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Mobile games have become ridiculously lucrative over the past year

Published Feb 19th, 2014 6:00PM EST
Mobile Game Spending Growth

Why was there such a media storm over Flappy Bird? Why is the upcoming IPO of King getting so much coverage? Maybe because mobile game apps are becoming the dominant force in out culture. According to a new survey by App Annie, consumer spending in-game apps has soared to more than double the size of spending on digital music. The survey covers the United States, the big Euro markets, Japan and South Korea. The annual growth of consumer spending on game apps is still a titanic 130%. The annual growth of digital movies and digital music is stuck in the relatively anemic 10-20% bracket.

Looking at the App Annie survey trend lines, by the summer spending on game apps will move above the combination of digital spending on movies and music. There are major geographic differences — in Japan, mobile game app spending is vastly larger than spending on digital movies while in America, spending on movies still slightly edges out spending on game apps. This is one reason why Japan has become the biggest mobile app market in the world: Its consumers are spending wildly on games but are still lukewarm on music and movies.

This is also why Japan is becoming a crucially important market for Western app vendors — it is now the key to global domination even as the U.S. app market is steadily falling behind despite growing at a healthy clip. The rush to Japan has motivated Supercell and King to go to great lengths to conquer the market, which they both did over the past winter. Supercell sold 51% of itself to Softbank and GungHo, while King spent millions on a lavish TV ad campaign around New Year. American app vendors from Zynga to Electronic Arts are still trying to find the keys to Nippon. Until they crack Japan, European app vendors are going to retain the global leadership in the mobile app industry.

Music and movies have been the traditional core strengths of American entertainment industry. But in the mobile sphere, they may be doomed to lag far behind the massive and rapidly growing mobile game industry.

After launching mobile game company SpringToys tragically early in 2000, Tero Kuittinen spent eight years doing equity research at firms including Alliance Capital and Opstock. He is currently an analyst and VP of North American sales at mobile diagnostics and expense management Alekstra, and has contributed to, Forbes and Business 2.0 Magazine in addition to BGR.

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