Obstacles slowing mobile game growth


The mobile game sector is doing great -- or not -- depending on whom you ask. If there's one thing industry analysts do agree on, however, it's that the business has some huge hurdles to overcome before quicker growth can occur.

The numbers tell the story.

El Segundo, Calif.-based iSupply, for instance, reports that, in 2005, there were on average six million active game purchasers in the U.S., which represents just 2.5% of wireless subscribers.

Two years later, M:Metrics in Seattle says that, last month, 3.6% of domestic mobile phone users downloaded a new game -- either to try it or buy it -- but only 2.8% actually paid for it. In other words, 97.2% of cell phone users chose not to buy a single game last month.

Indeed, six months ago, a survey by the Boston-based Yankee Group revealed that, of the 206 million mobile users in the U.S., just 140 million were aware that mobile games were available to them and of those, about 97 million had actually played any. Of those, only about nine million had ever bought one.

Clearly, the bulk of mobile gamers isn't being monetized. Which could be viewed as a tremendous untapped market. But only if the carriers, publishers and developers somehow overcome the barriers that convince cell phone owners to spend their entertainment money elsewhere.

Interviews with the three market intelligence firms paint a picture of the key impediments, beginning with what they call "the hassle factor."

"Let's face it," says Mark Kirstein, vp of multimedia content and services at iSupply, "mobile games aren't easy to download, especially not for cell phone users who aren't used to downloading anything, especially for people who don't consider themselves gamers and may not have downloaded a game ever."

Compare that to the success of Microsoft's Xbox Live Arcade, which allows subscribers to download a free trial version of a console game with the touch of one button and then buy that game by clicking the same button. Microsoft attributes its whopping 24% conversion rate from try-to-buy to the convenience of the "one-click demo, one-click purchase" process. The average conversion rate throughout the industry for casual games is just 2%.

"For mobile games, you are navigating through a screen that's way too small," says Kirstein. "Once you find and select a game, you end up going through six or seven more screens to actually begin the download process, which is typically not all that fast. You have to either really want that game or be immune to the hassle factor. The experience is certainly not as seamless as Microsoft has created on the Xbox."

Many cell phone users never decide whether games are easy or difficult for them to download; that's because they're not even aware that games are available to them.

"Primarily, the mobile game market is made up of casual games, which most mobile subscribers don't even know exists," observes iSupply's Kirstein. "That's because they neither consider themselves gamers nor are they the type of people who would be attracted to gaming as an application."

If carriers or game publishers did a better job of marketing their wares, perhaps non-familiarity of the vast selection of available mobile games wouldn't be such an issue, say analysts. But, they add, carriers are promoting multiple products -- music, videos, and text messaging, among others -- and they tend to focus their advertising on the fastest-growing segments, which is not gaming.

Similarly, the game publishers themselves spend less time and effort talking up their mobile games than they do the titles in their more traditional PC and console segments. And because mobile is still, in some respects, immature, it is not as visible to consumers as are the other game segments for which an enormous ecosystem has built up both in print magazines and in online communities. Mobile game review sites, for instance, are a rarity.

"It's a sort of chicken-and-egg situation," notes one analyst. "The carrier doesn't put a higher priority on marketing the games because it represents just 6% of its downloads. But, if it were doing a better job of marketing them, there would be more downloads. The games need a stronger momentum for the carriers to pay more attention to them."

An ongoing debate between the carrier and the publisher doesn't seem to be any closer to being resolved: Who is primarily responsible for marketing the games?

"Publishers say, 'Mr. Carrier, you are taking a huge chunk of my revenue, so you should be the one doing the marketing,' " notes Mark Donovan, senior vp and senior analyst at M:Metrics. "The carriers respond, 'I'm the one who distributes your games, so leave me alone and go do the marketing yourself.' As the bigger publishers buy up the smaller ones, as companies like Electronic Arts and Gameloft flex their marketing muscles, it will be interesting to see what strategies they use regarding consumer awareness. I believe they will be the bellwether for the direction the industry heads."

But there are currently 137 different mobile game publishers with 1,300 games vying for the gamer's attention.

"In that environment, consumers find maybe five to 10 of the titles of the thousands available to them," says iSupply's Kirstein, "because those are the ones on the first two phone screens they're searching. How many people do you think go beyond those first two screens?"

As a result, publishers have resorted to extensive licensing of well-known, heavily publicized movie and TV titles to attract the eye of the mobile game shopper. A game with, say, "Harry Potter" or "King Kong" in its title is more likely to be bought than perhaps a higher-quality game with an unfamiliar name.

