Market Research

Electronic Gaming Business, Sept 22, 2004

What Movie Game Do You Own?

Movie properties have a strong penetration with the gaming population, with one in five customers of major U.K. outlet, Game, owning at least one Lord of the Rings title. The company polled 155,000 of its customers to discover which movie brands gamer had purchased in game form.

The list is a testament to EA's masterful handling of all three licenses, which have helped establish some respect for film properties working as games.

Lord of the Rings  20%
007 James Bond     19%
Spiderman          18%
Harry Potter       16%
Final Fantasy      15%
The Matrix         13%
Star Wars          12%
Resident Evil      11%
Tomb Raider        10%
Star Trek          7%
Source: Game

Interest in GoD

As ISPs and portals try to hitch a ride on the game industry bandwagon, the Games on Demand (GoD) model seems to promise an appealing business model, if not a compelling consumer model. At $14.95 a month for what usually amounts to a back-catalog of year-old titles, most core gamers will not find the offers appealing, while casual gamers just don't have the right level of interest to devote a monthly fee to gaming. As Parks Associates' survey of household interest levels in GoD services shows, it is a fallacy that this model is great for casuals.

Even if GoD succeeds in attracting triple-A releases to appeal to core gamers, the model still only gives these players access to the games for as long as they pay the monthly fee. While GoD supplier Exent is about to roll out lower-priced packages to appeal to casual and kids segments, we still think that this model faces the same hurdles that other forms of fee-based Web content have faced for a decade. Many consumers still don't like paying for mere access to content.

GoD Interest Levels by Gamer Type*
Online Game Enthusiast Households  51%
Game Enthusiast Households         42%
Download Console Gamer Households  16%
Moderate Gamer Housholds           17%
Casual PC Gamer Households         9%
Non-Gamer Households               1%
*Percentage of households interested in GoD services (interest level greater
or equal to 5 of ten)
Source: Parks Associates

Mobile Gaming Will Be the 4% Niche

Expect annual mobile gaming revenues to reach $1.8 billion in the U.S. by 2009, says In-Stat/MDR. This means that game sales will constitute 4.4% of total mobile data income, a hearty niche but certainly not the $5 billion to $7 billion gusher some forecasters were predicting a year or two ago. Currently, only 6.5% of wireless customers say they are "very" or "extremely" interested in buying game services, but In-Stat predicts that by 2009 78.6 million customers will play mobile games and that downloads will increase tenfold.

In-Stats numbers suggest that the dream of mobile gaming proliferating the game habit to all segments probably is overstated. Mobile game users tend to be offline gamers already, playing games on other platforms for 5.1 hours a week (as opposed to 2.9 hours of other game play for all wireless customers).

And for all of the development effort that is going into porting console brands to phones, the simple puzzle, board and word games continue to dominate this platform.

EGB continues to be conservative in it estimation of mobile gaming's importance. According to reports, venture capital has been pouring into several wireless gaming companies in the last two months, but we don't think the market really justifies high levels of investment. Gaming on a phone will remain a lowimpact, low-involvement, low-satisfaction pursuit for the foreseeable future, even if it is something that every new phone owner will want to try on their upgraded rig. The fundamental truth remains. The form factor and ergonomics of phones are at war with comfortable gaming, regardless the quality of the screen, the speed of the connection, and the sophistication of the games. We use the same simple test on phone gaming as we use on adult handheld gaming. Unless and until we see grown-ups on the streets of America actually doing what mobile game proponents say they will (game on the go between meetings, on buses, etc.), then it is clear that the platform is being constrained by ergonomics and social self-consciousness.

This is not to say that phone gaming isn't growing quickly. According to new figures from mobile marketer Enpocket, Java and BREW game downloads represented the fastest growing mobile data segment, up 75% in Q3 2004 just from Q2 2004 in the U.S. About 4.4 million adults downloaded games in Q2 but 7.7 million downloaded games in Q3. The key mobile gaming demo remains 18-to-25-year-olds, where 22% of this group (4 million) downloaded games. To be sure, these are impressive stats, but we need to keep several caveats in mind. First, despite large number of downloads, other recent studies suggest that because of low price point and games bundled with plans and handsets, only a small share of game downloaders are actually paying for their games. We also need to see patterns of re-purchasing emerge over time, whether players really come back for more after their initial phone gaming experience. As we discovered with the Web, and even with online casual gaming, raw usage does not translate predictably into revenue.