gaming 19 Figure 10: Top 7 Augmented Reality SoLoMo Game 20

Figure 11: ARDefender SoLoMo Game on Android (copyright: int13.net) 21 Figure 12: In-game virtual goods market related data 21

Figure 13: Virtual goods placement in MyTown- a SoLoMo Game, tracking real time location (copyright: Booyah) 22 Figure 14: Mobile cloud gaming network diagram: a graphical presentation (copyright: Stanford) 24 Figure 15: G-Cloud: Worlds 1st Mobile Cloud LTE Gaming on Docomo Tablet (copyright: Docomo) 25 Figure 16: m.friendster.com - HTML5 Game Publisher for iPhone, iPad, Android i.e. Buggy Fighter, Cool Pool etc. (Copyright: FriendSter) 25 Figure 17: iOS vs. Android Gaming Market Share Related Data 27 29

Figure 18: Identified tasks behavior in SoLoMo gaming eco-system structure

Figure 19: SoLoMo Gaming Market Player in Value Chain Model 30 Figure 20: Revenue Dimension in SoLoMo Gaming Value Chain 33

Figure 21: SoLoMo Game Publishing Framework: Appstore vs. SNS/Location Portal vs. Cloud Platform 33 Figure 22: SoLoMo Game in OTI vs. OTA Distribution Channel 34 35

Figure 23: Competitive comparison between iOS vs. Android Appstore Model Figure 24: Sequential steps to monetize SoLoMo Gamer 38 39

Figure 25: Sample conversion funnel to analyze SoLoMo gamer Figure 26: Life Cycle model of SoLoMo game 39

Figure 27: KPI Framework to manage SoLoMo game life cycle

40 40

Figure 28: Steps to follow to develop Analytics Approach in SoLoMo Game Figure 29: Sample Viral vs. Retention Metrics Graph: What to Focus? Figure 30: Checklist to manage retention metrics 41 41

Figure 31: Checklist to get advantage from Virality Metrics 42 Figure 32: How to manage acquisition metrics 42 43

Figure 33: Checklist for business monetization metrics

Figure 34: Sample of Custom metrics to derive actionable insights 43 Figure 35: Checklist to monetize Brand in a SoLoMo game 45 Figure 36: Sample monitoring metrics determining Brand effectiveness in SoLoMo game (copyright: Oracle) 45 Figure 37: Strategy to include designing right Business Model for SoLoMo Game 47 Figure 38: Mobile Social Gaming APR, average download, charitable stuff related market data 48 Figure 39: Distribution & Pricing Model for SoLoMo Game 48 Figure 40: Key Revenue & Cost Items for SoLoMo eco-system player 50

Figure 41: A Need Bragging approach creation for SoLoMo game monetization in Free-to-play & in-game transaction model 50 Figure 42: Balancing SoLoMo gamer in a need bragging approach 51 Figure 43: Market challenges & Solutions in micro transaction model 51

Figure 44: SoLoMo Gaming Market Value (core + market shift) 2012-201754

Figure 45: Core vs. Shifted Market Percent among Total SoLoMo Gaming Market Value 20122017 55 Figure 46: % of Mobile Social Gaming Market will be shifted to Core SoLoMo Gaming Platform 55 Figure 47: Top 5 countries SoLoMo gaming market share 56 Figure 48: Revenue Share % among SoLoMo Gaming value chain partners Figure 49: Revenue sources % from SoLoMo gaming Eco-System Player 57 Figure 50: Comparison of Money Gaining & Loosing of Existing vs. New Market Player in SoLoMo Gaming Environment 58 Figure 51: Ad Funded vs. Micro Transaction Revenue under SoLoMo gaming platform 20122017 58 Figure 52: SoLoMo Gaming revenue contribution % Tablet vs. Smartphone vs. Featured Phone 2012-2017 59 Figure 53: SoLoMo Gaming ARPU 2012-2017 59 60 56

Figure 54: % of SoLoMo games average Virtual Goods Pricing Trend

Figure 55: SoLoMo Gamers expenditure over Consumable with real life cash vs. Durable vs. Personalization Virtual Goods category 60 Figure 56: Free-to-Play vs. Paid vs. Others Game in SoLoMo Platform 2012-2017 61

Figure 57: Ad Funded vs. Micro Transaction vs. Hybrid Game market share in SoLoMo Platform 2012-2017 61 Figure 58: HTML5 & Cloud Technology Adoption Trend in SoLoMo Game 2012 - 2017 Figure 59: GPS technology Adoption Trend in mobile devices 2012 - 201762 Figure 60: Worldwide SoLoMo Gamer Projection 2012-2017 63 62

Figure 61: Core vs. Shifted Gamer percentage among total SoLoMo Gamer 2012-2017 63 Figure 62: % of Mobile Social gamer will be shifted to SoLoMo gamer 2012-2017 64 Figure 63: Casual vs. Regular Gaming in SoLoMo Platform 2012-2017 64 65

Figure 64: % of SoLoMo Gamer bought virtual goods on different age bracket