Two research houses run the rule over mobile gaming and read runes somewhat differently… 

According to a new report from Juniper Research the increasing popularity of casual gaming, combined with a steadily increasing variety of gaming-friendly handsets offering high quality 3D graphics aimed at core gamers, will help to push end-user generated revenues from mobile games to nearly US$10bn by 2009.

‘Mobile Games: Subscription & Download (4th edition)’ reckons that, in total, more than 460mn mobile users are expected to download games by 2009, representing more than a double increase on the current number. Much of this growth is expected in emerging markets such as the Indian sub-continent, where the number of users will rise from 10mn in 2007 to nearly 40mn in 2009. “Game downloads have already overtaken those of ringtones in a number of Western European markets, while mobile handsets are now the de facto games console in many developing countries,” comments report author Dr Windsor Holden.

However, the Juniper Research report cautions that the high cost of browsing and downloading services and content combined with opaque pricing structures were continuing to act as a disincentive to service adoption. It also welcomes the fact that there were an increasing number of products targeting female gamers, although adding that more needed to be done to widen the mobile gaming demographic.

“Essentially, the proportion of leading titles focusing on action and adventure has not altered discernibly over the past two years,” notes Holden. “While these are popular within the traditional gaming demographic, there is a major opportunity to attract casual gamers by enhancing a portfolio mix with more titles from alternative genres.”

Other findings from the Juniper report include:
·         China and the Far East will remain the largest regional market for mobile games throughout the period covered by the report, with revenues rising from nearly US$2.7bn in 2007 to US$5.7bn by 2012
·         global revenues from in-game advertising will rise from just US$90mn in 2007 to more than US$1.2bn in 2012
·         operators and publishers should expand the number of games they offer on a free trial basis: with the entry price barrier removed, a greater number of consumers may play the game and ultimately convert to being paid customers

A somewhat less bullish view of mobile gaming is taken by value chain research and advisory services firm iSuppli Corp. That company’s analysis ‘Mobile Gaming and Music Growth Slows; Companies Look to Video’ reckons the mobile gaming market suffered a reversal of fortune in the 2Q 2007 as revenues for title publishers declined by 9% sequentially, compared with 11% growth in the first quarter.

“While growth compared to the same period a year earlier was slightly positive, the second quarter dealt a significant blow to manufacturers that were expecting their profits to continue to rise,” judges David Carnevale, iSuppli vice president, multimedia content and distribution. “While the third quarter performance and the fourth quarter outlook appear optimistic, the pace of growth is slowing, causing great concern to content providers hoping to cash in on this market.”

According to iSuppli one of the main problems is that number of subscribers for mobile games remains quite small. Game publishers’ and developers’ moves to broaden the awareness of mobile games will help build the subscriber base - but only if they target the right demographic. In the coming months, iSuppli expects to see game innovators focusing on the characteristics that separate mobile gaming from other types of gaming, including mobility, connectivity, community and location awareness.

The company reasons that because the current crop of mobile games is centred on casual players, one way to encourage a new demographic to play games on their mobile handsets would be to develop titles that support networked and/or multiplayer gaming. Allowing other users to play against, and with, their friends via wireless networks will encourage groups of gamers to adopt the platform quicker. These types of games also could reduce the churn-and-burn effect among targeted subscribers, an area of particular concern and importance for operators.

Altough iSuppli suggests that, despite the short-term setback, mobile gaming revenue is expected to nearly triple by 2011, its forecast is only for US$6.6bn in that year, up from US$2.3bn in 2006.

Seeing the light
Further the company says that with some uncertainty associated with mobile gaming, operators and content providers instead are turning to the mobile video market. It believes that while still in its early stages, mobile video holds the most upside potential among the premium content categories. iSuppli remarks that most of the early mobile video deployments are coming from operators that are streaming video over their networks. Mobile television services are debuting simultaneously worldwide and consumer acceptance has been most prolific in Japan and Korea. Notably, MobiTV announced that by February of this year their subscribers topped 2mn worldwide.

According to iSuppli mobile TV is a catalyst for the expansion of the mobile video market. As mobile TV services continue to garner subscribers, other services such as video on demand (VoD) and interactive viewing become more appealing to consumers.

Mobile video operators are apparently expecting big things from this market. iSuppli forecasts mobile video revenue will reach US$14.6bn by 2011, rising at a whopping CAGR of 71.7% from US$977mn in 2006.

While significant barriers remain - including content availability, spectrum accessibility and uncertain business models - iSuppli argues that the earlier these obstacles are breached, the faster this segment can become the largest mobile content opportunity for operators and content providers.

So, game on. Or not.
John Williamson