Social Networking Ends Games 40 Month Mobile Reign
The app revolution has changed the way software is distributed and used among consumers. With a perfect storm of digital distribution, free content and powerful touch screen devices, the success of mobile apps has disrupted industries …
Context & Ripple Effects
The arc here runs straight from the App Store's opening act: back in April 2009, coverage of how the iPhone rewired the economics of game software framed games as the category that proved mobile apps could eat traditional software. Games then held the top slot in consumer engagement for over three years — long enough to anchor forecasts like February 2011's projection of $38 billion in mobile app revenue by 2015.
What changed on this date is the composition of mobile attention: per Flurry's measurement, social networking apps have overtaken games to end their 40-month reign atop app engagement. The breadth of pickup — TechCrunch, AllThingsD, Gamasutra, A VC, VatorNews all carrying it within days — signals that investors and developers read this as a turning point in where daily mobile time, and therefore money, concentrates.
First-order effects
- Game studios lose their default claim on the largest share of consumer mobile sessions, forcing them to compete for engagement against apps users open reflexively every day.
- Social networking apps become the primary surface for mobile advertising inventory, extending the pressure Flurry described in August 2011 when it argued app inventory was hungry enough to absorb internet display budgets.
Second-order effects
- Advertisers reallocating toward social sessions compress the effective CPM available to game publishers, pushing them harder into free-to-play and in-app purchase models to monetize smaller slices of attention.
- Social platforms gain leverage over distribution itself: with GigaOM reporting in October 2011 that Twitter out-shared Facebook three-to-one inside mobile apps, the channels through which players recruit each other sit increasingly outside the game developer's control.
Third-order effects
- If daily-habit social apps hold the engagement crown, mobile industry structure shifts from product sales to attention platforms — the winner is whoever owns the recurring session, not whoever sells the most copies, mirroring the broader move of gaming toward service economics.
- A durable social-over-games hierarchy would make platform owners (Apple, Google) and social networks the gatekeepers between game makers and their audiences, sharpening the distribution-power questions raised when MySpace and Facebook first challenged mobile-only social networks back in 2008.
The trend: Mobile attention is consolidating around daily-habit social applications, converting engagement leadership into advertising revenue and distribution power at games' expense.