Mobile Game Conference Roundup

Mobile Game Conference Roundup

Over the last couple of years, Seattle has become a Mecca for digital and interactive media. Seattle hosted the Mobile Gaming Conference on the 13th and 14th. Next year’s World Cyber Games 2007 will elevate its status further to a new level. Several key players were at hand to talk about the status of mobile gaming industry and where it is headed. WSA’s Gaming SIG also organized an event “Value Models of Mobile Games” to coincide with MGC (on the 13th). I had the privilege of moderating an experienced panel that included Derrick Morton, GM Mobile Games, Real Networks; Jeff Davis, CEO, GoGoMo; Tom Meigs, Executive Producer, Yahoo Mobile Games; and Scott Wallin, CEO, Metaplay. This note summarizes the thoughts, observations, and discussions from the two events.

First, let’s do the numbers. According to the two leading industry players (rivals) – Telephia and M:Metrics, who measure the US mobile market, mobile gaming segment, is growing. By how much is anybody’s guess?

  • Game downloads represent approximately 6% (approx $50M/month revenue) of the mobile data revenues (compared to say Japan which is over 15-20%) and have approximately 5% subscriber-penetration in the US
  • While the number of first time buys is increasing (1.6M in May), repeat purchases are not scaling up
  • US has about 2% smart phone penetration but over 22% of such subscribers downloaded mobile games. Over 18% of the 3G users downloaded games – which is obvious – better user experience leads to more interactivity
  • The mobile game industry is growing. The number of downloads increased from 6M to 11M in a period of 7 months (Nov 05 to May 06) and the revenue jumped from approx $40M/month to $100M/month.
  • Not surprisingly, 13-24 age demographics is making majority of the purchases
  • 40% of mobile games played come embedded with the phone
  • Online promotion leads to 5-10X increase in mobile game sales
  • There is significant dispute over the leading games list published every month list (we will get to the “statistical discrepancy” or as someone would say “fuzzy math” a bit later)
  • Trends

    Current landscapeCarrier has the power, Deck placement rules, meager carrier staff to review games. Independent developers at a big disadvantage. Mobilized Classic games still the front runner. Big head is developing (top 5 mobile game providers have over 60-65% of the market share, EA Mobile with over 30-35%), no efficient way to leverage the long tail. Multi-player and cross-platform games only exist on powerpoint decks, limited interoperability across carriers and platforms. Single digit subscriber penetration, no gaming specific wireless devices. Business models straightforward – subscription or download purchase. IP primarily relates to content and licensing. Catalog on the server. Microsoft a fringe player. For D2C players, only marketing drives sales. Poor discovery and distribution. Insignificant use of other phone features (camera, haptics, broadcast, music, SIP, IMS) into the game environment. Development cycles shorter than legal and payment cycles for the smaller developers.

    Future landscapeCommunity driven market place. Tight integration of other mobile technologies (music, video, IM, advertising, location, etc.) with games. More consolidation (intra- and inter-segment). D2C rules. Mobile search drives growth for independent and small publishers, new business models are introduced. Carrier product managers leave their power jobs for industry positions. Multi-player and cross-platform games the norm. 50% or higher subscriber penetration, substantial improvement in handset features that enhance the gaming experience. More innovative business models, more bundling with other apps and services. IP relates to technology and innovation in addition to content. Catalog on the device. Microsoft a dominant player. Significant use of all available features on the handset and the network. Legal and payment aspects of content are all automated.

    Community If one had to pick a theme for the conference, it definitely was “community, community, community.” Small and big players alike expounded on the importance of community and communication though there seems to be some confusion as to what “community” actually means. Trip Hawkins talked at length about community and social computing driving mobile game sales while Microsoft is pushing its “Live AnyWhere” platform. More on LAW shortly.

