The recent surge in Chinese mobile gaming is also impacting the U.S. gaming market where mobile game stocks are seeing a boost.
Companies with significant mobile gaming interests that should be buoyed by these events include Tapinator, Inc. (OTC: TAPM), Activision Blizzard, Inc. (NASDAQ: ATVI), Tencent Holdings (NASDAQOTH: TCEHY), and NetEase, Inc. (NASDAQ: NTES).
Driven by the boom in the mobile internet sector, top Chinese gaming companies saw significant growth in game revenues for the first half of 2017. That is according to gaming industry consultancy Newzoo's latest global games market report.
Several large gaming companies are reporting above industry-average returns for the period and view this as a positive sign of things to come for their leading properties in the completive mobile gaming space.
One smaller company that’s been able to position itself alongside the giants is New York-based mobile gamer Tapinator, Inc. (OTC: TAPM). The company has announced several new titles this year and has seen solid results from its mix of low-cost development and potential for blockbuster type game franchises. Tapinator is a developer and publisher of mobile games on the iOS, Google Play and Amazon platforms.
The other gaming companies that continue to bring solid innovation in the mobile space include Activision Blizzard, Inc. (NASDAQ: ATVI), best known for its Overwatch, Warcraft and now King titles, Candy Crush among others; Tencent Holdings Ltd (NASDAQOTH: TCEHY), whose King of Glory game helped earn the company top rankings and NetEase, Inc. (NASDAQ: NTES), that crushed the market this year with its new Onmyoji game in China.
CHINA’S MOBILE GAMES LEADING THE WAY
Newzoo’s ratings show that the Chinese mobile games market is clearly blazing the path for all gaming companies, foreign and domestic.
The top slot in the ranking of Newzoo's “Top 25 Companies by Game Revenues” list is firmly held by Chinese video game giant Tencent Holdings Ltd, generating $7.4 billion in the first half of this year. That’s a 50 percent increase over the same period last year.
Newzoo explains that popularity of Tencent's mobile game King of Glory has made huge coin for the Shenzhen-based company this year. The game attained an estimated 200 million players in China alone.
Chinese gaming industry database Gamma Data Corp estimates that King of Glory took in about 6 billion yuan (US $911 million) in the second quarter in the domestic market. Gamma Data is forecasting that the runaway hit and its transactions should bring in more than 22 billion yuan for the full year.
Leading Chinese gaming firm NetEase Inc. continued to rank as seventh on the list, reporting a very strong 53 percent year-on-year increase in revenues. This gives NetEase revenue of $2.9 billion in the first half of 2017.
Newzoo forecasted that, driven by popular role-playing game Onmyoji and other mobile games, Hangzhou-based NetEase will be a strong contender for the global top five for the full year.
Tapinator is a relatively small gaming company by comparison, but it is focusing on the same growth segment as these major players and finding its stride in the mobile gaming space.
TAPINATOR MAKES PROFITABLE MOBILE GAMES
Tapinator’s business strategy relies on developing and publishing a mix of Rapid-Launch Games at low-cost with reliable return, alongside costlier Full-Featured games that offer more in-depth content and support long-term engagement.
And it appears to be working well.
The company, which launched in 2013, has an experienced team of developers, strategists and product specialists that have established serious expertise in building scalable, quality gaming products across a variety of categories.
Tapinator also knows exactly how much to invest into a game in order to get the best return before they even begin.
The Company’s portfolio of over 300 mobile gaming titles generate hundreds of thousands of daily player downloads which provide Tapinator with predictable and attractive returns through the sale of branded advertisements and consumer in-app transactions.
Tapinator’s game universe is significant. The best-in-class Full-Featured Games such as ROCKY™, provide game players with more in-depth, unique content that supports long-term retention and generates higher investment returns.
This model gives Tapinator the potential for sustainable $100+ million franchise-type games that have long product lifespans.
Tapinator, Inc. has built a solid base on Rapid-Launch Games. These are typically low-cost, quick to develop, follow a popular theme and fit perfectly in today’s fast paced mobile gaming environment built around short player engagement times.
NEW RELEASES HELP DRIVE GROWTH
If success is in the gaming industry is fuelled by new releases, Tapinator is on the right track.
