A number of high-profile console and PC games have also suffered from delays this year, setting up a return to growth in 2023. For one, consumers are spending less on gaming due to inflation increasing the price of everyday goods. mobile game revenue will surpass 2021 levels, worsening headwinds have firmly shifted the conversation away from the question of by how much.”Ī confluence of factors has created a particularly difficult time for game developers, and not just mobile ones.
“While there is still a decent chance this year’s U.S.
continues to decline as consumers contend with both economic uncertainties and a new post-pandemic normal,” said Sensor Tower gaming insights lead Dennis Yeh last week. But this year's decline marks a surprising downturn for mobile. Said Juenger: “A 10 percent/70 percent/20 percent weighted blend of our three cases yields our blended target price of $172, which is 37 percent downside to current market price.Mobile gaming has typically offset the losses in console and PC gaming and has been the largest and fastest-growing sector in the industry for years. He concluded: “Our bull case … still indicates a target price of $285, not much upside to current market.” His base case scenario would get him to a $154 stock price, while his bear case would value the company at $71. “If this is such a big opportunity with important downstream network effects, do we really expect formidable competitors like Apple, Amazon, Google and Tencent will passively sit back and let Spotify capture it, unchallenged?” Juenger asked. Overall, he increased his forecasts for bear, bull and base case scenarios for the company.īut he highlighted that while “we don’t disagree with the logic of how podcast could improve market share, it’s just a matter of degree.” And Juenger argued: “There are two important impediments we believe the bulls are missing.” One is “geographic limitation” given that “all of these expensive, exclusive podcasts are only relevant in the U.S.
The analyst acknowledged though that “we failed to previously appreciate” the logic that, if Spotify succeeds in securing exclusivity on popular podcasts, “it may naturally lead to increased share of paid music streaming, if consumers choose to consolidate their listening into one app.” Added Juenger: “Ardent bulls would argue for additional positive follow-on impacts, believing this will propel Spotify to become increasingly dominant.”
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