The Many Faces of Wireless Gaming: Breaking Through to Profits

Electronic Gaming Business, July 16, 2003

Another month, another report about how wireless gaming will make billions for us all. In this case, new Australian firm The Research Room argues in "Wireless Gaming: Strategies for Profit" that wireless gaming revenues from U.S. gamers alone will reach $8.1 billion by 2007, with the lion's share coming from Java and BREW format titles (see chart). Of course, we at EGB have been more circumspect (much more) than most about whether, how, and how much wireless gaming will take off in the U.S. All of the major carriers are being suspiciously mum about the actual sell-through they are seeing on all data services, let along gaming, and there are considerable usability and distribution/promotion hurdles for this platform (EGB, Vol.1 No. 1).

Nevertheless, this report's author Tim Sheedy, former analyst for IDC Australia, makes a number of very strong and innovative points about how publishers and developers might see mobile gaming impact existing PC and console based platforms. Defending his rosy picture, Sheedy tells EGB, "most in the market are still expecting around 70-100 million Java/BREW downloads this year in the U.S. alone - in the first 6 months there were around 25-30 million, and based on the high growth rates we should see the market expand dramatically."

Sheedy predicts a substantial spike in interest and revenues in wireless gaming over the next 18 months that will culminate in a jump from about $166 million in revenue in 2003 to nearly $1 billion in 2004 and $2.4 billion in 2005. The most important part of this impending tsunami of interest in mobile gaming is that it will affect all other platforms and even gamers' general approach to gaming. While standalone, downloadable games will attract the most money and interest, less obvious cross-platform opportunities could expand numerous game markets. "There is no reason why in the future players using a Nokia N-Gage can't compete against players on a home console such as the Xbox," says Sheedy.

In other words, Sheedy, argues, there are a number of less obvious ways in which mobile platforms could enhance and extend existing gaming experiences. The opportunity for using wireless to engage on some level with ongoing multiplayer and even single-player games could be substantial. Gamers could stay connected to their game on the road by performing micro-tasks when away from the PC or console like training a game character on a handset. Likewise, a crossplatform contest might allow a console-based player to coordinate the grand view on a multi-player or team-based action while individual mobile players interacted with the game via the smaller available perspective of a handset.

In fact, we would go further. Imagine being able to enhance your Sim character while on the road or modify your NASCAR racer, all the better to kick butt when you return to your main gaming machine. Why struggle to invent new brands and new gameplay on a handset when you could extend powerful existing brands to an installed base of users in ways that enhance their experience on the platforms most conducive to engaging game play?

Low Pricing, High Profile

The mobile gaming model has long relied on the notion that $3-$5 incremental pricing on a platform with a built-in billing system will help industry revenues soar on millions of impulse buys. It may not be quite that simple, Sheedy argues wisely. The corporate sector may prove to be a major hurdle for this market because so many cell phones are billed to the enterprise, and workers have no easy way of ordering a game without tipping off supervisors. Likewise, users are going to need some free demos or online examples of game play even for low barrier price points. Regardless, Sheedy recommends a pricing mix weighted towards the low end: 30% in the sub-$2 range, 60% in $2-$4 range and only 10% over $4.

No wireless titles can break through to profits unless users are motivated to find it amid the scores of others already available, and so Sheedy feels that major game publishers are in a power position when they leverage highly visible intellectual properties or media licenses that can grab attention with their brand recognition and co-marketing potential. Games tied to Tomb Raider, Charlie's Angels, Men in Black, etc. will not only secure attention in the marketplace but also help legitimize the mobile gaming market generally. "Mobile operators should look to partner with games publishers with at least a few recognizable partner brands," says Sheedy. "And the publishers and developers should be attempting to seal these partnerships with the holders of the brands now and over the next 18 months."

Contact: Tim Sheedy, +61-2-9981-6098, tim@thereearchroom.com

U.S. Wireless Gaming Revenue (in millions)
               2002  2003   2004   2005      2006      2007
Game Purchase  6.2   115.3  707.2  1,859.00  3,688.80  5,486.70
Game Traffic*   12.4  51.2   214.8  554       1,289.70  2,648.00
Total Revenue  8.6   166.5  921.9  2,412.90  4,976.50  8,134.70
*Revenues generated by metered fee models, such as connect time for
multiplayer contests, SMS/MMS messaging fees, download times for
extra levels, etc.
Source: The Research Room, www.theresearchroom.com

U.S. Wireless Gaming Users (in millions)
Game Types         2002  2003  2004  2005  2006  2007
mBrowser gamers    0.8   1.5   4.4   5.6   5.4   4.9
SMS/MMS            4     5.2   6.5   7     7.3   7.5
Java/BREW          0.6   4     9.8   19.2  25.6  31.9
Game Deck gamers*  -     0.1   1.3   2.8   5.7   7.9
*Game Decks refers to cartridge/CD-based game platforms with some type
of wireless connectivity, including Nokia N-Gage as well as eventual
wirelesscapabilits for Gameboy Advance and Sony PSP.
Source: The Research Room