A Look at Mobile Game Hits

Mobile-game megahits are starting to bring in more revenue than blockbuster movies, but measuring their “box-office” is a tougher task. That means they are very unpredictable.

Take “Pokémon Go” as an example. Its off-the-charts performance has sent Nintendo Co. shares skyrocketing this year. Yet nailing down actual revenue numbers is a tricky game. A host of third-party providers has attempted to fill in the breach, but such measurement is an imperfect science.

Data provider Sensor Tower said earlier this month the augmented-reality game brought in more revenue over the summer than some Hollywood movies such as “Warcraft” or “Independence Day: Resurgence.” It said the game has brought in $529 million of gross revenue as of Sept. 10.

Some think the game has done even better. App Annie said on Sept. 8 that revenue for “Pokémon Go” has already surpassed $500 million, on track to become a $1 billion game by the end of this year. Since App Annie takes out the 30% commission Apple Inc. and Google collect at their app stores from the revenue numbers, it means the gross revenue for “Pokémon Go” is more than $700 million by its estimate.

The problem lies in the fact that Apple and Google don’t disclose revenue data for individual apps. They also don’t rank their apps purely by revenue, but by secret algorithms to prevent publishers from gaming the system to get their apps highly ranked. Many publishers, especially the big ones, don’t reveal their revenue data either. The fact that a game’s success relies on only a small number of big-spending players making in-app purchases, nicknamed whales, further complicates the calculus.

So data-analytics companies have to rely on intellectual guesswork. They gather data from some publishers that do provide revenue numbers and try to correlate them with other metrics such as overall market size, rankings on the app stores and number of reviews. Some, like Sensor Tower, may also survey a panel of users. Others, like SuperData, collect data from payment-service providers which handle transactions for game publishers.

The approach works well for games that perform similarly to past titles. But for breakout hits like “Pokémon Go,” it could be less reliable. The “big-data” analysis relies on inference from past correlations, which could break down if the game is a true outlier.

As mobile takes the center stage of the gaming world, investors are bound to see more off-the-charts games. “Super Mario Run,” the character’s first appearance on smartphones, could be the next one when it launches in December. Nintendo’s volatile two months has showed that investors may need better data to inform their decisions.

Nintendo has already positioned itself to provide the best kinds of arcade games on mobile, and with a big player like this one on the scene, the mobile gaming industry can only grow, Thats good for both gamers and game developers the world over.

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