[Mobile Games] Video Games Were Betting on Mobile. Then Advertising Went Poof.

[FazzNoth]

 

Down and to the left
It was a busy week for the big publicly listed gaming companies and not exactly a pretty one. Roblox Corp., Take-Two Interactive Software Inc., Unity Software Inc., and others reported their quarterly financial results and showed that they aren’t growing at the rate analysts had expected. After a surge in sales over the pandemic, when lots of people were stuck inside, the new reality—people are back to school and work but the economy is slowing and inflation is through the roof—has analysts questioning what’s next for an industry many had considered recession-proof.

Aside from a lot of gripes about the strong dollar, one common theme this quarter was mobile gaming. This came up a lot on the earnings calls with analysts. In the first half of 2022, mobile gaming revenue fell nearly 9.6% from a year earlier to $11.4 billion, according to data from analytics firm Sensor Tower. Downloads decreased 2.5%, too. In its fiscal second-quarter results, Take-Two cut its annual forecast for bookings, citing “a more cautious view of the current macroeconomic backdrop, particularly in mobile.”

 

For years, gaming executives were shouting about the mobile revolution from the rooftops of their skyscraper-high share prices. We’ve seen several big acquisitions aimed at capturing a bigger share of the fast-growing mobile market this year, including Take-Two’s $11 billion purchase of Zynga and Unity Software Inc.’s $4.4 billion merger with mobile ad company IronSource. And yet, as financial results came in, analysts were scratching their heads. 

“Mobile performance was all over the place,” says Michael Pachter, an analyst at Wedbush Securities, noting the mixed results were “hard to reconcile.” Electronic Arts Inc., Take-Two, and Playtika Holding Corp., all showed disappointing results from mobile. But Activision Blizzard Inc.’s studio King — maker of Candy Crush — saw net in-game bookings rise 8%. Activision as a whole reported net mobile bookings up $20 billion year-over-year thanks, in part to its China release of Diablo Immortal. 

There are choppy seas ahead for what’s broadly considered gaming’s surest growth sector. John Riccitiello, chief executive officer of game technology company Unity, said advertisers are paying publishers less for ads on both Apple Inc.’s iOS and Alphabet Inc.’s Android. Riccitiello didn’t blame Apple’s data privacy changes that have gutted mobile-dependent platforms like Facebook. Instead, he put it squarely on the economy. “The timing here is clear: The declines take place as the world’s banks increased interest rates and the specter of recession was everywhere in the press,” he said on the company’s earnings call. 

https://www.bloomberg.com/news/newsletters/2022-11-11/candy-crush-bucks-mobile-game-industry-slump-amid-ad-slowdown