Awesome Video Game Data 2017

[Music] welcome to awesome videogame data if you're not here to see this you're in the wrong room my name is Jeffrey Zetkin I'm gonna introduce myself introduce what we're doing and then hop right into data we're gonna be doing about 75 data slides in an hour today so hold on to your seats I said my name is Jeffrey Zack and I've had a split career from my first 10 years in the game industry I was a game designer including having had the privilege of working on the original EverQuest team before that I was an indie dev that we weren't called that at the time for my seconds 10 years in the industry I founded ran owned and have now moved on from hede R which is the world's biggest video game space or market ah let me start again the world's biggest video games specific market research firm and at the beginning of my third decade in the game industry I've started a new VR focused startup called experiment 7 this talk covers a broad range of industry trends some of these will be familiar to you who saw this last year or the year before that or the year before that this is your number six

of this talk however all of the numbers have been updated through the very end of 2016 so some of this is new and some of this is similar but it's often good to know that some of the things are still the same in addition to what's actually changing so eat are one of their primary focuses is game attribution or the DNA pieces that make up games you can think of er as the game Genome Project they track most game attributes you can think of and this takes a very large team there's more than 40 full-time dedicated researchers analysts engineers and QA professionals working to track about a hundred thousand commercially released games gaming accessories and hardware and this covers pretty much every retail and digital console handheld PC iOS and Android game that has ever reached the top 50 of any chart for the mobile stuff and going back about 20 years for the console and PC stuff recently passed about 150 million unique data points and they partner with a lot of people who do measurement data sales marketing awareness including NPD who purchased it

are from Gregg short and I the founders last year so all the data that you see here is collected by EDR so that is this source everything is sourced down in the corner and integrated into our system from some of the best-in-class measurement companies that we partner with I am currently working as the creative director of experiment seven a studio I founded with a buddy of mine named Dmitri des 3ds and we're making VR games for our magic table platform and we make some awesome table based games that you play in VR with your friends from around the world we have a game in the oculus store and another one coming out in about a month which is in an animated kind of wizard chess battle chest inspired by Dungeons and Dragons and if you happen to be an investor in this space hey come by and say hi we're still closing around so why am I giving this talk when I'm no longer a TDR well GDC being GDC and being awesome you have to submit for the talk so far in advance I actually hadn't sold my company at the time so I chatted with RCA CEO and I said well if the sale goes through I'm

gonna come back we're gonna put one last one of these together and do it so if you see this talk next year it will be somebody other than me but we have a couple of really great speakers in analyst that are still so I hope the tradition carries on and today I'm going to tell you about some of the coolest things we've seen in the past year backed up with data so to get this talk you do not have to take a picture every single slide though you may if you like take a picture of that send an email in and you will get the deck in the mail in a couple of days so I'm gonna pause for a second for that I will also show that slide again at the very very end so if you decide you want to take it then go for it okay here we go so the gamers of today our entertainment consumers and they're consuming entertainment on pretty much every possible medium if you look at this point for the US about 65% of the population has played a game in the recent past we're taking pretty much every dedicated media device and turning

it into a gaming population they're a gaming platform and since last year was na Europe focused this year's more up to me na Asia focused this is more na Europe focus since we flip every year back and forth so who games if you look at the AAS a survey starting from 2007 whoops hold on I'm a slide ahead so this is homes with a gaming console so at this point according to the ESA when we went up to about 2010 two-thirds of American households had a gaming console in them and then they missed year and they backed it back down a little bit because what they'd been doing was counting consoles as opposed to counting consoles per household so about half of American households have a console in it but on average the households that do have a console have two of them in it so there's a friggin ton of consoles out there in addition to that a majority of US households own a device that can be used to play video games so at this point if you look at America North America and pretty much

across through Europe most households have some sort of device that can be used to access video gaming and at the start of 2017 we have a lot of choices of where to game and a lot of hardware built specifically for that purpose so this is showing Oh as a reminder that I forgot to say at the beginning if you have a device that makes noise like a cell phone please silence it they're taping so hardware sales are very important and this is showing hardware sales worldwide through the end of 2016 and hardware sales are important because this is what determines your total potential market for example with about 50 million ps4 sold worldwide the theoretical maximum sales of any ps4 game you make would be 50 million won for every ps4 in existence of course there are ones you know that's of course the maximum nobody ever hits the maximum but you know that is kind of why hardware is important if you're trying to put out a game on something that's sold a thousand units total the most copies you would sell would be a thousand so the core eighth generation

hardware the ps4 and the Xbox one are actually doing very well on sales so how well so what this graph shows is the generational hardware sales sorted not by calendar date but by quarters since the initial hardware release this lets us kind of compare apples to apple sales for 7th and 8th generation hardware so the sales of Seth tenth generation Hardware the 360 the ps3 and the we are in blue and the 8th generation the Xbox one the ps4 and the Wii U are in grey and you can see that the seventh generation is 36 percent higher the blue line than the grey line however an interesting thing about this is that you know we are including the Nintendo hardware and the Wii Hardware primary talk primarily targets non core game players who over the last generation in a lot of cases have been migrating from consoles onto web and social mobile experiences so if you remove the Wii and the Wii U from the

