Casual Biz Models No. 7 – Mobile

In a nutshell
Games publishers sign-up content from developers or develop it in-house to provide to phone operators, sometimes via an aggregator. The phone operator makes the games available via portals accessible from the phones, and charges the consumer around $5 per game, with those revenues distributed between all the members in the value chain.

Pioneers
In the decade since Nokia first bundled Snake with its handsets, mobile gaming has exploded in terms of revenues, volume of content, and hype. But with so many companies progressing the medium worldwide – from start-ups to telcos – and such fragmented technologies – from WAP to Nokia’s N-Gage, via a thousand different handsets – it’s rather meaningless to pinpoint pioneers.

Sure, Japan’s NTT DoCoMo is often touted as the inspiration for the corporate mobile gaming push in the West, but its subscription-based model wasn’t followed here; instead, buying downloadable games from operator portals has predominated. Equally, companies that have explicitly focussed on casual mobile games – such as the UK’s I-play – haven’t necessarily gained the traction of deeper pocketed rivals like EA.
    
Most mobile games sold are casual titles, with the bulk of sales having historically been near-interchangeable puzzle, colour-matching and card games. This is slowly changing. Tetris led the sales charts for years but now mobile-only casual brands have emerged. Several casual publishers have enjoyed some success porting their PC fare to mobile. Also, the ‘one-thumb’ action genre has demonstrated how to make pacier games work on mobile. But the market remains murky, especially from a gamer’s point of view.
    
This imperfect business reality and the apathy of consumers hasn’t stopped mobile gaming become a billion dollar industry, with recent years seeing multi-million dollar acquisitions and the emergence of giants like France’s near-1,000 staff strong Gameloft. The issue – besides too much of the revenues going to the operators – is that mobile has perpetually been predicted to achive so much more. With most consumers buying just a couple of cheap games then losing interest and the gameplay and retail experience still so uneven, that potential still seems eternally untapped.

In detail
The dominant business model for mobile games in Europe and the West is the purchase of downloadable Java games (Europe) or BREW games (US) via an operators’ portal, accessed via the consumers’ phone. Games typically cost around $4-$10 (£3-£6) and are accessible for as long as the consumer uses that phone (i.e. they cannot be transferred to a new handset).
    
That this is essentially PC casual gaming’s Try Before You Buy model without the ‘try before’ element is just one of many problems. Few gamers have much idea of what they’re buying beyond a couple of lines on the operators’ deck, which means licences predominate. Worse, the actual delivery of the game is hit-and-miss, and many phone owners have even found the version of the game they’ve successfully downloaded doesn’t actually work on their phone.

These latter problems are less widespread than five years ago, but a survey by GetJar cited in Mobile Entertainment magazine in 2008 still found 35% of consumers had suffered. It certainly doesn’t help rectify a situation whereby most consumers only buy a couple of games before being lost to the industry; a terrible performance that may be behind reports that worldwide mobile games revenues actually slipped in 2007.

Many have tried and are still trying to address these concerns. Publishers and independents have explored ‘off-portal’ sales via the Internet, peer-to-peer sales have been mooted, specialist consumer press like Pocket Gamer have emerged to plug the information gap, and Nokia’s various N-Gage offerings have attempted to improve the whole mobile games experience, particularly with its newest Xbox Live Arcade-alike services. In the past couple of years, free games backed by advertising have been offered by the likes of Hovr and GameJump, challenging the incumbent and sub-optimal download business model.
    
Advantages

• Mobile phone ownership is near universal.

• Can deliver gaming to consumers at otherwise ‘lost’ time slots, such as five-minute gaps between meetings or trains.

• The largest mobile games audience is the casual market, meaning opportunities for crossover with Web/PC titles.

• Consumers are comfortable with being billed piecemeal by phone operators.

• Mobile phones being visible in public means (theoretically) consumers can spread games via word-of-mouth.

• Operator portals, which dominate sales, are driven by commercial factors beyond simply making the best games available to consumers.

• Small screens and operator apathy means the mobile ‘storefront’ perpetually hobbles the retail experience for consumers, and also makes it difficult for new games to get exposure.

• The value chain is opaque beyond the game developer/publishers costs of production; European and (less so) US operators take a greater proportion of revenues than their Japanese counterparts.

• PC casual games need to be redesigned for mobile’s screens and controls.

• Multitude of handsets makes delivering a consistent experience difficult, and also means supporting a sufficiently wide range of devices is a job for professionals (a very different situation to PC and Web casual games).

• Low price point yet rising development costs.

• Limited or non-existent community features in current generation of games/portals.

• Game developers have failed to come up with a true ‘killer title’ for mobile (the equivalent of Bejeweled for casual PC games or Tetris for the Game Boy).

• The lack of critical awareness and the isolation of consumers means there’s too little incentive to create quality games versus mediocre ones, damaging the overall market and those game developers who focus on quality.

Future developments
Leaving aside the growing pains of the mobile platform, for existing casual games companies the biggest opportunity lies in bringing further well-known casual games to phones and increasingly integrating the two audiences, ideally by also bringing community features to the rather lonely mobile space. There would also seem to be an opportunity for existing subscription services to be rolled out to cover mobile platforms, data charges notwithstanding.

Current ‘watch this space’ developments include more free games supported by advertising and Nokia’s feature-rich but much-delayed N-Gage content platform, which comprise two competing visions of the future of mobile.

Bottom line
Ubiquitous phone ownership and the demand for ‘snack-sized’ play sessions makes mobile a proven platform for casual games. But buying is still too fiddly, there’s little sense of community, and the platform remains fragmented.

The frontier days are over, and newcomers are best advised to partner with established developers and publishers, although the opportunity for a start-up content creator to devise mobile’s long-awaited killer title and have history’s first billion strong audience for a game seems as ripe as ever.