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US mobile gaming revenues expected to double in 2011

A report by SNL Kagan said it expects U.S. mobile game revenues to top $1.53 billion this year, which is nearly double the revenues made in 2010. At that amount, the mobile industry will make up about 7.7% of the $20 billion U.S. games market. Looking further out, SNL Kagan anticipates mobile game revenues to top $7.81 billion in the next decade, i.e. growing more than 5 times from 2011 levels.

The author, John Fletcher, identified this year’s fourth quarter as a key turning point as consumers download new apps after receiving a smartphone as a gift during the holiday season. During the final three months of the year, he expects U.S. mobile game publishers to generate more than $439.4 million, up 62 percent from $271.7 million in the prior-year period. He said the revenue growth is being driven by the free-to-play model, which enables publishers to make more than if they were charging 99 cents. While only a few customers actually make in-app purchases, they easily outspend the number of people willing to spend 99 cents on a game they don’t know if they will enjoy.

As the freemium model prevails, he expects newcomers, including Zynga, will make a dent in the space by the fourth quarter. However, Fletcher anticipates incumbent companies, like Electronic Arts and Gameloft, will continue to dominate.

For our favourite pick G5 Entertainment this is good news. During 2010, North America stood for some 35% of their total  iOS sales. However, the company is actively pushing its marketing in North America and Asia and at a recent investor presentation, CEO Suglobov highlighted that the iOS revenues from North America are running now closer to 40% of the total.

Have a nice weekend and hold on to your G5 shares!

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