In 2002 Mobile Games were considered no more than an irrelevant sideshow by the mainstream video games community. Today, however, Mobile Games are emerging as serious contenders in the market place, with many predicting that their revenues will mount a serious challenge to Console, PC, Mac, Handheld and Online Gaming in the medium to long term future.

Current estimates of the size of the global Mobile Games Market vary but what is not in doubt is the expectation of future growth. Typical levels from a range of forecasters see the market tripling from around £3.3Bn in 2005 to £10.3Bn in 2010.

How could something that was dismissed, until relatively recently, as an irrelevance, assume such growing importance? Many have pointed to the low cost of downloads (as little as $2-$3), compared with the launch prices of AAA console games (as much as $70), as a reason for not getting excited about the medium. With such low average revenues per unit (ARPUs), it is argued, mobile games cannot be taken seriously. How wrong could they be?

Small can be Beautiful!

Only $10,000

The Market Drivers

Technical Factors

• The introduction of higher resolution screens and different form factors, better adapted to playing games.

• The increasing use of Advergaming to promote ‘free' ad sponsored mobile games.

• The increasing introduction of 3D mobile games, facilitated by more powerful 3D graphics processors/accelerators dedicated to mobile gaming from ARM/Imagination Technologies, Nvidia and Toshiba.

• The increasing end-user uptake of 3G (and soon 4G) models.

• The incorporation of more memory in handsets, allowing them to accommodate sophisticated, memory hungry games.

• The ability to insert Flash Memory Cards into some mobile handsets, opening up further delivery mechanisms for games developers.

• The appearance of hard discs in some handsets, vastly increasing download capacities.

• The availability of viable development platforms (such as Java/J2ME, BREW, Symbian and Windows CE [ Mobile ]), which have facilitated the creation of software for the mobile gaming community.

Marketing / Commercial Factors

• A proliferation in D2C Portals (driven by high profile international players such as Jamba!/Jamster [News Corp], LaNetro Zed and Buongiorno) has helped to diminish the market's earlier over reliance on MNO Portal operators as a means of selling mobile content.

• The more aggressive marketing of games by mobile phone operators, anxious to offset industry wide falls in voice ARPUs (Average Revenue Per Unit) by promoting higher margin, value added content.

• Improved and more transparent billing mechanisms have helped to increase consumer confidence in buying downloads .

• The increasing involvement of traditional big hitters in the games development community, such as EA (Electronic Arts), THQ, SCi/Eidos in the mobile games space.

• The emergence of several 'pure play' mobile games enterprises, fuelled by monies from the Venture Capital and investment communities.

• Lower barriers to entry for Games Developers. Simple mobile games can be extraordinarily cheap to produce (as little as $10,000) - compare this with budgets of $25m+ for some AAA console games. As a consequence this fast growing sector is attracting a raft of new players worldwide.

• A growing installed base of mobile games capable handsets. .

Creative Factors

• The introduction of mobile multiplayer gaming.

• The increasing availability of higher quality games.

• A rapidly widening games repertoire.

• Mobile networks are still too slow, resulting in games taking an inordinate amount of time to download.

• Frequent interruptions to games downloads are compounding end user frustration.

• Fragmentation – games have to be made compatible with a vast array of different handsets, some with different form factors and screen configurations. This can be a time consuming and costly process.

• Mobile handsets have comparatively poor processing power and are completely eclipsed by the likes of Sony PSP and Nintendo's DS.

• Until handsets with larger screens and more games-friendly form factors are made available the market will remain restricted.

• The price of Mobile Games is still perceived as prohibitive by the majority of users.

• The range of games on offer is still regarded as too limited.

• At the same time the appeal of the current offerings is still considered too weak.

• The percentage of mobile phone users who download games still remains very small – currently only 2.5% in Germany, 4.2% in the UK and 2.7% in the US download games [Source: M:Metrics, March 2006].

• Whilst men and women are equally predisposed to playing mobile games, women are far less likely to download them to their handsets.

• Games purchases are, more often than not, not tied to handset purchases and as a result fluctuate according to the handset's lifecycle.

• Operators are failing to convert players of mobile games into being regular repeat
  buyers. In particular they are struggling to maximise on marketing and merchandising opportunities.

• Misleading and complex billing systems have sprung unwelcome surprises on a number of active games players.

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© the Multimedia Research Consultancy 2008