Gameloft reports 125M mobile users thanks to free-to-play trend

Mobile gaming company says virtual goods, advertising generate 80% of smartphone revenues
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Paris-based mobile gaming powerhouse Gameloft reported notable increases in sales in its second-quarter earnings report, and predicted continued successes throughout the rest of this year. Specifically, the company said sales in the second quarter grew 10 percent year-over-year to $73 million, and that 125 million people across the world played one of the company's games during the past month.

Gameloft said users in Europe, the Middle East and Africa accounted for 33 percent of its second-quarter sales, making the region the company's biggest. However, Gameloft said North America was its second-biggest region, accounting for 25 percent of sales in the second quarter.

In the first half of this year, Gameloft said its smartphone sales grew by 45 percent over the same period last year, and represented fully 61 percent of the company's total sales.

Interestingly, Gameloft said that 80 percent of its smartphone revenues are coming from sales of virtual goods and advertising. "This business model increases the longevity of the company's products. Games dating from 2011 and 2012 such as Ice Age Village, Modern Combat 4: Zero Hour, World at Arms, MY LITTLE PONY, Order & Chaos Online, and Six-Guns have contributed to the solid performance of the company in the first six months of 2013," the company said.

Further, Gameloft said the trend toward freemium, free-to-play games is dramatically expanding its reach--the game maker said that in the past 30 days, 125 million people have played a Gameloft game on their smartphone or tablet. The comments are notable considering Gameloft historically has made a business selling complex, high-end mobile games for as much as $8.

Gameloft said it expects to report between $311 million and $318 million in total sales this year, "as well as an increase of profitability and net cash."

Gameloft isn't the only mobile games maker that's scoring successes with the free-to-play model, where games are free to download but generate revenues through the sale of digital goods such as character and equipment upgrades. For example, Electronic Arts earlier this year announced it has no plans to release any new premium-download mobile games in 2013 and will instead focus its efforts exclusively on the free-to-play model. Shortly after EA's announcement, Gameloft's VP of Publishing Baudouin Corman confirmed to FierceMobileContent that in 2013, "a majority of our titles will be free-to-play, but we will still launch some paymium titles throughout the year."

According to mobile market researcher Distimo, more than three-quarters of all revenue was generated via in-app purchases among the highest-grossing 250 apps in Apple's (NASDAQ:AAPL) App Store in February.

For more:
- see this Gameloft release

Related articles:
Gameloft, FDG Entertainment committed to freemium, premium app strategy
Electronic Arts ditches premium model for free-to-play mobile games in 2013
Distimo: In-app purchases pay off for iOS developers
Report: Gameloft shuts down India studio despite Q4 mobile sales surge

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