The video game industry has been dominated by the home game console since the early 1990s, and it has only been in the last few years that mobile games for tablets and smartphones have started challenge consoles’ place in the revenue hierarchy.

According to a new report by research firm Digi-Capital, revenues on mobile games have already surpasses online platforms like Steam, and by 2018 they will also surpass console revenues.

“Mobile games will generate more revenue than online games in 2015, as well as more revenue than console software,” the report says. “Where mobile games will take $3 of every $10 spent by gamers on software in 2015, that figure will go up to $4 out of every $10 by 2018. Digi-Capital forecasts that mobile games revenue will grow from $29 billion in 2015 to $45 billion by 2018 at 15 percent annual growth.”

While most console games focus on premium games that are further supported by DLC, many mobile games use a free-to-play model that earns revenue off microtransactions. This model has proven successful on other platforms as well, such as with popular esports PC games like League of Legends and Hearthstone: Heroes of Warcraft.

Recently, mobile games have also been spending more on advertising, but as the market becomes more saturated, it is becoming harder and harder for mobile games to stand out.

“Stable top grossing mobile games charts look set to remain the norm,” the report says. “This is great for games leaders and their shareholders, but puts the big squeeze on mid-tier players and makes breaking through more challenging for indies.”

Android on the rise

Digi-Capital’s report also predicts that Android revenue, split between Google Play Store and China Android, will surpass iOS apps revenue by 2018.

While iOS devices have had a smaller share of the market thanks largely to Android’s popularity overseas, iOS apps have still earned developers more money than Android. If that changes, however, the traditional focus on iOS app development could change.

While Digi-Capital believes that the current trends in game sales will likely remain steady for the next few years, the firm also notes that virtual reality systems, such as Oculus Rift and HTC Vive, and augmented reality systems like Microsoft HoloLens have the potential to disrupt the market in the near future.

Digi-Capital’s full Games Report Q1 2015 can be purchased on the company’s website.

Image credit: Digi-Capital