hardware line and you look at the core consoles the settling into the core market you can see red is the eighth generation and yellow is the seventh generation - the Nintendo hardware and at this point you can see that at this point in the cycle we've sold 34% more Hardware into core consumers than the hardware we were selling last generation so the consoles are actually ahead that are dedicated at the core consumer and as I said the more casual consumers have been moving to other platforms and this is an a lotta taste is true with the genres as well so what we're looking at here you know talking about the shift is this shift from kind of a balanced portfolio across consoles of Corin casual games to a more core focused portfolio so the numbers in blue are the percent of sales for the seventh generation consoles by John rrah and we're only showing some of the donors here and then gray is showing the eighth generation sales of those same genres so you can see that some of the more casual Jean rizzardo and of the mid core

remaining static and the core are increasing their number and in the same way you know the breakout genres on mobile are mobile centric excuse me I'm the sniffles from the airplane so what this show is here is the most plays on rus' from you know a vast amount of surveys that we've done for age basically adult gamers age 18 plus so blue is they only play that on mobile gray as they play it on mobile PC or console and yellow as they play on PC or console so you can kind of see this shift in genres that some of them are very much mobile centric and others are more the PC console centric and you know that means said what is very important to realize is that most gamers play games on a variety of devices there are almost no mobile gamers that only play games on phones so we've seen that the gamers are playing games across a variety of devices but they're playing different

games depending upon what device they have handy at the time or the actual amount of time they have for playing and we'll be going more into that later but you know of course we're you know from the previous numbers we're not just talking about consoles in handheld this shows platform sales worldwide including bringing in PC and iOS devices the iPad in the iPhone so PC is a hard thing to measure because of the quantity of PCs you know how many pcs have you owned across your lifetime you know that makes it really hard to get an active install base but this is up there a very underreported PC hardware number which is about a hundred and fifty million and I'm going to get back to where that number comes from later so when we're bringing the iPhone and the iPad you can see good amount of sales there you may notice that these are lower than their worldwide sales numbers so that you know what we're showing here is two year hardware sales for the iPad and the iPhone so that's ninety two million iPads instead of three hundred and fifty million sold across lifetime and the 407

forty seven million iPhones instead of the 1.1 billion iPhones sold life to date and why well because of data so especially with phones data shows that most people upgrade their phone every 12 to eight Divac send me every 18 to 24 months so the average smartphone right now is about six months old some we're actually starting the six month to a one-year range so well technically there's one point 1 billion iPhones out there if you take the last two years sales that's 147 million that's kind of the active install base that you're looking at and by the way one of the things to note too is that this is 92 million iPads last year I was talking about 123 million in the 2 year range so that number has actually gone down where the iPhone number is actually up 47 million from last year when I was talking about it on the active 2 year range and we'll get into that in a bit later as well so why am I not showing Android well Android fragmentation makes this a particularly difficult thing I know I showed this one every year we always get

a giggle but androids doing really well there's a tremendous amount of phones out there the problem is not every Android phone is powerful enough to play all games and this makes it again very hard to do a market sizing on something when you have a variety of different devices in this sort of fragmentation but what it really comes down to is there's a lot of dedicated hardware on which to play games so speaking of dedicated hardware we are got a lot of attention this year we've had everything from skeptics to true believers and but a lot of it really comes down to when will people buy Hart VR hardware and make VR Hardware thing well the thing is starting Lulu is showing life to date sales of the high-end via hard work ravit high-end VR hardware the ps4 the oculus and the vibe grey shows integrated mobile the gear VR in the daydream and the yellow shows snap and mobile excluding cardboard there is a lot of cardboard out there I heard a figure that was somewhere around 80 million and it's just Google's done a very good job of distributing that at a very low price the second graph shows

rough life to date revenue for the hardware the integrated mobile VR hardware is a bit lower than you might think because of the amount of sank some gears that came packaged in with their mobile devices a lot of people basically picked it up for free on promotion but we're starting to build a critical mass of VR hardware enough to begin to make profit of profitable VR ecosystem and like each generation of hardware and type of hardware before it you know consoles PC mobile it takes time to build an ecosystem you know and people always wonder will there be one up until the point where suddenly everybody's like oh oh of course there is one why did we ever wonder and this is going to happen here as well just like it's happened with every other dedicated piece of hardware out there so speaking of hardware the North American mobile market is maturing we're actually beginning to see device saturation at this point more than 75% of North American adults own a smart device and so there are fewer new device owners entering the market year-on-year so what

we're seeing here in blue is population that owns a smartphone or tablet and in gray is population that plays games on their smartphone or tablet and so what you're seeing is that decrease on the line less and less new people getting it because we're hitting the saturation the gaming population is still actually increasing faster than the hardware adoption so we haven't hit saturation on that yet but it is slowing down you know gamers as a primitive population is still growing but that being said it is mathematically impossible to continue growing the percentage increase forever and what that means in a lot of cases too is we need to get better about treating and acquiring a lot of our mobile users because we don't have an infinite amount of them to flip through and burn and just grab the next batch so dual device ownership is still very strong and strongly associated with revenue in North American and European markets as many mobile users opted to play on both

