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How Female Gamers Could Tame Mobile

In contrast to their Xbox-playing brethren, women constitute as much as 70% of the smartphone and tablet gaming audience. But the volatile mobile market, marked by few paying customers and even fewer smash hits, has yet to properly tap into this valuable demographic, say some analysts.

Women could bring some stability and an influx of revenue to this lopsided boom-bust sector, just as it is set to overtake the console market as the largest game segment by revenue.

"Women 18 (and over) are a huge demographic for casual gaming — outnumbering the stereotypical pimply-faced teen boys — and many of them will pay for virtual products," John Koetsier, vice president of research at tech news hub VentureBeat, told IBD via email.

Mobile gaming is notoriously fickle, dominated by casual gamers looking to kill time on their Apple (AAPL) iPhones while on a bus or in a waiting room. With low barriers to entry, the multitude of publishers also lean on single blockbuster titles and a concentrated group of paying customers to bring in most of their revenue. In fact, only 0.23% of all players on "freemium" games — free to download but with in-app purchases — account for 64% of their revenue, according to the 2015 Mobile Monetization Report from Swrve, a mobile marketing firm.

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Female 'Whales' Needed

Makers of mobile games mostly rely on such big-spending "whales" to bring in that revenue, as they shell out at least $10 a month on in-app purchases to strengthen town halls in Supercell's "Clash of Clans," buy more lives on King Digital Entertainment's (KING) "Candy Crush Saga," or afford a photo shoot in Glu Mobile's (GLUU) "Kim Kardashian's Hollywood.

If female players dominate mobile gaming, it might make sense to think that they constitute most of its paying audience. But women make up 63% of mobile gamers who never spend a dime, and 41% of those who spend less than $10 a month, according to game research firm EEDAR. And the percentage of women "whales" has fallen to 29% this year from 34% in 2013.

"One hypothesis for this would be the explosive revenue growth of the male-focused games 'Clash of Clans' and 'Game of War' and the lack of growth for the more diverse 'Candy Crush Saga,' " EEDAR's vice president of insights and analytics, Patrick Walker,told IBD.

By contrast, the most popular games among women who are heavy payers are simulation, resource management, casino and hidden-object titles, he said.

Wanda Meloni, gaming market analyst and CEO of M2 Advisory Group, has a different take.

"A lot of mobile gaming developers are very naive in the way they're looking at their consumers," she said, adding that the game developers she's spoken to have not done much research on how to reach female consumers.

Mobile To Eclipse Console

"One thing that really has not been looked at yet is how women actually purchase," she said.

But VentureBeat's Koetsier also noted that in-app purchases aren't the only way female gamers are monetizable, pointing out that they are a valuable demographic for advertisers too. Still, leaving this demographic untapped could be a missed opportunity, not just for mobile developers but for traditional console-game heavyweights like Activision Blizzard (ATVI) or Take-Two Interactive Software (TTWO).

That opportunity is about to eclipse their own market. Worldwide mobile gaming revenue is expected to rise to $30.1 billion in 2015 from $24.5 billion last year, according to research from Newzoo and the Global Mobile Game Confederation. Meanwhile, estimates on 2015 console game revenue range from $25 billion to $26 billion.

But the mobile sector's volatility can make it unappealing for console game makers to enter the market, Piper Jaffray analyst Mike Olson told IBD.

"Console games have become, in a lot of ways, a little more of a recurring revenue business, (posting) relatively consistent numbers," he said.

The console-focused giants have so far only dabbled in mobile, he said, though some, like Electronic Arts (EA), have found "huge success" in games like "The Simpsons: Tapped Out.

Outside of that? There are "not many examples to point to," he said, "just because of the cautiousness that publishers have around mobile."