Mobile, video, gaming convergence brings opportunities

Anand Srinivasan, Matthew Kanterman, Jitendra Waral and Anurag RanaBloomberg Intelligence analysts

Mobile gaming bolstered by tech, consumer and business trends

Mobile gaming may keep expanding because of the opportune convergence of consumer, technology and business trends. Consumer handheld devices such as smartphones and tablets are ubiquitous. The software on them makes it easy to deploy games without the need for physical distributors and to gather a large number of users. The increasing quality and complexity of games may have also found a large middle ground in terms of costs and revenue potential outside of a core group of gamers.

These factors will drive graphics processing both in devices and in the cloud that connects them. Nvidia and AMD are among the largest makers of graphics-processing units exposed to this growth, while EA, Activision and Take Two are among the biggest publishers of console and PC games.

Mobile gaming expands audience, market from ‘luxury’ sport

Mobile gaming’s audience has expanded beyond geeky PC and console gamers, which remains a luxury sport, given the cost of the hardware and software. Gaming PCs can cost more than $1,400.

With graphics cards’ capabilities advancing substantially annually,users tend to upgrade their graphics card more frequently than the PCs themselves, adding almost $1,000 per upgrade. Consoles also remain expensive, with high-end games costing both for the initial download and in-game options and mission packs.

Only 20% of PCs sold are high-end game capable today. Dell’s Alienware, Hewlett-Packard Inc. and Lenovo all make high-end gaming PCs, while Microsoft, Nintendo and Sony are the largest console vendors.

Device Price, Market Size Comparisons

Traditional games carry 20x sales; mobile games has 1.6x users

Mobile gaming may only carry revenue of $3 a user, while traditional PC or console-based games may carry as much as $60 per use through the game’s life. The base of smartphone and tablet gamers is 1.6x that of PC gaming monthly active users, according to IDC.

Most of the revenue is skewed toward the purchase value of the game itself. In the case of console and PC games, about 25% of additional sales could come via in-game ads and purchases. For Mobile games, it’s likely much lower.

Smartphone vs. PC Gaming Revenue, Users

Mobile ubiquity democratizes gaming, drives larger interest

Mobile gaming, unlike console or PC gaming requires no physical distributors for the software. The direct relationship entices game developers who want to break the barrier of a physical distributor or hardware intermediary that controls their access to users.

Emergence of social networks has also enhanced mobile gaming. These factors drive the user growth of the market, which in turn propel the computational and graphics processing needs of the device and servers users connect to.

Smartphone and Tablet Gamers by Operating System

Graphics are critical in device, data center for mobile gaming

Mobile gaming makes the graphics processing subsystem that much more critical for product differentiation. Currently ARM’s Mali, AMD’s Radeon, Qualcomm’s Adreno, Intel’s integrated graphics, Imagination’s PowerVR and Nvidia’s GeForce and Grid platforms produce graphics capabilities for use in mobile devices, PCs and servers. The growth of mobile gaming will drive data needs in the device and in the data center.

This in turn may have effects on power and heat management of devices and servers and how CPUs and GPUs co-exist logically and physically.

GPU Competitive Landscape

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