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Smartphone revenues likely to gross $1 billion in 2011, and Nintendo’s hurting

By on July 28, 2011

This is my third post inspired by Flurry’s most recent release of free-to-play data. (The others were on free-to-play ARPPU and how whales dominate IAP revenues on smartphones.)

This data shows just how successful smartphone gaming is becoming, and how threatening it is to Nintendo.

Smartphone gaming market size

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Flurry says that "iOS’s and Android’s revenue share of the U.S. portable game software category exploded to 34% in 2010 from just 1% in 2008."

At the same time, "Nintendo’s U.S. portable game revenue share contracted to 57% from 75%" (although obviously that doesn’t have to mean that Nintendo’s revenue fell: the market could just have expanded a lot).

Flurry also estimates that, by the end of 2011, "total U.S. iOS and Android game revenue will surpass $1 billion" (compare that to Lazard’s historic forecast – made in 2010 – that global iPhone revenue in 2010 would be around $1 billion).

The key to this growth is the freemium business model. Flurry says "games drive 75% of revenue generated among the top 100 grossing iOS apps, of which 65% were generated from freemium games".

New business models are driving smartphones to $1 billion of revenue in the US alone. Although that is still a long way from the $10 billion of retail revenue from AAA games in the US, it’s a great performance.

I find the emergence of these new, successful business models tremendously exciting. I look forward to seeing what new changes are just around the corner.

About Nicholas Lovell

Nicholas is the founder of Gamesbrief, a blog dedicated to the business of games. It aims to be informative, authoritative and above all helpful to developers grappling with business strategy. He is the author of a growing list of books about making money in the games industry and other digital media, including How to Publish a Game and Design Rules for Free-to-Play Games, and Penguin-published title The Curve: thecurveonline.com