Mobile to remain most lucrative gaming segment in 2023 with consumer spend to hit $108bn

Mobile gaming is projected to remain the industry's most lucrative segment, with consumer spending set to hit about $108 billion in 2023, a new study has shown.

While that would be a 2 per cent decline from 2022's spending figure, mobile still holds a significant edge over the rest of the field, remaining the largest market opportunity for games and developers, according to a report from market intelligence platform data.ai, formerly known as App Annie, and the International Data Corporation.

Spending on home consoles – based on rising figures from Microsoft's Xbox Series X/S and Sony's PlayStation 5, and despite falling numbers from Nintendo's Switch – is expected to grow 3 per cent to $43 billion this year, to make it a distant second, the study said.

Following closely is spending on Windows PCs and Apple Macs, which is expected to rise 4 per cent to $40 billion.

Spending on handheld devices will take the biggest hit, with an estimated 20 per cent drop to less than $3 billion in 2023, due to waning interest in Nintendo's Switch Lite but partly offset by rising interest in Steam Deck and other gaming handhelds.

“Despite the softening in direct consumer gaming spend, mobile is still the largest market opportunity for games. In this fast-changing landscape it's critical to stay ahead of trends, streamline your acquisition and optimise your monetisation strategy,” the study said.

Gaming has become big business globally, gaining traction during the Covid-19 pandemic in 2020, with new technology providing both an opportunity to reach a wider audience and develop new titles to cater to consumer demand.

Revenue in the global gaming market is projected to hit $212.4 billion by 2026, a 13 per cent increase over 2023, with mobile platforms continuing to lead the growth, market data platform Newzoo said in its August market update.

That revenue surge will be dominated by mobile games, which are seen to marginally grow 0.8 per cent and account for $92.6 billion, or nearly half of all revenue, this year, the Amsterdam-based company said.

Mobile gaming is expected to continue to lead in the industry with the widespread adoption of smartphones and the increasing power of mobile computing, Boston Consulting Group said in a recent study.

The growth in gaming's overall revenue will be underpinned by a growing gamer population, which is projected to rise 6.3 per cent year-on-year and hit 3.381 billion players in 2023, Newzoo said.

“Mobile gamers are varied and demanding. Staying on top of popular features and revenue-driving updates are the keys to better daily active users and stickiness,” the data.ai and IDC report said.

Gaming in the cloud is also gaining momentum, with its share of global hours on smartphones and tablets pegged to rise to about 26 per cent in 2023, it said.

That would translate into global consumer spending of around $3.8 billion, which would be a rise of more than half compared to 2022, it said.

The Asia-Pacific region continues to drive mobile gaming's momentum in 2023 across all platforms, with Brazil, Turkey and Mexico leading growth in the rest of the world, the study shows.

However, despite the present growth and perceived potential, the gaming sector is not without its challenges.

While mobile remains the largest opportunity, continuing updates to privacy regulations, macroeconomic instability and rising competition has made acquisitions and growth more challenging, which in turn makes finding new users and setting expectations for revenue growth “tougher”, the report said.

“New competition is constantly entering the mobile space and with mobile consumer spend set to remain about the same in 2023 as the previous year, it’s more important than ever to stand out from the market,” it said.

“In order to protect one’s standing and not fall behind, staying ahead of trends is critical.”

With rising acquisition costs, creative optimisation is more impactful than it has been in the past, according to the study, which emphasised that understanding how competitors are effectively strategising can drive asset and network strategy for growth.

“There are more options around how to monetise than ever before, but maximising revenue potential requires a more comprehensive approach to monetisation. Ad revenue, subscriptions, battle-passes, promotions and many other options exist,” it said.

“Understanding what’s performing in your genre for your users requires staying ahead of the market through monetisation insights.”