Mobile games market declines for the first time in over a decade

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Not seen since the launch of Apple’s App Store in 2008.

For the first time, revenue, excluding advertising, generated by mobile apps declined in 2022 as consumers became more frugal in their purchasing decisions in response to rising inflation, according to a report from app analytics firm Data.ai.

Spending on mobile games is down 5 percent globally in 2022, to $110 billion, Data.ai, formerly App Annie, said in its « State of Mobile » report released Wednesday. 

« We’re seeing the emergence of a general phenomenon, which is that people are more price sensitive and financially conservative, » Lexi Sydow, head of research at Data.ai, told CNBC, adding that the « biggest blow » to app spending is in games.

Faced with economic headwinds, such as rising prices and borrowing costs, people are cutting back on discretionary purchases. Games, in particular, have been under pressure.

Global sales of games and services, including console and PC games, would have declined 1.2 percent year-over-year to $188 billion in 2022, according to a July research note from market data firm Ampere Analysis.

In recent years, mobile game growth has been the main feature of the games industry, with major publishers making big bets on mobile game developers.

However, this growth has been challenged recently by a number of macroeconomic headwinds, including rising costs of living and rising interest rates.

However, according to Data.ai’s research, non-gaming apps have proven to be quite resilient, with the value of in-app purchases growing by 6 percent to $58 billion by 2022. 

This growth was primarily driven by subscriptions and in-app purchases in streaming platforms, dating apps and short-form video services like TikTok.

However, this was not enough to offset the slump in mobile game spending.

In addition, Data.ai expects global app spending for games in particular to decline another 3 percent this year to $107 billion, due to declining disposable income and privacy changes.

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