From humble beginnings more than 40 years ago, mobile gaming has grown into an absolute behemoth, and this ASX-lister is riding the wave of gaming into the future.

Mobile gaming has come a very long way since I was a boy. In 1980, a dear family friend came home from a visit to Japan with a gift each for my sister and I – strange, hand-held contraptions called Game and Watch.

Five minutes later, I was hooked. Like, seriously hooked – to the point where I became obsessed with the idea of seeing what would happen if I managed to get the highest score possible on a game called Fire.

The aim of the game was to save a bunch of tiny people leaping from a burning building, by bouncing them three times each into the back of a waiting ambulance.

For every person saved, you got one point – but as the game progressed, the frequency and speed of the tiny people in peril increased, getting faster and faster until it was nigh-on impossible to save them all.

But one miserable, rainy Sunday afternoon, 7-year-old me finally managed to reach a score of 999 – the highest (from memory) score that the game was capable of displaying.

I was ecstatic, of course, but it didn’t end well. I had perched myself atop the toilet to “take care of business”, and launched the game to help pass the time – and those early Game and Watch devices didn’t allow the game to be paused.

So I was stuck there for nearly an hour, frantically mashing buttons and gagging from the smell – and when I did finally reach the end of the game, I leapt to my feet in joy and celebration.

Unfortunately, having been sat on the porcelain throne for that length of time, my skinny little legs had gone to sleep completely, so they crumpled beneath me as soon as I stood, launching me head-first into the back of the bathroom door.

It was my father who found me, dazed and semi-conscious, mumbling something about “clocking it” and waving the now-broken game weakly in the air. No one believed me about my achievement, but I’m prepared to swear on a stack of Gameboys that I did manage to beat the game.

Still, the irony of being rendered completely immobile by a mobile game still haunts me to this day.


The obsession continues

Those early hand-held games paved the way for a global obsession with drop-in, drop-out casual gaming on the go – and from the moment Nokia’s indestructible phones brought a version of Snake into the hands of billions of people, the global obsession with mobile gaming began.

There have been some monsterously huge mobile gaming hits – Angry Birds being one of the biggest titles ever, and the rise of real-time(ish), co-operative base-building games like the record-smashing Clash of Clans and the very moreish games like Candy Crush paved the way for those games to become massively profitable for developers.

Freemium games – you get the game for free, and (allegedly) can make headway without coughing up money to do so… but for a few dollars here and there, that progress can be sped up significantly.

Or you can be happy with watching a few advertisements here and there while playing – or for a few dollars up front, you can go from Freemium to Premium and have an ad-free experience.

And, for a few more dollars here and there, you can customise your character, and change your appearance to look ultra-super-cool on the screen.

There is big money in mobile gaming, with some estimates valuing the global mobile gaming content market at more than $181 billion in 2022 – a figure that’s predicted to rise to more than $229 billion by 2027, with most of that revenue coming from the Asian market.

To put that into perspective, in 2022 the global film industry value came in at around $139 billion – so, make no mistake… mobile gaming is an enormous market to get into.

One ASX-listed company making significant waves in recent years has been iCandy Interactive (ASX:ICI), which has been turning out some top-quality games, while leading the charge into the Brave New World of Web3 gaming.

I recently got the chance to take up a small chunk of iCandy chairman, co-founder and executive director Kin Wai Lau’s time, to pick his brains about what the gaming landscape looks like from iCandy’s point of view.


Home grown heroes

Since listing on the ASX in 2016, iCandy has seen the gaming landscape changing considerably, from the mobile gaming market right through to the AAA console and PC sector.

And in amongst it all, iCandy has been there, with its name on a slew of massively popular mobile games such as Jetpack Joyride, and Fruit Ninja to name just a couple.

In recent years, however, the pace of the development of new avenues for gaming entertainment has really picked up, mainly thanks to evolutions in existing formats.

“The gaming industry has continued to grow post Covid, and we are seeing major M&As (mergers and acquisitions) happening in the global stage,” Kin Wai says.

Arguably the biggest M&A news in the sector right now is the oh-so-close to completion acquisition of industry giant Activision-Blizzard by Microsoft, worth a wallet-shattering $100 billion.

Mergers and acquisitions in gaming aren’t uncommon, and for iCandy it’s a huge part of the company’s success.

The prime example of that is the February 2022 acquisition of Lemon Sky by iCandy, which brought a major studio into the iCandy fold that has some serious runs on the board through its work on some of the biggest titles the gaming industry has ever seen.

