Are Free-to-Play Mobile Games the Future of Video Game Marketing?


Screenshot taken from Tim's iPad Mini. Batman: Arkham Origins property of Warner Bros. Interactive.

Time Warner is about as it good as it gets when it comes to marketing video games.

An outrageous claim? Sure, especially when you consider that Take-Two Interactive is setting records with Grand Theft Auto V console and online editions.

And yet it was only a handful of months ago I swore I'd never again purchase a video game console. With three kids and a job that leaves me with little free time -- not a complaint, I love this job -- I just didn't see the point. Then Injustice: Gods Among Us came along and took over my iPad Mini. Batman: Arkham Origins followed last week. These free-to-play iOS giveaways tease console versions that are no doubt richer, more complex, and more rewarding.

They're the gateway drug to a wider video gaming world to which I'm in danger of becoming addicted.

Behind the buzz
The high comes in the bonuses. Completing a certain number of missions in the mobile version of Injustice unlocks special characters in the console version, and vice versa. Arkham Origins features a similar design. An iOS version shipped last week while the console edition ships tomorrow.

Warner has good reason for connecting its titles this way: Mobile gaming is huge. In May, Newzoo had the market growing by 35% this year to $12.3 billion in revenue, accounting for about 18% of the entire video game industry. Impressed? Wait till you see the projections. Newzoo expects mobile to account for 30% of gaming industry revenue by 2016.

Such heightened growth expectations may explain increased investor interest in mobile gaming companies. Last month, King, a U.K. publisher of top Facebook game Candy Crush Saga, filed a confidential S-1 to offer publicly traded stock on U.S. exchanges. A recent report put the company's revenue run rate north of $480 million.

Just this week Japan's Softbank spent $1.5 billion to acquire a 51% stake in Finnish mobile game maker Supercell, whose Clash of Clans and Hay Day help the company generate about $2.4 million in daily sales, Reuters reports. I'm not privy to their thesis for investing but if I had to guess, I'd say Softbank believes casual gamers comprise a substantial market opportunity, and they don't need to spend $500 on a console.

Gamers gone bye? Not exactly
An increasing number of "core gamers" may be feeling similarly. In a March report, NPD found that only 29% of those who play console video games more than five hours per week would purchase the next-generation platform following release.

So is it time to write off Take-Two and Time Warner? Not at all. Console and portable game device sales zoomed 52% to $754 million last month after a 23% jump in August, NPD reports. A record-breaking start for Grand Theft Auto V no doubted helped boost the industry's late summer haul.

Next month, Microsoft and Sony are expecting strong sales of the new PS4 and Xbox One consoles. GTA V could sustain industry momentum in the meantime. The game topped the U.K sales charts last week in all formats. On the individual charts, the Xbox 360 version led the way while the PS3 version ranked third. Take-Two released GTA V worldwide on Sept. 17.

So, for now, it's fair to say console gaming is enjoying a comeback. How long the rally lasts depends, I think, on how well the industry's marketing machine turns casual iPad players into "core" video gamers who might love a good gateway shooter but which need the satisfying thrill of a console epic.

Or in simpler terms, a new generation of addict ... I mean, hero.

The Gamescon trailer for Batman: Arkham Origins. Sources: YouTube, IGN, Warner Bros. Interactive.

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Fool contributor Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team and the Motley Fool Supernova Odyssey I mission. He owned shares of Time Warner at the time of publication. Check out Tim's web home and portfolio holdings or connect with him on Google+, Tumblr, or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.The Motley Fool recommends Facebook and Take-Two Interactive. The Motley Fool owns shares of Facebook and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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