EB SECURITIES: Significant growth in the European and American mobile gaming market in the second quarter, focusing on the top game companies in the US stock market

According to the Zhitong Finance and Economics APP, EB SECURITIES released a research report stating that the overseas mobile game market in 24Q2 maintained steady growth, with significant growth in the European and American markets. It is recommended to pay attention to the top game companies in the US stock market: Take-Two Interactive (TTWO.US), Electronic Arts (EA.US), whose rich PC game IP is expected to gain incremental revenue in the era of mobile games. Also, pay attention to Unity (U.US), which benefits from the growth of the mobile app industry, and Roblox (RBLX.US), which has strong user and traffic growth.

The global mobile app market continued to expand in 24Q2. On July 30th, Sensor Tower released the 24Q2 Digital Market Index report. The global mobile app market saw significant growth in 24Q2, with consumer spending reaching $36.2 billion (yoy + 12%). Non-game applications saw significant growth, accounting for 46% of total consumer spending.

The performance of the European and American markets is better, with faster growth in consumer spending in mainland China in the Asia-Pacific region.

1) The Asia-Pacific region remains the largest gaming region, with 1.79 billion gamers (53% of the global total). However, consumer spending in some core markets declined in 24Q2, with significant drops in Japan (yoy -15%) and South Korea (yoy -1%). Mainland China saw growth, with consumer spending on the iOS platform increasing by 8% yoy.

2) The European and American markets saw significant expansion. The US market share increased from 29% in 19Q2 to 36% in 24Q2, while consumer spending in Europe increased by 23% yoy.

The mobile game market continues to grow steadily, with strategy game downloads reaching a new high.

1) The mobile game market has seen year-on-year growth for four consecutive quarters. Both the iOS and Google Play platforms experienced growth, with higher consumer spending on iOS reaching $25.2 billion.

2) Despite overall growth in consumer spending on mobile apps, there has been a slight decline in mobile game downloads, with a 6% overall decrease in downloads, reaching the lowest level since before the COVID-19 pandemic.

3) Strategy games performed strongly, with downloads reaching a new high, yoy +19%, a 9% increase compared to the previous quarter, surpassing RPG games as the most popular game genre. Compared to RPG games, which performed poorly due to the impact of the Japanese and South Korean mobile game markets, spending decreased by 15% yoy; simulation games and shooting games saw a slight increase in downloads. In particular, Supercell's popular strategy game "Squad Busters," launched at the end of May, contributed to over half of the year-on-year growth in the strategy game category.

Four major US-listed game companies released their 24Q2 financial reports, showing different performance.

1) Electronic Arts (EA) maintained strong profitability in FY25Q1 (24Q2), driven by new product-driven net bookings exceeding guidance. Net bookings reached $1.26 billion, surpassing the upper limit of the $1.25 billion guidance, net revenue was $16.6 billion (yoy -14.5%), and net profit was $280 million (yoy -30%) The release of "Madden NFL 24" and the EA SPORTS FC series of games performed well, with higher player engagement and the success of the new versions exceeding expectations for the company.

2) Due to user and traffic expansion, Roblox's 24Q2 revenue grew significantly, with losses improving. Roblox generated $890 million in revenue (yoy +31%), with strong platform engagement. Key operational metrics such as daily active users (DAU) and user hours showed positive trends: average DAU reached 79.5 million (yoy +21%); total user engagement time was 17.4 billion hours (yoy +24%). Increased costs in research and infrastructure led to overall losses, with a net loss of $210 million this quarter (compared to a loss of $280 million in 23Q2).

3) Take-Two Interactive saw slight revenue growth, but increased operating expenses led to larger losses. Take-Two reported net bookings of $1.22 billion in FY25Q1 (24Q2), with consumer spending by recurring users remaining flat year-over-year. GAAP net revenue was $1.34 billion (yoy +4%), with the release of multiple new games including "NFL 2K Playmakers" and "TopSpin 2K25". GAAP net loss was $260 million (compared to a loss of $210 million in 23Q2), primarily due to higher operating expenses related to game development, marketing, and business restructuring.

4) Still in a period of strategic adjustment, Unity's 24Q2 revenue declined, with a focus on the potential turning point with the release of Unity 6 in the fall. Revenue for the period dropped to $450 million (yoy -15.1%), attributed to increased competition and strategic shifts in product supply. Despite efforts to reduce costs, including workforce and office space reductions, Unity reported a GAAP operating loss of $130 million (compared to a loss of $190 million in 23Q2)