Third-Party Engines and Mobile Gaming

Telecommunications, Media, and Technology

Development drivers: Third-party engines and mobile gaming

By: Jayson Chi /// Terry Sun

A tiny but key component in the massive mobile gaming industry, game engines enable rapid innovation. Deciding on a third-party engine entails a range of factors.

Worldwide, the total third-party game engine its two variants Cocos2d (for iOS) and Cocos2d‑x market was worth about $130 million in 2013—an (supporting multiple platforms). Unlike in South amount dwarfed by the $13 billion collected by Korea and Japan, the Cocos variants lead the the mobile gaming industry that same year. While market in China, since only six of the top-100 overshadowed by the more flashy and fun-filled grossing apps are 3-D games. It will be interesting elements of the gaming ecosystem, game engine to see how this trend unfolds as handsets be- companies nonetheless play an indispensable role. come more powerful, enabling a greater number A critical building block in creating new games, of 3-D-based games. game engine software enables developers to build 2-D and 3-D graphics, animation, sound, “collision Given its influence on the overall gaming scene, response,” and other elements into their games. a conservative projection puts the annual growth Compared with in-house solutions, third-party en- of the third-party game engine industry at 21 per- gines offer ready-built features and functions that cent through 2016. A scenario in which growth of can greatly reduce development cost and time in a 36 percent is also quite possible (Exhibit 2). market where speed is critical.

Choosing a third-party game engine Third-party engines in the mobile gaming landscape While two engines dominate the industry and their deployment most starkly falls along the 3-D/2-D Third-party game engines can deliver game devel- divide, there are actually several engines to choose opers graphics and other creation tools. Looking from and a host of factors that should guide a de- at the top 1,000 free gaming apps, developers veloper’s decision. Specifically, developers should turn to third-party engines for nearly 40 percent consider seven main factors when choosing game of the mobile gaming apps they build (Exhibit 1). engines—both from the product fit/support angle Among the top 100 grossing game apps, two as well as from the capability angle. types of third-party engines predominate. Knowledge availability. Is the programming team Unity. For the top-grossing 3-D games, Unity is skilled in using the specific game engine? Are clearly the dominant choice for third-party engines. there resources to train developers and trouble- Of the big-four gaming markets—South Korea, shoot? Familiarity can help a developer save time Japan, the US, and China—South Korea and Ja- and skip over the learning period that comes with pan are home to a significant share of 3-D games. using a new engine. In South Korea, more than one-third of the top- grossing games are 3-D, making Unity a dominant Support and community. What kind of support force in that market. Unity is also preferred by does the engine provide developers? How quickly many who develop 2-D games. can they fix bugs when discovered? For independent developers, it is important to have self-sup- Cocos variants. A preference for Cocos-based port tools and a vibrant community surrounding engines is apparent in the 2-D space along with the engine. 3

About 40 percent of the top free games apps are created using third-party engines

Worldwide engine market share Number of titles, as of Aug 2014

11,151 1,013 N/A 981 1,003 1,034 1,006 984 1,020 1,023 1,045 994 984 100%

Other 59.3% Google Play top Corona 0.6% free games 3% 2% Marmalade 1.3% 2% 3% 3% 3% 3% 3% 3% 3% 2% 3% 3% Cocos2d (iOS) 14.2% 2.6% 15% 14% 14% 3% 3% 3% 13% 3% 3% Cocos2d-x 26% 26% Unity3d 22.5% 23% 19% 23% 22% 23% 23% 24% 20% 19%

100% =12,095 1,101 975 924 954 971 979 1,086 910 1,035 1,058 1,046 1,056

Other 58.8%

17% iTunes top Marmalade 11% 0.8% 15% Corona 1.4% free games 13.5% 15% 14% 14% 11% Cocos2d (iOS) 15% 22% 13% 12% 12% 10% 14% 15% 7.0% 4% 5% Cocos2d-x 5% 4% 4% 3% 3% 4% 5% 22% 25% Unity3d 18.4% 16% 18% 16% 17% 19% 17% 19% 21% 16% 15%

Total Australia China Germany France India Italy Japan South Mexico Russia UK US Korea Source: McKinsey analysis based on data from SourceDNA Exhibit 1

Genre and features required for the game. Do the needs, but is it clear that there will be learning op- features of the engine meet game requirements— portunities going forward? Some developers take graphics and technical requirements, for example? a game-by-game approach but neglect to take Some engines are more well-known for supporting the longer-term view of whether they buy into the the development of specific game genres. Unreal’s future road map of the game engine. Getting the engine, for instance, does very well in racing and alignment question right early on in the process shooting games. As mentioned above, the 2-D is important, because once a team has become versus 3-D requirement is also a major differentia- familiar with an engine, the cost of switching to tor when it comes to choosing an engine. another one can be significant.

Engine compatibility and source code availability. Development team size. Another consideration What is the engine’s ability to adopt plug-in and in selecting a third-party engine is development work with other in-house systems, such as sound team dynamics. How large is the team? How will engines? What third-party add-in support and the work flow within the team for this particular customization is required? Does the engine sup- project? Unity, for example, is known for working port multiple platforms? If so, how easy is it to port well in small-team, iteration-driven development from platform to platform? More advanced devel- environments, whereas Unreal is known to be well opers will typically seek a full source code arrange- suited for very large development teams. ment so that they can tweak and make changes to the code as required. Cost. What is the licensing fee for the engine given the size of the development? For small develop- Company product vision. Is the engine’s devel- ers, the cost has been reduced across the board opment trajectory aligned with the direction the recently so the difference may be getting smaller. developer wants to take the games in the future? For large studios, however, the cost of licensing The engine may meet the developer’s current an engine—especially when source-code licensing Telecommunications, Media, and Technology Development drivers: Third-party engines and mobile gaming 4

The third-party game engine market is expected to grow between 21 and 36 percent p.a. through 2014

Low case of third-party engine revenue growth High case of third-party engine revenue growth $ millions $ millions

322 +36% p.a. Independent developers 33 Ofﬂine contracts +21% p.a. 254 79 Large and medium-sized 225 25 developers 195 22 194 18 13 73 164 56 10 128 57 128 70 2 59 2 52 52 210 147 156 120 95 111 74 74

2013 14 15 2016 2013 14 15 2016

SOURCE: McKinsey analysis Exhibit 2

is a requirement—can be a major swing factor in choosing the engine.

밠밠

The industry is looking at strong growth as the overall mobile game market continues to expand. Third-party mobile game engines can give developers the benefits of speed and cost efficiency. Considering a range of factors will help developers in choosing the right third-party game engine.

Jayson Chi Terry Sun is a principal in McKinsey’s is a knowledge expert in McKinsey’s Hong Kong office. Shanghai office. [email protected] [email protected]