Recent successful launches of two of its new Full-Featured titles – Big Sport Fishing 2017 and Dice Mage 2 – were recognized on the Apple iOS platform as “New Games We Love.” Big Sport Fishing 2017 received well over 520,000 player downloads during the game’s first seven days after global release.
Four new titles, ColorFill, Divide & Conquer, Shadowborne and Fusion Heroes, are in the pipeline for release in Q4 2017 and Q1 2018.
The company’s Rapid-Launch Games division also saw increasing player interest recently with the launch of Fidget Spinner Superhero and Scary Shark Evolution 3D.
MOBILE WILL SOON EQUAL OVER HALF THE GAME MARKET
In its report, Newzoo noted that mobile gaming accounted for 42 percent of the total game revenues by the top 10 companies, suggesting that the mobile gaming sector will play a much more significant role in supporting future total gaming revenues.
Dong Zhen, entertainment analyst at internet consultancy Analysys in Beijing, said powered by the large user base, China's mobile gaming sector has entered what he called a “new phase of rapid growth.”
"By 2020, China's mobile gaming sector will evolve from an upstart emerging market to a mature market.", Zhen said.
That sentiment is echoed by Newzoo’s view of the North American gaming market.
Mobile gaming, which refers to gaming on smart devices such as a phone or tablet, is expected to be the segment that will experience the highest growth. Newzoo’ s projections show mobile gaming revenue growing 68% from $38.6 billion in 2016 to $64.9 billion.
This aligns perfectly with industry trends and plays well into Tapinator’s strategy for rapid growth.
The mobile gaming business is in a relatively healthy position and companies that can catch the mobile tailwind can ride it for some time to come. Of course they need to be positioned now, as do their investors to maximize gains.
As the Chinese video game market goes, it appears so will the U.S. These trends are becoming more globalized as are the companies that provide the leading game offerings.
Investors could do well to consider the gaming sector, and mobile gaming in particular. Look for continued strong revenues and for leverage, consider some of the smaller, outsider developers that appear to be hitting the mark. Tapinator is a standout in that category.
POTENTIAL COMPARABLES
Activision Blizzard, Inc. (NASDAQ: ATVI)
Activision Blizzard, Inc. develops and publishes games for video game consoles, personal computers (PC), mobile devices, and online social platforms. The company operates through three segments: Activision Publishing, Inc., Blizzard Entertainment, Inc., and King Digital Entertainment. The company develops, publishes, and sells interactive software products and entertainment content through retail channels or digital downloads; and downloadable content. It also publishes subscription-based massive multiplayer online role-playing games; and strategy and role-playing games.
Tencent Holdings (NASDAQOTH: TCEHY)
Tencent Holdings Limited, an investment holding company, provides Internet value-added services (VAS) and online advertising services in Mainland China, Hong Kong, North America, Europe, other Asian countries, and internationally. The company operates through VAS, Online Advertising, and Others segments. It offers online/mobile games, community VAS, and applications across various Internet and mobile platforms; instant messaging services; and online literature services. The company’s online advertising services include display advertising; and delivery of pay-for click, pay-for download, or pay-for instant display advertisements. The company was founded in 1998 and is headquartered in Shenzhen, China.
NetEase, Inc. (NASDAQ: NTES)
NetEase, Inc. operates an interactive online community in the People’s Republic of China. The company operates through Online Game Services; Advertising Services; and E-mail, E-commerce and Others segments. It offers PC-client massively multi-player online role-playing games and mobile games; and distributes its point cards to gamers. The company’s NetEase Websites provide Chinese Internet users a network of Chinese language-based online content channels, as well as community and communication services. It also offers other Web-based applications and services, including a Web directory. In addition, NetEase, Inc. provides online advertising services that include banner advertising, channel sponsorships, direct email, interactive media-rich sites, sponsored special events, games, contests, and other activities. NetEase, Inc. was founded in 1997 and is based in Beijing, the People’s Republic of China.
For a more in-depth look into TAPM you can view the in-depth report at USA News Group: http://usanewsgroup.com/2017/11/06/mobile-games-booming-as-global-games-market-hits-108-9b-in-2017-2-2-2/
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