Aristocrat wisely spreads mobile games risk: JP Morgan
The high exposure of casino games maker Aristocrat Leisure Ltd to mobile gaming, and the firm’s diversified mobile game product portfolio, offers it a good opportunity to earn revenue from its assets in the sector, says banking group JP Morgan.
Mobile gaming is a high-growth industry with compound annual expansion of revenue at circa 14 percent, noted a report from JP Morgan issued on Monday. “Aristocrat’s increased exposure to digital (38 percent of financial year 2018 revenue) is a positive,” wrote JP Morgan analysts Donald Carducci, Shaun Cousins and Shalin Doshi.
In August Australia-listed Aristocrat said it was to pay US$500 million for social gaming firm Plarium Global Ltd, to add to its stable of online casino and social gaming brands. Aristocrat’s chief executive Trevor Croker noted of the Plarium deal that it increased the group’s addressable consumer market from approximately US$3.2 billion in the social casino segment, to about US$25.4 billion “when including the strategy, role-playing game and casual segments”.
The JP Morgan team noted in its latest market update: “Aristocrat’s diversified mobile game portfolio approach has the potential to manage risk and monetise better” its mobile games assets.
The banking group also gave some commentary on the sector in relation to the findings of a report by a California-based startup called Liftoff, which provides marketing and analysis services for the mobile apps market.
The Liftoff Mobile Gaming Apps Report 2017 found – said JP Morgan – that sector-wide, mobile gaming with casino games content had in terms of consumer behaviour, “very high retention rates, average session length, and stickiness”.
Casual games performed “relatively” more modestly in terms of player retention and “monetisation”; while for role play and strategy games, average revenue per paying user was “high”, but “other indicators lay “somewhere in between casino and casual”.
Casual games had the “lowest” user acquisition costs while casino games had the “highest”, said JP Morgan.
Casual games typically had lower costs per install. Games using known intellectual property rights generally had lower costs per install “compared to fantasy and sci-fi type games which require design investment,” stated JP Morgan.
The institution added: “About a decade ago, up front paid apps was the [business] model of choice but now a majority of app store revenue is generated from free-to-play apps. Around 79 percent of gaming apps utilise in-app purchasing techniques, while 49 percent of all mobile app developers use in-app advertising for non-gaming.”
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