and tablet devices who are spending ever-increasing amounts of time on social media, messaging and music, movie and television streaming applications, personal computer and console games, sports and the Internet. We compete for promotional and Digital Storefront placement based on our relationship with the Digital Storefront owner, historical performance, game quality, perception of sales potential, customer reviews and relationships with licensors of brands and other content. For content licensors, we compete based on royalty and other economic terms, historical financial performance of prior licensed content titles, perceptions of development quality, speed of execution, distribution breadth and relationships with storefront owners. We also compete for experienced and talented employees.
We compete with a continually increasing number of companies, including Activision (the parent company of King Digital Entertainment), Disney, Electronic Arts (“EA Mobile”), Gameloft, Netmarble (including its Kabam Games subsidiary), Rovio, Stillfront, Warner Brothers, and Zynga and many well-funded private companies, including AppLovin, Epic Games, Jam City, Miniclip, Niantic, Playrix, Pocket Gems, Scopely, and Supercell. In addition, hyper-casual games published by companies such as Crazy Labs, Lion Studios, and Voodoo account for a significant and growing percentage of mobile gaming downloads.
We also face competition from online game developers and distributors who are primarily focused on specific international markets. We could also face increased competition if those companies choose to compete more directly in the United States or the other markets that are significant to us or if large companies with significant online presences such as Apple, Google, Amazon, Facebook, Microsoft or Verizon, choose to enter or expand in the games space or develop competing games. For example, in 2019 Apple launched its Apple Arcade subscription service in which users receive access to a curated selection of paid titles on the App Store. In addition, we also face competition from mobile applications and websites focused on the home design market, which may include games, e-commerce titles, design applications and others seeking to displace our Design Home title which is a leading title in the currently unsaturated home design application market. Competitors in this space include Redecor – Home Design Makeover published by Reworks, and may include established game developers, established real estate companies, interior design companies, e-commerce companies and other well-funded private companies looking to enter the home design market. Given the open nature of the development and distribution for smartphones and tablets and the relatively low barriers to entry, we also compete or will compete with a vast number of small companies and individuals who are able to create and launch games and other content for these devices using relatively limited resources and with relatively limited start-up time or expertise. As an example of the competition that we face, it has been estimated that more than 4.5 million applications, including nearly 1 million active games, were available on Apple’s U.S. App Store as of January 31, 2021. The proliferation of titles in these open developer channels makes it difficult for us to differentiate ourselves from other developers and to compete for players without substantially increasing our marketing expenses and development costs.
We also compete for downloads and time spent on mobile devices with companies that develop popular social media and messaging applications, such as Facebook (with its Facebook, Facebook Messenger, Instagram, WhatsApp and other applications), Pinterest, Reddit, Snapchat, TikTok, Twitter and YouTube, companies that develop streaming music, movie and television applications, such as Pandora, Spotify, Tidal, Disney+, HBO Go, Netflix, Amazon Prime and Hulu, and with companies that create other non-gaming related software applications, such as Kim Kardashian West’s own personal media application.
Some of our competitors and our potential competitors have one or more advantages over us, either globally or in particular geographic markets, which include:
●significantly greater financial resources;
●the ability or willingness to spend significantly more than we do to acquire new players, which may be due to competitors having games with higher lifetime values than our games (i.e., the amount of money the average paying player spends in the competitor’s game over the player’s lifetime is greater than in our games) or where a competitor is willing to pay to acquire users in a manner that does not have a positive return on investment in an effort to increase its revenue and/or user base;
●greater experience with free-to-play games, building and maintaining games, and building social and community features into mobile games, as well as more effective game monetization;