February 1st, 2009 by Arjan Olsder Posted in Analysis & Editorial | No Comments »
The handset market is facing a difficult period according to analyst Informa. As handset sales stagnate, the mobile games sector is expected to be influenced negatively as well.
The world's mobile subscription market grew by 18.5% y-o-y in 2008 (down from 22.5% growth in 2007) and is set to increase by just 12.7% this year, although Informa does note that this reduction in growth is partly due to the effect of natural market development, particularly in Western Europe and USA.
So where does this hurt the Mobile Games Industry? The biggest amount of mobile games sales happen around for example Christmas. Every year, various reports accentuate the relationship between increased handset sales and increased mobile games sales. Most mobile games are purchased in the first weeks after a consumer received a new phone.
"The handset market is facing a difficult period with the average replacement cycle likely to increase by 6-8 months in 2009, which would result in a 5% y-o-y decline in the number of total devices sold globally to 1.16bn", explains senior forecasting analyst at Informa Nidhir Maudgalya. "And things could get even worse than this, as depending on the extent of the deterioration of global macroeconomic conditions, the y-o-y fall in the number of total devices sold could double to 10% with replacement cycles increasing to up to 12 months."
"India became the world's largest market in terms of net additions in 2008 for the first time with 102mn new mobile subscriptions over the 12-month period, ahead of China," notes Nick Jotischky, Principal Analyst for emerging markets at Informa. But Jotischky does have a warning for those investors looking to escape the saturation of developed markets – "… India and other emerging markets have their own difficulties as mobile operators continue to work out how they can deliver profitability in the face of increasingly brutal competition."
