Jam City president Josh Yguado said he is optimistic that the game industry can continue to grow in 2021, despite the challenge of having to beat record growth numbers for 2020.
Yguado made the remarks at the GamesBeat/Facebook: Driving Game Growth event today. Los Angeles-based Jam City is one of the biggest U.S. mobile game companies, with titles ranging from Cookie Jam to Harry Potter: Hogwarts Mystery. The company has had more than a billion downloads and more than 30 million users.
Yguado acknowledged that every mobile game company is wondering whether it can beat the numbers from 2020, when, during the onset of the pandemic, new players flocked to games because they had nothing else to do, and games were a way to be social during lockdowns.
“It is going to be hard to beat the incredible growth rates we saw in 2020, but the silver lining is that the big bumps we saw in user acquisition and new players into our games have held,” he said. “These weren’t temporary users. These weren’t temporary wins. All of that is sustaining, at least at Jam City. It accelerated some trends that were already happening.”
He noted that a Deloitte survey found 40% of millennials and Gen Z players ranked video games as their top three activities. The trends that point to more money coming into games and stronger interest in games have been happening for years, and it’s not just due to COVID-19, Yguado said.
“I’m not ready to chalk it up to COVID,” he said. “If you follow player patterns, the dollars almost inevitably follow. So many players have entered gaming through mobile. These trends were a long time coming and to a certain extent the investment dollars have been catching up.”
“That says something about player expectations and entertainment expectations are changing very quickly in our industry,” Yguado said.
Market insights and analytics firm App Annie found that time spent on mobile in 2020 surged to an average of 4.2 hours per day on Android, which amounted to 3.5 trillion hours, up 20% and 25%, respectively, from 2019. That mobile time spent surpassed the average 3.7 hours of live TV watched per day.
More people started playing games in the pandemic, as other forms of entertainment were cut off. Generally speaking, it takes 66 days for people to pick up new habits, and during the pandemic, people have had much more time than that, according to App Annie. That means those new players are likely to stick with playing games even after the pandemic is done.
And App Annie also found that people played mobile games at home, even though they weren’t commuting and they had the option to play PC and console games. The convenience of mobile games is why it has become the biggest segment in games and could grow 25% to $120 billion in 2021, according to App Annie.
Facebook Gaming’s report on Games Marketing Insights for 2021 found new players in the U.S. grew by 28 million since March 2020, and they’re still playing. They’re playing more hours per week than existing players, and they’re more social and they’re spending more.
Above: Jam City lets you attend the school for magic in Harry Potter: Hogwarts Mystery.
Image Credit: Jam City
Yguado said that his company will lean in when it comes to making games more social. Story and writing have become more important as games start to replace other forms of entertainment like books and movies. Jam City is creating more narrative role-playing games and strategy games on top of the casual fare that it started with.
“We have a whole team of writers that came from television,” Yguado said.
Harry Potter fans have flocked to the mobile game because J.K. Rowling hasn’t created any new titles in the book or movie series, Yguado said. Production values are going up, and it’s always social because your social graph is with you on the phone. Players are picking up their phones as an entertainment powerhouse instead of a convenient alternative to watching TV, Yguado said.
As for raising the bar on creativity, Yguado said, “It starts with people. We have gone out of our way to find talent from other creative industries to try and bring different perspectives and frankly to up our game. If you aren’t willing to take chances on people who don’t come from games but have that deep creative capability, you will probably miss out on opportunities and talent.”
That means hiring people from Hollywood, PC game development, and console development, he said. Yguado believes that the consolidation happening now makes sense, as the industry was too fragmented in the past and suffered from too little investment.
Above: The new Hollywood: Jam City’s headquarters in Culver City, California.
Image Credit: Dean Takahashi
“With the companies that can be consolidators in this space and build up strong central services, which can be differentiators, and continue to roll up creative studios in this space and bring those central services to them, I think we’ll see a lot of value creation in this space,” Yguado said. “We definitely see ourselves as a consolidator in this space. We did three acquisitions in the last three years and each one has performed very well.”
Of the clouds on the horizon, Yguado acknowledged that the change to the Identifier for Advertisers (IDFA) has created some uncertainty. Apple is making it harder to do target advertising in favor of user privacy, and that will make it somewhat harder to do mobile game marketing in the short term.
But Yguado said that increased user privacy could be good for the mobile industry. And over time it could lead to lower user acquisition costs. In that sense, he said, it’s a “double-edged sword.” Based on some tests, this has some impact on marketing campaign effectiveness and ad revenue, but he noted that networks are becoming more efficient over time.
“There’s a lot of talk, but I don’t think it’s going to be a big issue,” he said.
Asked if he would buy a Hollywood studio, Yguado said, “We are a Hollywood studio. That’s the point. We’re creating intellectual properties. If you think about some of the biggest IPs in the world, our games have so many more viewers than some other channels that are more known or famous. If you have a big franchise and you need to reach your fans directly, there’s no better place than mobile games and video games generally. I think we’re just entering the golden age of video games and mobile games specifically.”