tablets and smart phone devices and this is critical because a large percent of the revenue comes in from users who own both at this point 51 percent of active mobile game gamers on both a smartphone and a tablet and they generate 60% of the revenue you know that means said this is down from 61% owned both last year and they generated 70% of the revenue between 2015 and 16 tablets usage by adult mobile gamers has declined from 70% in 2015 to 59% this year and a lot of this is because of the availability of large screen smartphone options basically we now have ones that are big enough that people use that instead of going up to a full tablet that being said the duo owners still do generate the vast majority of the revenue and in a lot of cases for tablets where it had previously seen more mixed use the tablet is becoming more commonly a livingroom device now so

if we look at who games excuse me to take a sip the Democrat the demographic of people the game in America and in Europe and in actually all of North America is a lot older than most people think the average game of the u.s. gamer according to the ESA rose from 29 years old in 2004 to 37 in 2011 and then we had a dip when they started measuring mobile and that dropped the age but then it shot it right back up as people besides children started playing games on them and it kind of permeated the ecosystem so you know this is great we've continued to expand the market by adding game players and average age of 35 is a very healthy thing considering the lifespan of people in the North American states and if you look at the age distribution here blue is 18 and under gray is 18 to 35 yellow is 36 to 39 and red is 50-plus so yes there are almost as many 50-plus gamers as gamers under the age of 18 which is

again fantastic you know we have a well distributed age demographic of game players in North America and this represents a really large market expansion in our consumer base there's been a long-standing myth that video games are for children games in America have never been for children at least in the past decade children like to play games in the same way that children like movies and TVs and books and music but games are another form of entertainment media and they've permeated our culture and they're now played by pretty much everybody on a very wide variety of devices if we look at mobile kind of focusing down on some of this the mobile market is also shifting older year-on-year and we will I believe this is primarily due to a late to an influx of late adopters coming into the market and late adopters tend to be older and less tech-savvy as part of the population so blue here is this is showing total market size on aged looks I mean let me look at my graph this is showing age by groupings

of people on how they pay for mobile so on the left are non-payers people who never pay any money for this and you can see blue is 2014 gray is 15 yellow is 2016 the age has gone up from 34 to 41 payers are people who basically on a yearly basis for their entire mobile spending habit spend between a penny and $99.99 and heavy payers pay $100 or more across their total gaming habit per year and again this is just on the mobile spin this doesn't count they're console and their PC and their web and everything else so this is purely mobile you can see the age of the heavy payers has remained pretty constant while the non payers and the payers have gone up and again this is a law due to the late adopter syndrome and we'll get more into that later so if we go back and we look at the gender you know returning to who games the ratio of male to female gamers has definitely changed over time and it bounces around a lot and this is the ESA numbers the eat our numbers are very close but you

can see we've always kind of maintained about a 60/40 ratio and it creeps up a little bit and creeps back down but there have been more women playing games longer than most people think this is also really impressive here because with the quantity of new players coming into the market this could have been a radically different story this could have been you know only this age came into the market or only this gender came into the market but we've seen it you know pretty much permeate the culture going you know both wide and deep and again that points to a very healthy ecosystem of you know people who like games and are willing to come into the gaming ecosystem and hopefully pay all of our salaries so we can go make more games however that means said men and women tend to play on different pieces of hardware blue is boys purple is girls and you can see here on mobile there are more female gamers than there are male gamers outnumbering but you up to handheld a little more male console more male PC primarily and this always shifts around a bit over time but at this point

if you're looking there are more women on mobile and there are more men on PC if you kind of look at the payer segments on this so in again blue 14 grey 2015 yellow 2016 going into the female gamers on this on the non-paying segment they've received they've remained pretty steady same on the payers last year the women's shot up to be 50% of the heavy payers that's considered the whale category and this was because for one of the first times with Kim Kardashian and a couple of other things we actually saw dedicated offerings made that started addressing pieces of the market that hadn't been significantly addressed and monetized before however the lowering which I'll get into in a minute is due to the fact that an ox algún didn't warn another slide we've seen an increase this year on the number of people who were kind of the top of the payer category just into the heavy payer category and those were primarily men so while the

women are still paying in the heavy category this group of people who can have just moved over was primarily male leaving a lot of the women at kind of the top of the payer category and so that lowered percentage-wise and so you know that being said we've seen that women like men will pay for the games they like and you know this just may means make games that people like or you know target specific groupings that people will like so a quick note on game Naumann klaich er a skew or a shopkeeping unit is what you'd actually buy in a retail or a digital store so that's Angry Birds hggg a game of the Year Edition to the Assassin's Creed collector edition rock band with or without instruments and most games release multiple SKUs you know you want to put out your regular edition your game of the year or you want to put it out on different platforms so if I say that something's askew that means the individual game that came out if I say hey you know this was Angry Birds on

