Digital card games revive stagnant retail business, reaching $714MM by 2014E

Originally invented as a ‘casual’ game to play in between role-playing sessions at tournaments, collectible card games (CCGs) today are one of the fastest growing segments among online games. In 2011 worldwide sales totaled $2.1 billion, after a quick recovery from the recession, and grew 7% in 2010 and 9% in 2011. This remarkable growth, in a time when other categories suffer from a steep decline, can be attributed to the transition to digital CCG sales. Practically non-existent in 2008, digital card games grew to $191MM by 2010 (about 9% of worldwide sales), and by 2014E we expect digital sales to grow to $714MM.

There are several reasons behind this rosy forecast. For starters, large publishers face declining growth of the physical CCG market, forcing them to explore new formats and platforms.

digital card games

Traditionally major publishers like Pokémon (Nintendo), Konami and Wizards of the Coast dominated especially the physical CCG business. Konami, the company behind Yu-Gi-Oh! and an estimated $332MM in annual CCG sales, saw its Dragon Collection become the number one app on mobile social platform GREE, reaching 4 million users. Another Konami title, Sengoku Collection, counts 2 million users on the Mobage platform. Similarly, in late 2011 Bandai, known for its Dragonball Z and Naruto CCGs, teamed up with DeNA and together invested $1.3MM in, among others, mobile card games. Bandai found itself motivated to pursue the mobile platform after Gundam Royale accumulated one million players within only six days. In the West, Wizards of the Coast (WotC) made a strong push into digital CCGs with Magic the Gathering: Tactics and Duels of the Planeswalkers. WotC saw the digital version of its well-known franchise sell 500,000 copies on Xbox Live alone, and has since released its games on both PC and PS3.

All three companies are industry juggernauts in their own right. And, more importantly, have the necessary dollars and experience to not just enter the digital CCG space, but conquer it.

Small developers shuffle the deck

Despite their efforts, however, large companies never move as fast as small ones do. And so the emergence of new platforms goes hand-in-hand with the coming of a new generation of small, innovative developers. In the current vacuum left by the incumbents, relatively small, but experienced companies have been able to quickly build a name for themselves. Playdek, a small publisher originating from Incinerator studios, houses several decades of console development experience. Its Ascension is currently one of the most popular CCGs on iOS, and convinced the company to publish a sequel and other card-based mobile games. To an important extent, Pokémon’s absence from the Apple platform has allowed smaller developers to capitalize on the momentum of the smartphone market.

digital card games

Similarly, 5th Planet Games, with its card-based Clash of the Dragons, is one of the biggest earners on Kongregate, claiming around $55 per paying user every month (Source: Kongregate). To further expand on its success the company recently acquired New York-based developer To Be Continued. And finally, Fight My Monsters, which targets a 7 to 12 year old male demographic, claims 1.1 million users and received a financial boost in the form of a $2.4MM funding round led by Greycroft Partners. After a long period of a relative stability the CCG market is experiencing structural changes in the overall competitive landscape.

Bookkeeping

In terms of game play, digitalization makes it possible to dispense with the laborious bookkeeping inherent to the genre. Just as pencil-and-paper RPGs became a more mainstream genre because there no longer was a need to keep score and roll dice, so too will CCG become more accessible. This allows players to focus on developing strategies and building their decks. At the same time, social gamers increasingly seem to move toward more complex game play. We recently found that mid-core social gamers outspend mainstream social gamers two to one. The depth and sophistication of CCGs put the genre in a good place to capitalize on this trend.

digital card games

The proof, of course, is in the spending

The average physical CCG player spends about $300 a year. For digital card games this number is higher: we recorded ARPPUs between a low of $33.37 and a high of $52.68 over the last six months (monthly ARPPU for CCG-type social games across platforms). Findings based on our data are consistent with publicly released numbers. Earlier this year at GDC, Kongregate claimed two of its most popular titles earned monthly ARRPUs of $33.08 for Tyrant (Synapse Games) and $59.65 for Clash of the Dragons (5th Planet Games). By comparison, the average mainstream social gamer, who plays city building and farm-type games, spends between $20 and $30 a month.

With a shifting competitive landscape, the emergence of well-funded developers with something to prove, and healthy spending among the first generation of digital CCG players, the future may just be in the cards.

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Want to know more? Anyone interested in this market should come to the panel on digital card games at Casual Connect in Seattle, titled “Too Cool for Old Skool? How Card Games are Keeping Up with the Digital Era“, on Tuesday July 25th, from 4:00 – 4:50 pm PST. Have a question? Contact us!

Learn more about our research on online and social games.