Lemon Sky’s fingerprints are on several titles that even non-gamers are likely to recognise, including The Last of Us, which recently hit the Big Time thanks to the HBO adaption of the title into a limited series for television.

Lemon Sky contributed concept art, environment, graphic design and 3D modelling to the title, which was released under the Sony Entertainment banner, years before Pedro Pascal smouldered his way into yet another huge hit on the small screen.

“On the consumer end, gaming is now mainstream digital entertainment,” Kin Wai says. “The success of HBO’s adaptation of The Last of Us and the Mario movie show that gaming IPs can also turn into lucrative franchises in non-gaming areas.”

Meanwhile, another of iCandy’s recent acquisitions has been taking off in Europe, with Flying Sheep Studios, bringing industry powerhouse Thomas Rössig and his team into the iCandy stable.

Flying Sheep has, since its launch in 2014, successfully delivered over 200 cross-platform games to world-renowned clients, including DreamWorks Animation and Lego Group.

Those two studios represent just a fraction of the output from iCandy, however, and the company is currently in the middle of a major push into new mobile gaming markets.

In 2019, iCandy entered into a “Global Collaboration and Distribution Agreement” deal with another ASX-listed company, Streamplay Studio (ASX:SP8) under which the companies would work together to build a dominant presence in the Asia-Pacific’s rapidly-growing mobile gaming market.

The plan was simple – Streamplay would provide its technology that allowed for gaming and eSports to be enjoyed on-the-go by mobile gamers everywhere, while iCandy would provide the games, carefully tweaked and ported so they would work seamlessly with the play-anywhere tech.

The collaboration has, to date, been an outstanding success, with Streamplay opening up huge new market sectors around the Asia Pacific region – most recently launching mGames in Papua New Guinea, under a deal with local telco Bemobile (a division of Telikom Limited) with a 50/50 revenue split between them.

“Streamplay intends on rolling out the partnership across American Samoa, Tonga, Solomon Islands, and Fiji in the near future, delving into a rich userbase of 7.3 million unique mobile subscribers by 2030, and 90% smartphone penetration in the Pacific Islands market,” Bert Mondello, chairman of Streamplay, said.


Web3 is where it’s at

iCandy’s chairman has his eyes set firmly on moving quickly, but carefully, into the rapidly growing Web3 gaming space, driving the company towards “developing extensive capabilities and securing some strategic partnerships that will put us in a leading global position”, he says.

Lemon Sky is a big part of that push, as the company is no stranger to working in that space, having been involved in the development of major Web3 gaming platform The Sandbox with its work in animation, character creation and assets for environment and props.

“iCandy is currently charting a fresh growth strategy for Lemon Sky Studios, and positioning it for the next level of growth,” Kin Wai says.

And iCandy is also pushing development for a number of  the multiple prongs of Web3 gaming, including the “play to earn” model that sees gamers rewarded financially (and in other ways) for the time and effort they are putting into being part of the title’s ecosystem.

iCandy inked a partnership deal with Froyo Labs last year, which has seen it develop its Super Misfits and The Engineers NFT-focused titles, and the Star Life ecosystem that drew wide praise for its innovative “one click to play, party and hang-out” approach that significantly reduced a lot of the barriers to entry keeping a huge segment of mobile gamers at bay.

For iCandy, though, there’s always room to grow, Kin Wai says, through the ongoing forging of crucial partnerships in that space to provide “insight and access to many parts of the Web3 ecosystem”.

As far as the reasonably ‘new’ play-to-earn model – a novel way of attracting and retaining a solid gaming audience – is concerned, Kin Wai sees solid potential there, but it’s not the be all and end all of the Web3 space.

“It is still early days but data is encouraging,” he says, on the topic of end-user uptake. “Play-to-earn was just the initial phase of Web3 gaming, there will be many different modes of Web3 gaming as the industry matures.”

What that space will end up looking like is, of course, hard to pin down – it’s evolving rapidly as developers find the boundaries of the underlying platforms and tech, to peer over the fence and imagine where the next step into the unknown should take place.

But Kin Wai seems highly positive that his company is ready to be right there on-the-spot when it happens, with plans for future expansion of the iCandy stable down the track.

“We have done a lot of M&A over the last two years,” he says, “So it’s time for us to be growing the studios and encouraging collaboration… but, having said that, we are always on the lookout for good M&A opportunities.”