Apple you know for the original one that would have meant for games rolled into one if we're counting and this is important because I'm gonna be showing counting numbers if I say is distinct game like Angry Birds that means Angry Birds on every platform it came out with every single SKU released all rolled into one where the franchise would be Angry Birds this of course doesn't count regionalization which adds a whole bunch of different things to this and this is of course why your accounting department hates you so looking at games and game count we're going to be talking about platform for the next couple ones which is hey if it came out on Apple and there were four SKUs that only counts as one game so looking at the number of games release for the past few years we've been in the middle of a renaissance of game creation you know while the barriers to making a triple-a or s tier game have arguably never been higher the barriers for small teams to create games of quality of perhaps never been lower so this is the quality of retail console

handheld and PC games released at a platform level so all the skews rolled into one and you can see that it's getting lower and this is not something you'd expect but I'm leaving out a huge thing here so let me change this axis from 2000 up to 7000 and it looks like this and let's say instead of retail games let's say retail and digital console handheld in PC and at this point it looks something more like that so yeah that is a lot of games and yes we had almost 6500 games come out last year just for console PC and handheld and the question is where are all these games coming from so in blue we have the seventh generation consoles Xbox 360 ps3 Wii gray is 8th gen yellow is handheld and red is PC and yes that is almost entirely steam there were about 5000 games released on Steam last year here let me break this out this is

what steam has looked like in 2014 there were 1500 games in 2015 there were 3400 in 2016 4600 games released more games came out on Steam last year than the entire physical and digital catalog of every seventh generation console so the 360 the ps3 in the Wii and eighth generation console the Xbox one the ps4 and the Wii U and all of the handheld like the game boy or man I can't even think today the Vita and all of that put together if you put all that together more games came out on Steam last year than that entire catalog and last year so let's see steam they announced about 15 years ago at GDC actually over a hundred and fifty million active users remember when I said it was hard to gauge a PC hardware install base well if you assume that there's at least one PC for every steam active user you get at least 150 million active gaming PC's out

there so back to games released so we also now have bite-sized gaming devices in every pocket which is great it's and it is now socially acceptable to play a game just about anywhere anytime we have become a gaming culture you know when I was growing up nobody played games in bars nobody played games in coffee shops you know nobody played games on the bus well maybe on the bus but you know obviously a tremendous amount of iPhone and Android games released every year and I've shown in past years we've talked about the discovery problem you know there were more than a hundred thousand you know just iOS games released in North America alone that however is a very impractical number because the majority of those games sell nothing so the numbers I'm showing from the next chart RR io s and Android games that basically hit a top 50 chart meaning that they had some chance of making revenue so if we're gonna what we're gonna look at now is if we say okay if we take the total release of everything that came out what were the percentages so this is on quantity of

games added up against each other seventh gen which is sunsetting 1% eighth gen 15 handheld 2 % PC 58% of the games released and then you get iOS and Android at the 10 and 14 but again those are only basically games that hit a top 50 of any of the charts during you know the entire year so that is still a tremendous amount of games and those are the ones that actually had again a chance of selling so a point of fascination for me also on the shift between the seventh and eighth generation consoles has been going from physical to a fully integrated digital strategy so blue is physical only game releases grey is digital only releases and yellow is written games released both physically and digitally on a console and as you can see you can actually see here the peak of physical game releases and the constant rise of digitally released games this kind of sums it up here and at this point unless your game on a console has a mandatory physical component or peripheral it is

pretty much always released digitally there are no more physical only released games of this type you know you can look at that tiny little blue bar at the bottom of 2016 going along with kind of some of the surprising bits on the trends another one has been for console the quantity of publishers which is here shown in blue has increased over the past decade so blue is publishers grey as games on console and the yellow line is games per publisher so this is surprising I say because there's been a massive consolidation in the mid in the top tier publisher ranks you would expect to see therefore fewer publishers over times with the buyouts and acquisitions the consolidation has been offset however by the rise of the digital only games and the low barriers to entry for digital publishers so you can again kind of see the quantity of games and going down and the yellow line is the average number of games released per publisher which you can see has declined and most publishers at this point are concentrating on fewer better

financed and better marketed titles you know if we showed only the major publishers here the difference would be significantly more pronounced gone are the days when a single large publisher would have a slate of say 20 plus premium games all coming out in one year again the trend is less games per but bigger development budgets and bigger marketing budgets so video games sales you know so these are games this isn't counting the hardware the peripherals as reported by ntpd is about a 116 point five billion dollar a year industry just in the US and there's acknowledgement that this is it a little bit of an underreported number but this is really close and of course the games are not the only thing in the ecosystem you know we also do have the hardware in the accessories and together it adds up to about twenty three point five billion dollars again just in the u.s. mobile sales are also increasing this year we had about six point 1 billion dollars of mobile sales in North America and this

makes up you know a larger percent of the market than ever before about a third of the revenue is coming in from that and across mini REIT in pretty much every region mobile gamers tend to engage similarly with mobile games with about half of the players spending nothing on games in a very small amount of them spending a lot and this has been pretty consistent year-on-year in North America and we see you know this back in similar trends across Asia and Europe so blue here is 2014 and this is the mobile gamer this is actually a number of active mobile gamers in gray as 2015 yellow is 2016 and they're bucketed into the non-payers payers and heavy payers and a couple interesting patterns of note here much of the market growth is happening on the non payer end and this is again mostly tied to the late adopter non traditional gamers coming in and despite the smaller proportion of you know these the payers still contribute very significantly to a revenue we also see here that the

average spend of payers and heavy are payers and heavy payers is down from 2015 which is in the yellow to 2016 in green but the population has increased so the total population of heavy payers actually went up almost 50% but the new heavy payer is just edging their way in aren't the super whales these are guys who've moved from say spending 90 bucks a year to maybe 120 bucks a year as opposed to the 500 2000 bucks a year kind of at the top so more people are in the category in this category is making more money in total but there's less money per average one because some people kind of just moved up over the line so again more people in total generating a bit less on average but more money for the category when you look at monetizing to kind of break it out again just four percent of revenue non-payers obviously bring in zero percent of the revenue because they are non payers the moderate payers bring in

