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In the event that you have been living under a rock for the past few weeks, you may have missed our coverage of the CTIA Wireless 2008 conference. For those that missed it, there was a great display of cellular related hardware, software and accessories which was accompanied by a fantastic series of presentations and seminars meant to provide insight into the mobile world and where it is headed.

One of the seminars that I had the good fortune to attend was geared towards discussing the current state of mobile gaming and where it has opportunities to grow and become even more prevalent in our increasingly wireless lives. The Future of Mobile Gaming seminar which was moderated by Jason ford, VP of Strategy and Planning for Namco touched on a few of the reasons mobile gaming has been successful to date, while also steering the discussion towards where the industry has opportunity to grow going forward.

The panel which featured a number of notables from the mobile gaming world, included:

• Martin Dunsby - CEO of Vollee
• Teemu Huuhtanen - President, North America & EVP Business Development for Sulake
• Oliver Maio - GM, Mobile for Centerscore (Vivendi Games Mobile)
• Suresh Sudera - Consumer Internet Services & Platforms, Games for Vodafone Group Marketing
• Rob Sands - Senior Manager of North American Publishing for Gameloft

Everyone on the panel shared great insight from their personal perspective and I feel a good representation of the views of the industry (both developers and carriers) was presented. (NOTE: All answers are paraphrased because I am not very good at writing short hand.)

The Future of Mobile Gaming Seminar Highlights

Why is the mobile gaming industry not as profitable as expected and why is growth slow to occur?

Suresh: Up to this point, the industry as a whole has been doing a good job of distributing the available mobile games, but is not doing enough to actively retail the games themselves. There needs to be more of a concentration on digital retailing and tracking of this sector over short time frames.

Martin: The ability to supply these games to a wide section of the target market is impeded by the cost and sheer complexity of porting the titles to each device that has the capabilities to display them. There are too many players in the hardware areas that are in competition with one another, each has their own specifications and platform requirements. These players are only serving to fragment the marketplace as a whole.

Rob: The market itself is not broken. A more accurate statement would be that the approach to distribution in North America is flawed. When compared to the Japanese mobile gaming market, North America is clearly operating on an outdated model.

Oliver: Education is key. Many cell phone owners do not know how to buy games for their device. Another hurdle that the industry is facing is the lack of creativity. Stagnant sales and slowed growth can be attributed to a lack of fresh ideas and games being produced.

Teemu: The current revenue sharing model that is in place between carriers and game developers is a problem. Carriers demand 40-50% of the revenue when games are downloaded over their network.

Suresh: Customer awareness needs to be raised. The average potential customer has little to no awareness of how to obtain the kinds of games they like. Many only play the default games on their devices. Up until now, the major focus in the retail sectors has been video and music (ie. ringtones), the games industry has been coasting on its own steam.

Overall, it can be said that the North American market needs to re-think its approach to mobile game distribution, pricing, and above all, the relationships between carriers and developers. On top of that, developers need to get a little more creative with their offerings in order to entice a buying public to hand over their cash.

It was widely agreed upon by most of the presenters that migrating to a distribution model which is similar to what is available in Japan currently, will provide the greatest opportunity for the North American sector to prosper.

Which technologies are most important now to the mobile gaming industry?

Martin: Streaming is key. The better our streaming capailities are, the better experience we can deliver to the gaming audience. With a tried and true streaming technology in place, there will be more resources available to dedicate to player interactivity.

Suresh: It is not a matter of what type of technology is most important, it really comes down to the stability of whatever technology is being used. Setting an expectation and then delivering on that expectation is crucial can convert a casual gamer into a dedicated cuatomer.

Oliver: Network Connectivity is the most important technology at the moment. When all the major carriers can communicate with one anothers’ networks, we will see a surge of mobile game adopters. They will now be able to play games with their friends across various carrier networks with no limitations.

Teemu: The Nokia NGage platform is very important at the moment. The programmers there are doing great things to reduce/solve the problem of device segmentation, thus allowing developers to reach more people while porting to fewer device specifications.

Suresh: (In response to Teemu) The Nokia NGage platform is doing great things, however, they are still only represented on less than 40% of Nokias handsets. The NGage platform will not have a significant impact on the profitability of the market as a whole.

Does the mobile gaming industry need to appeal to hardcore gamers, or are casual gamers a large enough market?

Teemu: hardcore gamers are not absolutely essential to the success of the mobile gaming industry. The industry needs individuals who are looking for easy payment solutions that are tied to quick downloads and easy to pick up games. The hardcore Xboxers and PlayStation gamers will wait for a game with baited breath and spend a large sum to get a game that visually blows them away. To this audience, the visuals presented by a mobile device could never compare.

Rob: A broad focus and steady growth is what is required here. Instead of counting out an entire section of your marketplace, specifically one with large amounts of disposable income, think along the lines of bundling your offerings with some attractive content and try to convert them into mobile gamers as well.

Suresh: The top genres in mobile gaming are: puzzles with 29%, sports with 29% and card games with 21%. Casual pick up and play games account for 55% of the mobile downloads as opposed to branded games which come in at 49%. Out of all of these mobile gamers, the majority are female. Clearly there is room to target all demographics when creating a library of mobile games.

Martin: The developers and carriers alike need to target all segments of the market and they will even themselves out.

Answering from the opposite perspective,how do you better the industry?

Rob: Carriers need to lower their demanded margins. If the right price point for a downloadable game is $1.99, the developers have to retail it at $5.99 just to cover costs and carrier margins. Carriers need to work together with developers to creat an attractive product with the right push.

Martin: Carriers need to open the market up. Stop playing the cat and mouse games with one another and start cooperating. The market as a whole will expand and both carriers and developers will prosper.

Teemu: Carriers need to lower their pricing of individual downloads and adjust the rev share model to somewhere in the area of 15%.

Oliver: Carriers have to begin to think long term and feature new and innovative products to entice potential gamers.

Suresh: Developers need to work closely with carriers. They need to learn how they promote and identify customers. in addition, they have to take an active role in the promotion that their product is given when attempting to expose it to the masses.

Will browser based offerings replace downloadable gaming content?:

Martin: There are too many technical hurdles to overcome when dealing with browser based gaming solutions. Browsers will have to become way more advanced than what they currently are. Text based niche gaming (Are You Smarter Than a 5th Grader, Deal or No Deal) may take off in a browser based environment, but little else.

Oliver: It is possible that gaming demos may take off and flourish in a browser based environment, however this would only be a means to an end. That end being the raising of consumer awareness and ultimately their conversion to paying customers.

What we can take away from all of this

After listening to this group of developers and carrier representatives discuss the current state of mobile gaming and where it needs to go, a few things jump out right away. There clearly needs to be better communication between all three links in the chain when it comes to getting new games out there. The developers need to cozy up to the carriers and become partners with them as opposed to the client based relationships they currently enjoy. Likewise, both carriers and developers must reach out to the gamers in a similar fashion to ensure that they know what the market wants and how to best deliver on that expectation.

The other major point here is that there needs to be a complete overhaul of the delivery strategy for mobile games. It was mentioned on multiple occasions that the Japanese mobile gaming industry uses a very successful “Monthly Subscription” model that would more than likely benefit all involved in the North American sectors. The kicker is that big business is going to have to smarten up, start thinking long term and learn to value their customers instead of trying to snatch as much as they can out of their pockets with every game download.

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