Mobile gaming in Europe and Asia has now entered the classic technology “chasm” in terms of sales. This is due to many factors, such as handset design, technology, available media and consumer trust. I would like to share with you some findings and provide a vision of the future of mobile gaming and of course welcome some discussion.
Across Europe and Asia we see the mobile games market has decreased in real terms by around 30% during the last 12 months. The user base of mobile game players is still about 5% of the population and on average we see only 6% of users making a repeat purchase. Customer satisfaction is generally low.
The use of the subscription model and aggressive marketing across these regions has created an unease and distrust of the mobile content market. This has led to a fragmentation of the market, as well as users looking for a new time-wasting mobile phone media.
The mobile games market in all parts of the world is split between casual and hard-core gamers. Their purchase process is completely different, the hard core gamer has a considered purchase, based on the game genre and user experience. The casual gamer's decision is based on a brand or brief peer reference.
The competition for the casual gamer is currently coming from new technology and new media types which have been made available on the phone. The casual gamer has a choice of playing a game, recording a video/image/audio and sending it to friends via MMS, texting, or browsing the Internet. Accordingly, browsing via WAP is up by 20% over last year across Europe.
An increasing trend is for the hard-core gamer to purchase the game directly from the developer and not from the service provider, mobile operator or retailer. Buying online and direct ensures confidence in the purchase process; having no spam or additional charges and also obtaining a number of promotional items.
If we look at mobile-phone gaming over the last 6 years, it has moved from text based games, through the arcade style of the late 1970s and early 1980s to the current Atari style of games. This has been an amazing pace for such a short time. In 1983, the video games industry took a crash and in 2006 the mobile games industry did the same. Before the console games crash, the main hardware devices and titles were: Atari (Space Invaders), Intellivision (Las Vagas Poker and Blackjack), ColecoVision (Donkey Kong). These titles are what we see in the mobile games charts today, interestingly the markets crashed at the same point.
After this, the video games industry developed for the Nintendo (Mario Bros) in 1985 and the up turn was complete, leading to the console wars which still rage today. What platform and genre will lead the mobile games industry out of the chasm?
If we look at the mobile gaming platforms which are used today (J2ME, Symbian, Brew, Windows Mobile) the gaming aspect is a nice to have feature and no manufacturer provides a clear statement of intent. This is clear when looking for development (API) support on most handsets.
Fragmentation of the J2ME platform has meant the development costs are almost evenly split between game creation and porting onto the hundreds of handsets. This is an unsustainable situation for all parties and we see game play quality reducing across the board over the last year. J2ME games are fast becoming the white elephant of mobile gaming.
Symbian has the best possibility of success in the short term as it already has the highest support through handset manufacturers and an installed user base. It provides the best game developer support, DRM and flexible distribution models.
Brew has a good DRM solution which ensures higher revenues through Qualcomm’s control of the distribution chain. However, the main channels are within the USA, so the overall return is limited for any developer.
Windows Mobile has become a stable development environment and, with the Microsoft portfolio of games, could provide the best user experience in terms of purchase process and quality of games. However, handset support is still limited.
One of the major differentials between mobile and console gaming is the business chain. In the console industry, it is well structured and the publisher controls it from the centre of the chain. In the mobile games industry the risk of publishing and revenue rewards are not placed within the same business, reducing revenue which can be used for investment of new titles. The mobile industry has to model itself on the console games industry, as it is one which works and is well understood. It allows reinvestment and marketing to build the industry. One other key business aspect is that hard-core gamers are willing to pay a higher price for better quality and the mobile industry needs to take advantage of this opportunity. This requires a more flexible payment system.
My prediction is that during 2007, mobile gaming will leave the chasm and be centred on hard-core gamers using Symbian based games. The price of these titles will increase for the end user. I hope a new publisher led business model will start to dominate the industry providing more investment for new innovative titles, fuelling future growth of the market.
Only a few companies are well placed to take advantage of this new emerging market. EA has been developing Symbian games and have clearly targeted the hard-core gamers with a higher price point. Gameloft has just launched three new titles, Ghost Recon: Jungle Storm with its amazing graphics and audio sound track is probably the best game on the market. Others include such companies as Telcogames, with their purchase of both Magic Productions and Fathammer, which clearly puts them in a good place for this new market of 2007. But what about the others, such as Glu, Iplay and Handson who have yet to move on this market situation, maybe they will get left behind?
Interesting times...
David Bozward - Consultant - david @ bozward.com