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Mobile To (Candy) Crush Games Industry

By Oonagh Reidy | Thursday | 13/02/2014

Mobile the name of the game

By 2016, we'll be buying more mobile games and downloads online, than from physical gaming stores.

New figures out today, show the value of the digital gaming industry is going up and up, driven by mobile games and in-game purchases of lives, money and coins, and will exceed physical purchases in 24 months, Sam Yip, Telsyte told Smarthouse.

The value of the gaming industry by 2016 will be far greater than its current worth (of $2 billion), especially if 50% growth for digital continues. Games purchased from physical retailers hit $1.14 bn last year, while digital was slightly less at $899m. 

The gaming model is turning on its head. 

Its no longer Aussie gamers flocking to EB Games in droves to buy titles, they're turning to freemium games like Candy Crush, Angry Birds and Temple Run on smartphones, tablets and consoles on free or low cost games. 

The real spending is on lives and coins via in-game transactions, Telsyte data reveals. 

In the past 12 months digital games has surged 50% to $899 million on the back of mobile games like Candy Crush and Temple Run worth $452 million in-game purchases accounting for $316m.

The new freemium gaming model an "untapped" market and the recent phenomena that was Flappy Bird, now killed off, shows the "viral nature" of the market, says Yip and expects micro transactions in games to spike further. 

Digital games were also boosted by online game downloads and subscription to online gaming platforms like Xbox Live and PSN. 

But Telsyte's figures do not include used games, overseas gaming purchases from online sites such as eBay and Amazon so the value of the gaming industry is actual much higher, say Yip. 

Gaming is a seasonal market, it fluctuates according to the value of the dollar, which encourages gamers to buy from overseas retailers when the dollar is strong. 

In terms of the future of physical gaming, the future isn't so bright. 

"At this rate, mobile game revenue could exceed that for physical games within a couple of years" but retailers are benefiting from the surge in consoles sales - on the back of the PS4 and Xbox release. 

This cycle will cease once initial demand stabilises. 

With only 6 weeks of sales of the 8th generation Microsoft and Sony console, the value within the category for the entire year improved 27% in Australia, according to NDP data.  

Consoles accessories sales also improved in 2013, driven by Interactive Gaming Toys: Skylanders & Disney Infinity. 

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