Smartphone Storage Space Is the New Turf War for Game Makers

(Bloomberg) – From Tokyo to San Francisco, mobile game studios have struggled for years to captivate volatile audiences and fostered an overlooked problem – the average title has grown so large that gamers can’t fit more than a few on their phones.

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Japanese game publisher Gree Inc. expects an impending reckoning over escalating costs and skyrocketing file sizes as developers pack their games with increasingly complicated graphics, voice acting, and larger storylines to entice players to buy. That creates a situation where the winner gets everything that smaller studios could win in the years to come, Yuta Maeda, Gree’s senior vice president, said in an interview. The situation will only get worse as console veteran Sony – no stranger to space-eating hits – prepares to invade the mobile arena.

“Mobile game production is inevitable to become more complex, time-consuming and large-scale, which will inevitably lead to larger app sizes,” Maeda said. “Companies that survive in the market will only be the ones that can keep up with this trend.”

The spending that’s poured into today’s A-list mobile titles — MiHoYo Co.’s Genshin Impact, for example, started out with a $100 million budget — rivals Hollywood blockbusters and brings better production values ​​than ever, but also an oversized footprint. This game can take up to 20 gigabytes of storage space, which is a huge chunk of what most people have available on their phones. As memory upgrades don’t keep up, fewer games can compete for attention.

“Even when players show interest in our games, we’ve found that some of them give up installing the apps because their phones are already full,” said Gree’s Yoshihide Koizumi, marketing director for the company’s newest game, Heaven Burns Red.

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Sony, one of the console gaming giants, has been developing plans to bring its high-profile PlayStation franchises to mobile platforms. The rival Microsoft Corp. is also building an Xbox Mobile Gaming Store. All of this is putting pressure on the established free-to-play business model that Gree and others are following. These publishers rely on monetizing in-game items and upgrades, and regularly add more content for players to purchase and play with.

The most common workaround for game studios is to just put a simple installer on app stores, which then downloads more game content as soon as the player launches. Gree uses it with Heaven Burns Red, which is 1GB initially and grows beyond 10GB for players who want the full experience.

Today’s typical flagship smartphone starts with 128GB of storage, but many devices already in people’s hands have far less. Necessary operating system files also take up a significant part of the basic equipment, leaving even less space for large games. However, memory upgrades are expensive.

“As smartphone prices have increased significantly over the years, users tend to buy the cheapest versions of the latest devices that have less storage,” said Francisco Jeronimo, vice president of analytics at IDC. “Devices with more storage can cost up to 50% more, and most users don’t realize that apps take up a lot more storage, and they’ll download a lot more apps.”

Gree’s Maeda and Koizumi said that lowering data requirements at the expense of game quality is not an option. Exceeding player expectations is now considered the minimum requirement for a game to last over the long term, prompting studios to be more aggressive in their spending and marketing.

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To attract attention, the company hired an acclaimed writer to write the screenplay for Heaven Burns Red. Other mobile publishers have pushed the envelope with graphics, video and voice overs in their higher-fidelity titles — and Gree’s chunky 10GB game will be the norm going forward, not the exception, Maeda said. He anticipates mobile gaming will continue to grow as expectations rise with more budget console and PC games on mobile.

“Most of the big mobile game hits come from Asian developers, but I think western studios are ready to follow this trend,” said Tokyo-based industry analyst Serkan Toto. “Users expect better and better quality from mobile games. File sizes will definitely only have one direction going forward: up and to the right.”

Cloud gaming, the long-promised next level of connected gaming that would host all game progress, assets, and compute-intensive work on remote servers, has yet to materialize in a meaningful way to address the memory shortage. Alphabet Inc.’s Google Stadia service was one of the best-funded initiatives of its kind, but the company recently decided to shut it down due to a lack of player adoption – it now serves as a cautionary tale.

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Offloading other phone content, like photos and videos — which are also getting bigger with more advanced cameras — to the cloud is becoming an expensive proposition. Free online storage from companies like Google, Apple Inc. and Microsoft Corp. is insufficient for the task, partly because these companies want to push users into subscribing to paid storage.

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The threat to smaller companies now is that larger and larger game production companies will simply take over with the brute force of their marketing budget and reach.

“The only hope would be for handset makers, realizing this is a critical issue for their ecosystem, to offer models with larger storage,” said Hideki Yasuda, an analyst at Toyo Securities. “Without a change of course, the future for mobile game companies looks bleak and industry consolidation is likely to occur.”

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