The future of gaming and global trends

good morning Seattle I love that awesome okay so my name is Herman Lee I lead our professional services team here at app Annie and today I'm gonna share some general industry trends some of which you probably know if you've read big following our reports otherwise all this is amazing insights for you today so from our recent state of mobile report here's some really interesting stats globally I want to ask you a quick question so over here it says on average the mobile consumer spends three hours a day on their mobile device what do you think gains take up two and a half very optimistic well the reality is that it

is actually around 30 minutes to a little over an hour especially here in the United States it's a little bit on the a little bit about 45 to 50 minutes however in a pack it is well over an hour so games of course is tremendous opportunity actually there we go okay and here's another interesting tidbit so when you look at revenue generated by games across all the platforms what do we see we see that mobile revenue is exceeding all the other platforms we're talking about console we're talking about PC games it exceeded 2017 and into 2018 and we expect that to grow continuously into 2019 so what are some of the possible driving factors behind this it is really the amazing work that you're doing here ok so taking a step back so what is that batting so some of you are our customers

already but for those of you who do not know we provide industry-leading insights about the entire marketplace so you can understand what consumers are doing in terms of downloads revenues engagement and usage across a variety of app categories a variety of genres and we help our customers better understand what is really going on out there so that then you can build better engagement mechanisms to really reach those gamers now of course my team's involvement is about helping those customers and really distinct projects to really move that needle even further so to no surprise we work with thousands of customers around the world top gaming companies as well as top mobile-first publishers out there and so let's start back in what happened to 2018 what can we learn from the past year that will inform us for the future so if you just look at a Penny's maturity curve by

country really this is about by market where do people step so our country is then so you have India Brazil that are still in the emerging category so what that really means is there's high degrees of download very relatively low monetization for those of you who publish in those emerging markets you know what I mean and then you have the second-tier Chinese cities you have the UK who fall into what we're calling the adoption phase you still have very strong download growth you're getting ramping revenue growth and engagement growth and at the bakery stage you see to no surprise our top tier Chinese cities you see Japan you see the US where you see the Downloads rate having slowed but you see continued ramping growth okay who's been jumping my slides come on go back go back go back Oh

okay why does he keep on jumping back alright alright come on back back back okay it really wants me to talk about this without everything else so I'm gonna go with it so on that previous slide it was just about I really want the others okay alright so what it really is is continued growth and revenue especially on the matured markets you will find it more challenging in acquiring those new users then we can go alright so top 10 games worldwide by active users what do we see okay some obvious players you see some interesting things of course that happen to 2018 you see the introduction and really resurgence of popularity when it comes to battle royale games but similar to what Ivan was talking about you see a very big pop especially on number 10 with helix jump on the hyper casual side so hyper casual battle royale really big not just on the battle

royal side not just on console and PC games but also on mobile now when you try to look at some of those top countries that was pointing to earlier and what are the top five game titles in each you see that trend kind of popping through okay so in the top five you see proliferation of Battle Royale you also see a proliferation of the hyper casual and of course with the hyper casual as was talk one of the biggest problems is term and so what we also see with some of these players in the hyper casual space is that they are continually introducing a whole constellation of hyper casual games so that they can move those eyeballs from one title to another and keeping those people inside that ecosystem to maximize the ad revenue diving a little bit deeper into the Battle Royale genre for a moment so here are the mature markets index in terms of active users okay

there was a big pop in US Japan South Korea UK and then it really stabilized for the past several months and we expect that to continue to be pretty constant not big pops here and there but perhaps with Apex legends now coming to mobile there's gonna be another little pop that will bring that up even further but as you can see you know there's nothing spectacular in its future growth emerging markets apologies for those in the back of the room that really light line is India soak that in for a moment tremendous opportunity to go to other countries especially emerging markets now yes as I've said earlier India you've got growing downloads you've got growing usage base monetization is hard but it's hard to ignore that growth in active users alright so let's just talk revenue now so in terms of where consumers are

actually having their spend to no surprise us Japan South Korea Germany and so on and so on also continue to pay attention to India Brazil year-over-year still impressive revenue growth relatively speaking still small dollar amounts very important to not lose track of those markets big story of 2018 of course was China so for those who are not aware I'm just going to give you a quick overview in 2018 late late 2017 early 2018 China put a stop on licensing new games they recently just unreleased unfroze that revenue potential so really in 2018 to no surprise the revenue growth year over year has had slowed a lot of the publishers that we work with in China really were just depending on life support on their old titles but we expect that to grow back again and so that's going to be exciting and of course some of it is in the news recently of how the Chinese government