    Value-chain collaborationAsian economies are better at value chain collaboration than their western counterparts. Daishiro Okada gave an example of the partnership of DoCoMo, Panasonic, NEC, and Square Enix to enhance the mobile gaming experience. Similarly, DoCoMo had worked with SEGA to develop some neat experiences and offerings in the early 2000s. SK Telecom and KTF also work closely with both device manufacturers and content providers to have a more consistent content and enhanced user experience strategy. US carriers have started to change their attitudes towards wireless data in general but they still work in silos internally and there is less collaboration between different entities within the company such as procurement, marketing, mobile gaming, messaging, etc. Unless one takes a holistic view, final products will miss the mark.

    RIM – a gaming platform? RIM had a booth trying to woo the developers to consider Blackberry as a gaming platform. They might do well in corporate thriller or corporate scandal game category.

    Microsoft’s entry into mobile gaming spaceMicrosoft is one company that can take a holistic view of things and change the industry. What’s impressive about the vision is its inclusion of different platforms and development environments. It is not usual for Microsoft to promote or target J2ME and BREW platforms but they are going after them to build a rich ecosystem of devices that can be supported and can talk to their XBOX platform and perhaps even tie-in other gaming communities as well. Can you imagine the wealth of user, device, and network data that will be captured as a result? Hello advertising. Yahoo and Google should be afraid. This will also lead to some disruptive business models and interesting carrier conversations. Imagine migrating the model to other areas such as enterprise applications. How well Microsoft is able to execute its strategy worldwide will define the next shift in mobile gaming.

    McDonalds vs. StarbucksPublishers are aiming to become the Starbucks of the mobile games market where people come in, pay a premium to a commodity offering, spend time in the environment, commune, spend more money, and come back again for more. This versus the current fast-food environment with low spending desire.

    Licensed vs. original contentBig brands still drives the sales. Every now and then there will be a game based on original content and vision that will be do well but for the most part without some branded (meaning licensed content) equity, the chance of making a “hit” drops faster than the temperature on mountain top after the sunset. That means only innovation can get you attention.

    Fuzzy MathTelephia, M:Metrics and others regularly publish the top selling mobile games, their market share, the revenues generated etc. These lists have significant impact on how the games and the players are perceived within the industry and hence can harm or benefit a company (especially smaller ones) depending on which side of the equation they end up. Many of the publishers – big and small, and carriers seemed frustrated at the wide discrepancies in the results from both Telephia and M:Metrics. For e.g. Telephia results indicate a gender-gap while M:Metrics’ don’t. Publishers indicated that the order of their top hits published by research vendors is inconsistent with their internal numbers. Carriers also noted that they have never heard of some of the games that appear on the top 10 list which points to some sampling issues. Since these numbers have a direct impact on strategies, planning, marketing, execution, and revenues of many companies, much more transparency in sampling and statistical methodologies and validation of results is warranted.

    Missing the big pictureExcept for some of the seasoned industry veterans like Daishiro Okada (Square Enix), Trip Hawkins (Digital Chocolate), Chris Early (Microsoft), Mark Pierce (SHFF), and some others, most (esp. the smaller players) seemed to be operating in a world of their own, unaware or uninterested in what’s currently going on outside the mobile gaming space and how it might impact their respective businesses. As pointed out above, mobile gaming is shifting gears and people who aren’t watching for trends and developments outside their sub-segment will be creamed within the next 12 months. Developers will benefit from looking at the developments in the areas of mobile music, mobile search, voice recognition, mobile video & broadcasting, mobile advertising, near field communications, etc. As Mark Pierce noted, his experience in working on projects with Jumptap (mobile search), v-enable (voice search), Autodesk (location), Mobot (visual search), Vibetones (vibration), GestureTech (motion, tilt) helped him gain a broader perspective of the industry that he can apply to his passion of building mobile games. Conference attendees would have also benefited from the perspective of infrastructure vendors like Ericsson and Motorola – what’s coming and when? For e.g. SIP and IMS will have a direct impact on the mobile gaming market but they were barely uttered by any of the speakers. 3G will hit the inflection point next year but not much was discussed except EA Mobile demonstrating 3G only games.

    Such focused conferences (vs. say CTIA) do elevate the issues and there are more direct conversations and less ducking the critical questions.

    Overall a great show pointing to interesting times ahead.

    Your comments are always welcome.

    Chetan Sharma