Following its strongest quarter in Q2, the mobile battle royale segment outside of mainland China is showing signs of weariness. Both Fortnite and Knives Out declined quarter-on-quarter by -26% and -16% respectively. PUBG Mobile and Garena Free Fire – titles which are fuelled by less developed mobile games markets such as India and Brazil - grew at quite sedate rates of 3% and 10% respectively quarter-over-quarter. This is according to IHS Markit Technology analysis of Priori Data mobile app performance data.
In May, Tencent pulled PUBG Mobile from the Chinese market, having failed to secure monetisation approval. Game for Peace was immediately launched in its place, and in many respects is identical to PUBG Mobile but with a different skin and different content update schedule. It inherited the established PUBG Mobile audience in mainland China and has managed to capitalize on this to great effect, as we estimate that it generated total net revenue of $361.4m in Q3.
Game for Peace generated more than $280m net revenue in Q3 on Android alone
The third-party Android app store landscape is uniquely fragmented in mainland China, however sales through these storefronts represent the majority of the mobile games market there. IHS Markit Technology estimates that Game for Peace amassed $281.9m in net revenue across Android app stores in Q3, which surpasses total app store net revenue for Fortnite (iOS only), PUBG Mobile and Knives Out combined for the same period.
Game for Peace’s first season launched in July along with a battle pass, encouraging player spending. The weapons portfolio was also updated in September, and this is representative of the style of updates being applied – as yet there have been no new maps or characters.
Fortnite’s platform-wide decline felt strongly on mobile
In Q3 2019, Fortnite saw year-over-year growth of -63%. It generated only a third of the net revenue seen a year ago, and this reflects the wider reduction in consumer engagement and therefore spend seen across other platforms – namely console. Growth is likely to flatten or increase into Q4, with a potential boost from seasonality and the recent introduction of Fortnite Chapter 2 offsetting any substantial further decrease in net revenue.
Competitive imbalance alienates players in Fortnite’s Season ‘X’
Epic has struggled to balance tending to the needs of both casual and competitive players – an issue which is also apparent in PUBG and likely the battle royale scene more widely. In Season X (10), Epic introduced the highly powerful B.R.U.T.E. mechs, which could one-shot other players and therefore gave even novices the chance to claim their first kill. The backlash from Fortnite’s more hardcore audience was tangible, with several notable influencers voicing their frustrations.
As a result, Epic eventually reduced the power of the mechs, but it seemed that the damage was already done in terms of community rapport. Despite a reasonable spike of $2.6m in daily net revenue at the start of Season X in August, this then flattened for the remainder of the quarter, dipping to an all-time low of $186k in September. Against this backdrop it’s not surprising that Epic has now launched Fortnite Chapter 2 to reinvigorate the player base across all platforms.
Year-over-year growth fuelled by Tencent’s titles
Despite both Fortnite and Knives Out declining year-on-year, PUBG Mobile has seen individual growth of 326% - more than quadrupling its quarterly net revenue since Q3 2018. This is likely a result of Tencent’s strong and consistent pipeline of content and updates, as well as the title being expanded to further territories and localised over time. Additionally, the introduction of Game for Peace in mainland China has dramatically scaled the market. This has driven the entire segment upwards, although in Q3 2019 PUBG Mobile’s net revenue growth started to stall. We expect the October launch of Call of Duty Mobile – another military-themed, free-to-play experience developed by Tencent and published by Activision Blizzard outside of mainland China – to have some impact on PUBG Mobile in Q4.