Time is money. And if you are spending your time staring at a mobile phone, then that is where the money is. Advertisers know that – eMarketer expects ad spending on mobiles to grow 92 per cent this year. But the mobile gaming world is struggling to win its fair share of those ad dollars.
Android users spend a third of their device time playing games, says Flurry, an analytics company owned by Yahoo. By comparison, Facebook gets 17 per cent of phone time. But advertising in mobile games – about $6bn a year – is less than Facebook’s mobile ad revenue. The business model is different – for now: mobile games make their money from in-app purchases, to the tune of $18bn this year, with sales growing 20 per cent annually.
But the growth in mobile ad spending is a lost opportunity for the gaming industry. One reason is that no one has quite figured out how to do mobile game ads well. Banner ads are tacky. And ads that are successful demand a lot of development work – such as the virtual Lexus in Real Racing 3 (by Electronic Arts). Some companies, such as Tencent, eschew ads altogether. But as it is, mobile games are less lucrative than their console counterparts. Average revenue per user in mobile games is only one-tenth of the Arpu for console games, according to Interpret.