41 percent of the revenue or to me 45 percent of the revenue brought in by 41 percent of the population and this is actually down last year it was 45 percent of the ecosystem brought in 50 percent of the revenue and this year for the heavy payers which last year were about five percent of the ecosystem there now 7 percent and we've gone from 50% to 55% of the revenue so people are basically beginning to be okay with spending more money or a larger percent of the population is okay spending more money in the mobile markets than ever before which again is great for our ecosystem there is a heavy overlap between people who play games a lot and people who pay for the games a lot so on the left-hand side in purple we have light payers are we a payer players in the top the lightest one is light players less than an hour a week going down in the middle of moderate players one to five hours a week and heavy players for mobile and again this

is only their mobile playing time five hours plus a week across the top you can see the non-payers at zero the payers at you know ninety nine cents to a hundred bucks a year and the heavy payers at a hundred plus and you can kind of look at the heavy player amount and you see that almost none of them are light amount of players they all play for significant amounts of time and the heaviest monetizing group plays for the longest and again this is very important as you're designing your game people who play more tend to pay more that being said there's also still a difference by gender and as usual the men are the blue and the women are the purple and if we look at the heavy players there is close to gender parody if we look at the heavy payers because of the shift from last year men are now out numbering the women again and you can also kind of see the average age going along there so cross-platform ownership is very high in Western markets so this is looking at people who

play games on phone and where else they play games so if you look at the entire mobile gaming population of eighteen plus it's only 24% play games only on their phones you get them the twenty four percent for mobile PC thirty percent for mobile PC and console and twenty two percent for mobile console and a lot of the people that are mobile only are some of these late adopters who are just getting in and basically didn't grow up playing games in other places who then moved into cell phones because they work and tablets because they were convenient for playing and again almost all of the heavy whoops why do I even have that note there if you look at the PC market it's actually very similar although it's a little more skewed and this is slightly older data but again non-payers just below 50% you get the moderate payers and you get the heavy payers and on PC the 99th percentile is a call out accounts for 15% of the generated revenue so there are even more super whales in PC in some cases than there are in mobile PC

revenue from the total you know monetization of the PC ecosystem has been stretto steadily increasing over the past few years so in blue you see PC retail or physical in gray you see digital retail and in yellow you see free-to-play and at this point physical PC is pretty much non-existent PC has moved entirely into the digital ecosystem and you know a lot of this is spearheaded by outstanding titles like League of Legends and online stores like Steam you saw the steam numbers going up but again a majority of the PC ecosystem is now digital so part of this talk used to be with all the talk on PC and mobile why do I even still talk about console and then I'd show you pictures of all of the billion-dollar console games and say because they generate a and this is a technical term metric fuckton of money so I rearranged it this year for a new message there's a lot of great ways to sell games and some games cost significantly less to develop and some games provide enough in the experience

that people will pay $60 upfront for them but it's not just consoles if you have a widely adopted hardware platform ie audience people will figure out how to sell to that audience and this is why Apple and Android do so well they have a widely adopted hardware platform and a great game with you know a strong consumer value proposition and the correct monetization method can vary do do very well on mobile tablet PC console so we have billion-dollar HD games console and PC that are both premium and premium and free-to-play and billion-dollar free-to-play mobile games what we haven't seen yet is a billion dollar premium mobile title you can see one of the areas of that square is empty so as a publisher a developer when you're looking at the game industry it's very very easy to become myopic and focus only on what you and your team is doing or the region you're doing it in or the customers you're selling to but the game industry is the tremendous ability to scale to new hardware to new features to new business models and

rarely do the old ones die off as quickly as predicted or in some cases die off at all I can't tell you the number of times I've heard mobile is dead in my 21 years in the industry or PC is dead or console is dead or any wait now everything is PC or everything's console or everything subscription or everything is free-to-play know everything just keeps going and expanding out which again is great for the market that means we get to all keep making things and hopefully get a paycheck so speaking of dying off many people are wondering win tail games will die off and the answer is actually not very soon so this is the revenue split of games released simultaneously in physical and digital formats on basically core consoles and this grout so you can see in 2016 75% of the revenue of these games came in from physical sales this might have been a physical sale ordered digitally buying it off Amazon but this is buying a copy that you could stick in to your device 25% digital sales and this has

