You’re Going to Play Video Games in a Whole New Way (Many do Now)

Activision is showing the way of the future to big console makers like Microsoft and Sony.

As anyone that has had even a remote interest in them knows, after a short but memorable stint in arcades, video games have traditionally been played on consoles.

Since the debut of the Atari  (PONGF)  2600 in 1977, we’ve sat at home (and as kids, on the floor, often craning our necks upward in awkward positions) to play our games, watching the action go by on the television, mesmerized by the battle against an evil wizard or simply hoping to make it to the next castle to save the princess.

While Milton Bradley  (HAS) – Get Hasbro Inc. Report was the first to try to make this experience portable with the Microvision handheld in 1979, the first true handheld video game success was Nintendo’s  (NTDOF) . After the release of the Gameboy in 1989 in Japan and one year later in the U.S., a new avenue to play games opened up — a way we could play them on the go.

It’s funny to think that 33 years ago, this chapter in video game history marked the start of the mobile market today, but that’s very much what was happening. And today the mobile gaming market is a $119 billion industry, expected to hit $338 billion by the year 2030.

Another interesting change has been how a once console-dominated activity is quickly moving in a new direction. A joint study from IDC and data.ic from May 2022 showed that 60% of the current gaming market is dominated by mobile gaming today. Just as we once saw a shift from arcade to console, now another one is taking place from console to mobile — and it may permanently change the way we play video games.

Activision’s Shift Towards Mobile With ‘Diablo Immortal’

Activision Blizzard  (ATVI) – Get Activision Blizzard Inc Report is old hat when it comes to making video games. Since 1993, when it was known as Blizzard Entertainment, the company has built its reputation making highly successful franchises for PC (and much later, for console) such as “Warcraft,” “Starcraft, and “Diablo.”

While Activision Blizzard had ported some of its prior games to mobile, it went all in with its very first franchise title created exclusively for mobile in June 2022. Called “Diablo Immortal,” and free to play, the game caused instant controversy due to its microtransactions, which could lead players to spend more than six figures via a lottery system.

Beneath the uproar, however, people were playing — and spending. During its Q2 earnings call, Activision Blizzard announced that mobile contributed 51% of the company’s total earnings in the second quarter, adding up to $831 million. However, to be clear, a big chunk of that came from King’s “Candy Crush Saga,” ($684 million, to be exact). Activision Blizzard acquired King in 2016 for $5.9 billion.

Compare these numbers to Activision Blizzard’s console earnings, which totaled $376 million, and it’s pretty easy to see where consumers are most willing to spend money — on their phones.

Real Money

Elevate Your Portfolio

Get actionable market insights from a team of experts who actually invest, trade, and manage money for a living

Daily Market CommentaryActionable Trading IdeasInvestment Advice

What This Means For The Gaming Industry

The writing on the wall here all points in one direction: mobile is the future for the video game industry. That doesn’t have to mean all games will go mobile and consoles will go away, but with the advent of cloud-based streaming and subscription models, it’s quite possible that video game consoles could become a nostalgic memory in the next ten years.

While other big players in the space like Microsoft  (MSFT) – Get Microsoft Corporation Report, Sony  (SNEJF) , and Tencent  (TCEHY)  are clearly making moves in mobile as well, Activision Blizzard’s financial results shine a clear light on just how crucial it will be to advance more quickly down that path.

Microsoft’s had a huge success with “Minecraft,” which it acquired when it bought Mojang in 2014. It made $160.7 million for the company in 2021, which is great — but a pale shadow of what Activision Blizzard earned in Q2 alone.

Sony also announced a goal of bringing 20% of its popular PlayStation games to mobile by 2025. While it only has a few mobile titles, such as the “God of War” spinoff, it published in 2007, it may have the furthest to go down this road in order to pursue all it has to offer.

But of all the game companies out there, Tencent has the least to worry about when it comes to mobile. Not only does it make more money than all of the aforementioned publishers, but its mobile title “Honor of Kings” is the highest-grossing mobile game of all time, taking in $13 billion since its 2015 release in China. Thanks to its success, an international version is in the works and slated for release before the end of the year.

Related Posts