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Freemium Isn’t Free! Free Mobile Games Generated a Whopping $61 Billion in 2018

Last Updated September 23, 2020 12:22 PM
David Hundeyin
Last Updated September 23, 2020 12:22 PM

The 2018 end-of-year report by Nielsen-owned gaming research company SuperData has revealed that so-called freemium games – games that are free to play but typically enable microtransactions for users to purchase upgrades and gizmos – are dominating the entertainment market, generating a massive $88 billion in the past year.

Unsurprisingly this segment also known as free-to-play or F2P is dominated by Fortnite. The report places the value of the global gaming market at $110 billion, which means that F2P games now account for at least 80 percent of the value of the entire gaming market. According to the data presented in the report, traditional upfront-purchase video games as well as movies and television barely even register next to F2P gaming.

Source:  Superdata

Mobile Gaming and Microtransactions Achieve Dominance

The report shows that of the gaming market’s $110 billion valuation, mobile gaming accounts for $61 billion or more than 55 percent of the total. Unsurprisingly, this places F2P gaming at an obvious advantage, seeing as the freemium model was initially developed primarily to cater to mobile users. Multi-platform behemoth Fortnite was the year’s big winner, bringing in an enormous $2.4 billion in revenue, leaving $12.2 billion to be shared by the rest of last year’s top 10 titles including Red Dead Redemption.

A key takeaway from the report is the growing predominance of Asian gaming markets, with the world’s most populous continent responsible for 62 percent of F2P gaming revenues. This comes at a time when Chinese giant Tencent is developing and marketing an increasing number of games based on the freemium model.

European and North American markets, on the other hand, retain a stubborn predilection for “premium” gaming, collectively contributing 80 percent of $20 billion in global traditional gaming revenues across PCs and various game consoles.

Interestingly, the report notes that while top titles are heavily Western-dominated in terms of revenue, this may not necessarily indicate that Europeans and North Americans are spending more money on gaming. This is because the massive Chinese market remains a unique jurisdiction without many of the anti-piracy and copyright protection laws of Western jurisdictions, As such, the true distribution of popular game titles in China and across much of Asia remains anyone’s guess.

The growth of gaming revenue from streaming on Twitch and Youtube is also addressed. Amazingly, both platform form about half of all gaming revenue, which is a sign that the financial model of the gaming world is rapidly evolving away from the traditional model that dominated the past few decades since the inception of video games.