gone significantly through from 2005 when 97% was physical and 3% were digital but it's still much less than most people believe and has the potential actually not to increase turn drive add dramatically anytime soon and let me tell you three reasons why hey these are big games a lot of them and the Internet infrastructure of North America is not amazing you know we're gonna have to if you want to be a digital consumer you need a very strong digital backbone going across the country and the ability to get these games quickly number two is digital gifting is still really hard if my mom wants to give me a game on the Xbox or my wife wants to give me a game on the PlayStation or you know anything like that or you know I want to go to a my friend's bachelor party and give him a game this is still a very hard thing to do and until we can reduce the friction and make it super easy for basically non traditional gamers to gift as gaming there is still a lot of games that get bought as gifts number three a lot of these kind of gamers like to sell their

games back and they can't do that with digital copies and so that also is preventing this from getting more integrated that means said if you look at total digital sales which we see in blue they have at this point past total physical sales which we see in gray and for this measurement digital sales include digital game sales subscriptions DLC mobile apps and social network gaming so kind of the entire ecosystem of it so a few slides ago I showed how the quantity of games per publisher was decreasing and more publishers who are looking to invest more significantly both in development and marketing budgets on the games they released and this is actually reversed some of the market consolidate and trends we saw over the past few years but the top game still disproportionately outperformed the more modest games what we're looking at here is physical and digital consoles so yellow is the percent of revenue for all of the sales generated by the top 2 percent of the games gray is the top 10

percent and blue is the top 50 percent so the top 50% of the games bring in about 99 percent of the revenue and you can see the top 10 percent of the games are bringing in right around 65 percent of the revenue and the top 2 percent are bringing in and just under 30 percent of the revenue and this is actually a little better than it used to be and the categories are moving up again because people are putting more money or the bigger publishers more money fewer titles which means there are more titles than just the top 2 percent now you can kind of see that little dip in there going along with that the average looks on loans I skip his lines there we go I did so looking at 8th generation retail console 12% of the titles have at this point generated 75% of the revenue since 2012 and this is actually up from 2008 to 2014 when it was 8% of the titles generating 75% of the revenue so again more people investing more money and marketing in these kinds of games in a

lot of cases you know this really is the middle on the retail market is disappearing we're basically pushing up and we're pushing down kind of going along with that the average quality though has remained fairly consistent we haven't seen big spikes that dip by the way in 2007 and 6 was of the Wii when basically there was so much shovelware that got shoved on to the Wii that it lowered the entire review score average of the industry by a couple of percentage points it was down surprising to everybody this by the way the seventy number is about 10 points under the magic number you want 80 is the noob 90 80 basically is the point where people will buy DLC for your game where they'll buy expansions etc 80 is kind of the cutoff in consumers at this point for the good enough game and it really comes down to people don't lie buy more of a game that they don't like and if you're kind of looking for

your quality bar it's a tea that's where you want to be so ten points over the industry average um there's just variants every year honestly you know there's you get a couple titles that do particularly well or particularly poorly but the oh sorry the question was what do I do the trivia the slight drop in and again it's just it's seasonal and yearly variants there wasn't like all the games this year sucked or they were all better one of the interesting is kind of going along with that is the quantity of games receiving a review score so this is total count of retail and digital console games getting a review score in also buckets blue is less than sixty Gray's the 60s yellow 70s red 80s and purple 90's for review scores received and you can see there was that kind of dip for a couple years and that coincided kind of with the initial boom in Mobile when there were a

lot more people kind of looking at that but it has gone back up and what is interesting though is remember that quantity of game graph I showed you how many more games are coming out and so this is actually the percent of games on consoles that come out without a review score and that doesn't mean nobody reviewed it we count our review scores kind of like metacritic and gamerankings where it has to get at least a couple from basically sites of above a certain I'll just say reputation so these aren't individual blogs but if you look at digital excuse me digital only games we're still averaging just under half of them get no review score and again this is just the quantity that come out where the reviewers aren't obviously reviewing as many of the physical edition games as they used to you know used to be only three percent didn't get a review in 2016 we're up to 22 percent but if they're doing a pretty good job keeping up again considering just the firehose

of games that are now coming out and they're having to keep up with so coin kind of going along with reviews and review scores advertising matters there's a lot of development teams that think if you make a good game people will come and buy it and as a developer I used to think that and I don't anymore so without good marketing your game may do well but it will never do as well as it could have been usually substantially less so I've put two factors up on the screen a market spend and review score so in this case we're going to proxy review score as a shorthand for game quality and polish and if you wonder why you can look at my past GDC talks but there is a direct correlation between review score and unit sales and it's a hockey stick curve higher your score the more you get so you can look it up in the vault this is a little bit updated methodology since I last showed it this is showing 8th gen console first three months of revenue which is when a majority of it comes in but this holds true across pretty much every platform

every Hardware every type of game so what we have here is on the bottom is review score and we put them into buckets bottom third of review scores middle third and top third and on the left on the yellow going up and down the bottom third of markets men the middle third and the top third so if we take out the middle buckets we're left with hey bottom review bottom marketing which is where you don't want to be and top third and top third so if you look at the unit sales you can see there is a huge difference between the bottom and the top or the bottom thirds bottom thirds top third top thirds you know on average the bottom bottom brought in six percent of the first three month revenue of what the top group did but this then leaves the question if you had to choose between your game getting you know top third review scores in bottom marketing or top third marketing and bottom third review scores which would you do better with and the answer is you would do about twice as well with good marketing