has been tweaking what are the different criteria set to gain approval so of course the recent removal and replacement of pub G to be I'm getting this wrong probably games for peace or peace game game for peace where it's now a blend of propaganda and very non gory death all right so then all those things that happen to Chinese publishers in 2018 what have they been doing since export as you can see many of our publishers out there have been either published trying to publish directly into foreign markets or doing some sort of a partnership or acquisition to then broaden their revenue horizons we expect that to continue in terms of their attempts to enter the US market UK market Japan market and so on and we see

a lot of that in the news periodically of that happening so what can we go looking into 2019 I've alluded to this already but we expect by 20 end of 2019 that mobile growth in terms of mobile revenues to surpass 60 percent now I want to remind everyone this estimation is excluding advertising so this is purely the initial mobile purchase all I ap so any additional revenue from the advertising perspective is gravy on top this so when we look at the top 100 games and weari categorize it based off of something that is probably more meaningful to this crowd we see that casual games continue to be very lucrative so we're gonna dive real quickly into sports casino casual in midcourt for a moment there's going to be some interesting opportunities for you going forward for the rest of this

year and into next so when you look at the ARPU plots and graphs over the past few years you see some interesting trends of course casual continuing to increase exponentially in the upper-right mid course slow down a little bit there's an interesting story there casino and sports so let's get into casual so similar to what was talked about by the previous speaker hyper casual is really big driver in this space and I probably cannot expose the importance of continuing to have some titles into this casual space to continue to make it grow year-over-year we see our proof 60% 80% went with the comes to revenue total revenue growth mid core MIT course load down a little bit didn't it 2018 there were some titles that really contributed to this

fault now remember this analysis is based off of like the top 100 games that we see and we recategorize it so looking at some of the top mid core games a lot of this was will just say problems of their own making so what can you learn from this there's still tremendous opportunity here and we look at that our poo is still well above that index of 100 although that total revenue has come down a bit there's a tremendous opportunity to develop new titles that better target and monetizes those that are interested in mid core games opportunity now that make our RPG has definitely bucked this trip RPG people are always really engaged in trying to connect with others play with others especially when we're talking about MMORPGs that green growth is tremendous

keep up the good work there so other trends to watch out for there's been some talks about what are some things that we can expect for 2019 we expect for one thing keeping an eye out on subscription-based monetization methods with apples an announcement that's great but that is of course going to be very limited to a very subset of game publishers and titles that they cherry pick however it doesn't mean that you cannot experiment with your own types of subscription models to help your customers come back again and again and again in a steady stream not relying so much on individual loot boxes or individual IPS that you can buy to further advance or get more coins another key thing to watch out for for 2019 would be some of the introductions when it comes to battle royale see what kinds of interesting differences that they will be coming up with and then of

course with hyper casual to some degree it's kind of near that envelope when it comes to monetization so definitely keep an eye out on that and with that we have a little booth in the back please come and stop by and visit us and have a quick chat love to be able to discuss if there's anything that I have not covered here or the happy to yes question yeah yeah or trying to where they're not that

an alliance right in terms of like the engagement of the active user so the question was about the Indian market and how engaged are those users and do we see a lot of fraud in that haven't looked at the fraud angle specifically but what we definitely would agree with is the actual monetization from India is still relatively low the active users while growing very high the actual time and spent by those users relatively is not as like it's not like at the same level as like the US market would be now how ways of overcoming that is a different angle it definitely would be more interesting to look at after this to see okay of those the advertising spam by networking and separating that out

correct correct yeah yeah yeah yeah very compact she got through it I always thought it's just prefer the next thing well we try to be on time ask you know very good there's any more questions for this is questions yes note still yes so in this editor okay the question was when we were looking at the actually let's go back to this one when we were looking at the mid core where we're looking at yeah yeah oh we're MOBA games included as part of

this I don't know exactly whether my analysts did this and so I want to say depending on the average duration because we segmented this based off of the session at session time some of them would have been in here but most of them because of that duration would have been more under than what we would have categorized as the hardcore