Apple The Lead Beneficiary Of The Multibillion-Dollar Mobile Games Industry

May 29, 2015 12:47 PM ETApple Inc. (AAPL)BABA, KING
Motek Moyen profile picture
Motek Moyen
6.77K Followers

Summary

  • Apple appears to be the biggest beneficiary of the rapidly growing mobile games industry.
  • Big-spending iPhone gamers are helping create billion-dollar mobile games like Clash of Clans and Game of War – Fire Age.
  • Mobile gamers are even spending $100 just to buy one Premium 4-star hero in Kabam’s iPhone game, Marvel Contest of Champions.
  • The iPhone 6, which only has 1GB of RAM and dual-core processor, is still a better mobile gaming device than the Samsung Galaxy S6.

The fast-growing multi-billion mobile games industry is one more reason to stay (or go) long on Apple (NASDAQ:AAPL). Digi-Capital estimates that sales from mobile games will hit $29 billion this year (and $45 billion by 2018). Annual revenue from mobile games-related purchases also will enjoy a 15% CAGR.

Even though Apple does not develop mobile games, Digi-Capital still recognized the iPhone company as the leader in mobile games.

(Source: Gamasutra/Digi-Capital)

Digi-Capital's estimate is a little lower than Newzoo's previous assessment that revenue from mobile games will hit $30.3 billion this year and $40 billion by 2017. However, I strongly agree with the assessment from Digi-Capital.

iPhone/iPad gamers deliver 4x more in-app purchases than their Google (GOOG) (GOOGL) Android counterparts. After taking its 30% commission, Apple paid more than $10 billion to iOS app developers last year.

A Wall Street Journal writer also confirmed that Apple's App Store generated more than $14 billion in sales (Google Play had $10 billion). Apple therefore gained $3-to-$4 billion as commission from app store sales. This amount is higher than King Digital's (KING) $2.4 billion gross bookings in FY 2014.

As per the Q1 2015 report of App Annie, global sales from iOS apps increased its lead over sales of Android apps. This in spite of Google Play having 70% more number of downloads.

(Source: App Annie)

Why It Matters

Mobile games remain the dominant moneymakers in Google Play and iTunes Store. The better-than-predicted strong sales of the iPhone 6/iPhone 6 Plus in China could substantially increase Apple's share in mobile games. China has risen to become the top country when it comes to the number of iOS app downloads.

China is now also the third-biggest source for iOS apps-related revenue.

The pay-2-win nature of top-grossing games like Clash of Clans, Game of

This article was written by

Motek Moyen profile picture
6.77K Followers
I am 100% Filipino, with 25% maternal Chinese blood. My background is 20 years in the creative/advertising industry. I am a very bad writer, but please refer to my TipRanks history, or do a manual curation of my investing ideas here at Seeking Alpha. You will know that my stock picks are mostly winners. I like technical indicators and the Piotroski F-score is usually my no. 1 factor when evaluating the investment quality of a stock. My 90s college adventure involved wasting time in B.S. Mathematics, Diploma in Commercial Advertising, and B.S. Computer Science.I am a well-trained computer technician, video editor, game content creator, web developer, graphic/UI designer, and social activist. I will start learning C# in early January 2023. If I can't learn doing production-level Blazor apps by end of June 2023, I will just go back to improving my Python skills. I am too old and sick to be learning a new programming language like C#. I DO NOT gamble/invest on U.S. stocks. My right lung problem has given me a bad heart. I'm not fit enough to do stock trading.

Disclosure: The author is long AAPL, KING. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.

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