and this again goes back to that quantity of games coming out there are so many games coming out that if you don't have marketing nobody hears about your game which means that nobody buys it and this doesn't mean you have to go out and do traditional marketing though that helps what this means is people have to have a way of discovering your game and that one of the ways you do that is through marketing and you know you can always bet on going viral but that's a bad bet to set your entire games success on so if you look at direct media spend at this point nine percent of the retail titles account for about 75% of the direct media marketing since 2012 and this was actually the exact same percentages last year and down from the year before Wars 13 percent this is however much higher than in kind of the 2008 to 14 were only six percent of the titles accounted for this so again publishers less games per publisher more marketing spend more development spent on it so switching back over to mobile

for a bit so if you compare across regions we see the mobile gamers are largely playing for many of the same reasons and these tend to revolve around two key themes accessibility and convenience and this ties back to the mobile gaming experiences that have been successful those that require a very limited attention span and time to play can be played and fit into a variety of circumstances and in many ways at this point we feel that Mobile's kind of found its niche as an experience that fits into a network of other gaming experiences and is most successful when it aligns with these gamer expectations of bite-sized gaming experiences rather than trying to shoehorn more core experience that would be better suited for other hardware or other platforms and these motivations tend to be very different from PC console motivations which honestly tend to focus more on entertainment factors and less on convenient session length and portability so discovery is how people find out about a game this is from a combination of promotion and traditional marketing and PR and cross-platform and incentivized installs in internet

marketing and editorial coverage and social media reviews and buzz in viral you know how do people hear about your game and again if you look at the quantity of games coming out you you know discovery is a huge thing it's vital to every game and over the past few years consumers have become a lot more passive in their sources of discovery and much less active on the store front you know ads are playing a key role in the past of discovery but notably only when they're being consumed on the mobile devices themselves you know as with social media or ads for other game you know there is a disconnect between the consumption of the ad and the actual process of downloading the game say with like printer TV it does undercut the effectiveness of the ad as a discovery tool mobile gamers are also showing a clear preference for more direct social recommendations and again allowing for kind of a more passive discovery and then again this makes a great deal of sentences the players are finding the combined elements of an overcrowded market where the inner iterative experience is intimidating and we're

also not seeing a lot of movement kind of in the top of the charts and so a lot of these performers people have already decided am I gonna play that game or not and that makes you know it kind of interesting finding good options so engagement are basically the different reasons people decide to actually acquire the game or engage with it and on the whole players and for mobile emphasize quick indicators of suitability and quality when deciding to play and consistent with the past couple years price and genre continue to be the single most critical elements in making a download or play decision you know plis basically suggests that players look to see is this a business model that fits with the kind of game they're looking to play and you know free downloads are particularly attractive across some genres and premium models you know being justified on others and the same for John rrah if a game isn't the type of game you like to play there's very little chance of you engaging with it you know I don't really like racing games no matter how awesome the racing game is I'm probably not going to download it even if it's free because that's not the kind of game I play with this vast amount coming out of

the games I could be playing and although social sources are critical to learning about new games they do play somewhat less of a role and actually deciding to play or you know engage with the game you know other indicators are much of quality or a much bigger role and players basically also prefer to know that the masses enjoy a game rather than a specific person so ads on the everybody likes this in his playing it once your friend has told you about it is actually more suitable than my friend Bob likes this game so churn or players leaving the game is of course very important to the lifetime value of a user and a key factor across all regions is loss of interest players churn because of lack of compelling meta game this is followed closely by friction both on required spending game progress and as always remember there are plenty of really good games out there and if a player perceives that the game they are playing is not as good as other games out there they might leave for a perceived better experience so perception in your game is very

important so what we're looking at here is mobile Jinora revenue year-on-year by revenue change with green bean increases in revenue and red bean decreases in revenue for mobile genres and you know tying this into kind of a general pattern towards you know mobile market stabilization mobile game players again accessibility and convenience and we're seeing the strongest growth among those types of experiences which has done the best job of embracing and implementing these features also especially everything in this year is the power of brand clash royale and pokemons go both drove massive growth in their respective subgenres let me actually expand this chart out to show the full growth that clash royale brought to the RTS tower-defense sub-genre also impressive is the combat city builders such as class of clans remained flat considering their massive growth over the past year or two we haven't seen the decline in that also you know the of note for kind

of the ones doing well is looking at how carefully they navigate the Western pay2win stigma on how they do their monetization so if we look at the top growers you know those that have been doing an especially good job of aligning their business models with game play you know noting what should appeal broadly or deeply and generating compelling core content loops that keep gamers coming back for daily check-ins and you know kind of evolving and adding in overtime those are the ones that have been doing really well this year the ones that have decreased the most are the ones that have struggled to innovate or honestly to make their gameplay mobile-friendly or to implement free-to-play well and while there is a Western pay2win stigma Western players are ok with spending money to progress more quickly so you know this was a survey on what where are you most likely to consider or to me when are you most likely to consider spending money on a mobile game and surveyed you know thousands of people so other factors include accessing new content

