Mobile games will bring in nearly $29B by 2016 by squeezing players for more

Gaming on smartphones and tablets is a huge business that is only going to get bigger.

Juniper Research, a technology-consulting company, released a report today that claims that mobile games will generate $28.9 billion by 2016. That will represent a 38 percent increase from the $20.9 billion that the industry is on track to bring in this year. To reach these new heights, Juniper projects that mobile developers will shift their strategy to focus on squeezing more money from their most dedicated players.

In 2013, consumers spent around $16 billion on mobile games worldwide. That’s largely due to free-to-play megahits like developer King’s match-three puzzler Candy Crush Saga and Supercell’s strategy title Clash of Clans. Both King and Supercell (along with a number of other developers) generated their revenue by paying to acquire as many players as possible. “User acquisition” is expensive, but most companies see it as absolutely necessary. While that strategy will still play a part in mobile gaming — especially for free-to-play releases — Juniper sees a new trend emerging.

“Under the new strategy, which brings mobile analystics to the fore, developers are increasing lifetime value through analyzing, re-engaging, and monetizing players, allowing for higher overall returns on investment,” Juniper spokesperson Sam Smith wrote in an introduction to the report.

In addition to the new strategies for developers, the report finds that tablet users tend to spend more money on in-game purchases than smartphone players. Juniper explains that this is the result of a migration of traditional gamers from dedicated handhelds, like Game Boy and DS, to iPad and other large mobile gizmos.

But that doesn’t mean the end is here for 3DS and Vita.

“Dedicated gameplay hardware will continue to serve a niche gaming audience,” writes Smith.

Juniper’s report also highlights that gaming and the distribution of software will need to emphasize convenience, accessibility, and online streaming. People want their games with them everywhere, and the top developers will deliver that.

Finally, the report also speaks of the importance of Latin America, Eastern Europe, and Southeast Asia for gaming. People in those regions adopting smartphones at a high rate while also earning more disposable income. This should boost the amount of in-game purchases gamers in those developing nations make.