and experiences things on sale or discount and the ability to be more competitive and again it's that fine line between more competitive and play to win you have to tiptoe carefully to avoid the stigma while still being able to monetize on top of that another interesting thing to note is that these are by the way are let's see let me tell you that again another interesting thing is that these are the top John Roos that people say they play not pay and that these are not necessarily the top grossing ones so these survey results came from a question to identify your top actively you know top five most actively played genres on mobile for the past six months and so while most people played a wide variety of genres they did not necessarily monetize on this wide variety of genres were the one exception here slots and while slots didn't necessarily tend to top most of the monthly charts in aggregate they were very widely played you know these this

was another big growth genre which was slots and now my yearly Kickstarter update so Kickstarter is you know probably the most well known of the crowdfunding sites you know it's become a thing over the past few years and it gives small studios away out of relying exclusively on big publishers you know the indie movement crowdfunding finance so Kickstarter this point has had two point eight five billion dollars pledged since inception with almost six hundred million going to game the game category on over twenty nine thousand game projects you know it is an interesting proposition and it's no secret that most developers usually ask for less money than I actually need to make the game usually substantially less money but it does give them upfront money for development and some leverage to go to a publisher later Hey look at how awesome our Kickstarter was we asked for this much and we got this much you know you're kind of pre selling part of your game but there's also been another nickname which is you know this is the kick finisher model we've seen more of this year in last year which is where teams take an almost complete game put

it up on Kickstarter to get kind of their last a little bit of revenue or in some cases don't even care about the revenue but use it as a marketing opportunity or the ability to pre-sell you know a certain quantity of Units for their game and engage their community earlier so if we look at gaming projects on Kickstarter about 1/3 gets successfully funded now this year it was 34% last year it was 33% the year before that it was 34% it's remained pretty consistent with a 1% bounce rate back and forth and you know kind of speaking of the money this is the distribution of successfully funded Kickstarter titles to date there have been 76 games as of the beginning of February that have done more than a million dollars in raise and this is up 18 from last year when there were 58 games that had done a million dollars or more we also added 178 games to the hundred thousand to 1 million dollar range which is 5 more than the increase from the year before this being said

doing a Kickstarter is getting harder and harder because we have increasing degrees of Polish that are being required and consumers are getting more sophisticated on what they fund and again this is especially true because we're seeing teams bringing in almost finished games into Kickstarter and that's a lot easier to show in pitch than a game that's you know a little bit of concept art and somebody saying this will be awesome in two years of course not every game it's funded in fact about two-thirds of them don't this is the distribution of sick unsuccessfully funded projects 12% don't even get to the 1% mark 67% get from the one to the 20% roughly four thousand games were added to this category last year but what's really interesting is all of these percentages I had to double check are exactly the same as the graph from last year meaning literally with 4000 games added they fell into the exact same ratio of how much money they didn't gather on their raise and so this basically kind of says you know this is

solidifying on consumer response to Kickstarter and crowdfunding things and if you look at it with a 2/3 failure rate and 79% of games only getting 20% or less of their ask this basically means more than half the games raising money on Kickstarter 53% got no significant money so game broadcasting and rebroadcasting and its myriad forms is now a big thing I could do an entire talk on this but sadly I don't have time this year so we're gonna show one slide you know competitive multiplayer continues to dominate viewership you know blue here's peak views gray as average concurrent which is what the chart is ranked by Liga Legends dota hearthstone csgo FIFA overwatch you know these were the top viewed games last year and you know think certain things can spike you in their community events game launches competitive tournaments fundraisers twitch personalities you know those can get you up for a bit but sustained views however are engaging competitive multiplayer backed by an engaged audience and compelling content and you know this coincides a lot with

some of the eSports tournament scene we've seen tremendous growth since 2010 in the prize pool where you know 2010 o is you know 3.25 million this year just under 80 million you know notably the prize pool per tournaments kind of grown at a very exceptional rate also due to crowd funding you know dota as the invitational has been particularly interesting on that so I'm gonna wrap up this year with one of the biggest surprise hits of the year of pokemons go and part of the surprise was the extreme virality boosted by the power of its brand so on the virality aspect this is a quit this was a survey for where most people first heard about pokemons go and the answer was from friend more than 1/3 of people who played pokemon go heard about the game from a friend that is an amazing amount of virality number to read about it you know it so you can kind of see a trailing down you know App Store was the lowest percent 5% found about about it from the App Store so

this is you know this was an actual phenomenon you know I was experimenting view who walked through Central Park or walked through you know shopping malls filled with people looking at their phone and bumping into things which again was awesome but the other thing but the brand or the brand familiarity was also a major factor in the virality you know in a crowded market having a well aligned recognizable brand is critical as a critical means of driving consumer awareness and interests broadly accessible IPAs Disney Marvel candy crush you know they've historically seen the widest appeal and more specific brands you know celebrity HD gaming mobile brands publishers send me a little more niche in their appeal you know with Nintendo in his flagship mario RPG among a few exceptions but they still hold very strong potential when aligned with gameplay you know in the middle of a crowded market finding a way to stand out and a signal value is vitally important to the success of your game so I'd like to thank you for the opportunity to present six years in a row awesome video game data and speaking

of success I wish you all great luck out there [Applause]