"That's an issue that will slowly fade as that mobile game ecosystem develops," says Kirstein. "If consumers can learn which are the better games through online chat groups, game reviews and word of mouth, they won't rely so heavily on brand names to help them make their choices."

At the same time, publishers need to be able to convince carriers that their great-but-non-branded titles deserve placement high atop the so-called "deck" -- or mobile game menu.

"That is enormously difficult," says Kirstein. "The carrier tries to figure out which game will generate the most volume and then gives it the best positioning. Think of it as programming on a video channel or determining who gets the shelf space in a store. The carrier will always pick the game that it thinks will make them the most money. Imagine trying to convince a carrier that your Brand X game will do better higher up on the deck than, say, Madden Football."

Another reason why a consumer might buy a game with a "brand name" is that, unlike casual games on PCs and consoles -- which usually have a "try-before-you-buy" option -- some carriers have eliminated that opportunity. In essence, gamers must buy a game blindfolded and they therefore rely on a familiar title as a guide.

"With 1,300 games out there, trying before buying is one of the easiest, most understandable methods of selection," says one analyst. "Recommendations from friends or online sites is another, but that's a choice that is underdeveloped at present. There needs to be a site that rises up and becomes the MySpace.com of mobile gaming."

Without recommendations, consumers take potluck on games that frequently don't offer the same rich experience of a console or PC game.

"When you're marketing to a gaming enthusiast, you have to be careful not to disappointment them with a sub-par experience," says Kirstein. "You have to take advantage of mobility and not try to replicate the console experience, because you're never going to match it. That's why most of the mobile market still depends on what is commonly referred to as casual games."

While the newest cell phones are capable of serving up PlayStation-like, 3-D graphics, the jury is still out on how successful the more complex games, like first-person shooters, will fair on tiny mobile screens, says Mike Goodman, director of digital entertainment at the Yankee Group.

"There's a reason why the PC continues to be the preferred platform for games like shooters," Goodman explains, "and that's because it's just a flat out better platform for such games. Did you ever try playing 'Doom' on a cell phone? Not a lot of fun."

The challenge for developers, he adds, is creating games other than casual games for a form factor that is, after all, a telephone.

"There are specific limitations on what you can do with a phone -- the size of the user interface, the way the buttons are mapped to the actions, and so on. All of this has a big impact on the quality of mobile games," says Goodman.

Indeed, some mobile publishers have stressed the need for a new sort of innovative mobile game, one that departs from the traditional gaming model and takes advantage of the mobility and the social interaction that cell phones afford.

"It's difficult to convince traditional game developers who have different mindsets," explains Kirstein. "They need to forget what was their core business model -- that they have the license to, say 'Wheel Of Fortune' and now they need to bring it to as many platforms as possible to maximize their investment."

Until consumers believe that mobile games offer the sort of value that is worth the average $6 that carriers charge for them, the sector will be slow to expand, says M:Metrics' Donovan.

"Six bucks may not sound like a lot," he says, "but that's relatively expensive when you consider that, for that amount, you have the choice of one game or a big bundle of text messages. So pricing does become an issue."

Especially when a wide variety of mobile non-voice services and content -- videos, music, text messages, browsing the Internet, and more -- are competing for the mobile consumer's attention and wallet.

"There's a segment of the market that's going to max out in terms of the dollars they're willing to allocate to their mobile phone," says Linda Barrabee, an analyst at the Yankee Group. "Mobile users don't think in terms of how much they want to spend on games; they think in terms of how much they have in discretionary income - for instance, how much will go to a new music CD and how much will go to a movie that night and how much they want to spend on their phone."

And, adds the Yankee Group's Goodman, household incomes over the last five years have been fairly flat.

"That means the number of discretionary dollars I have to spend isn't changing," he explains. "But the number of options on which I can spend is increasing dramatically."

Which means that consumers must somehow be persuaded that there is a higher value in mobile games than in some of their other choices. According to Barrabee, that means the creation of games that provide the best experience given the limited form factor that is a mobile phone.

"In the grand scheme of things, games are not why people buy cell phones. Communication is," she says. "But people have learned that mobile games can be great time wasters, to be played while they're waiting for a bus or train. The most successful mobile game developers will be the ones who understand what's important to the consumers when they are mobile. They'll be in a much better place than the ones who just take what's been delivered on another platform and just try to port it.

"Think of a collection of Nintendo Wii games that take maybe a minute or two to complete each," she adds. "From a conceptual point of view, that's the kind of thing that would work."

Paul "The Game Master" Hyman was the editor-in-chief of CMP Media's GamePower. He's covered the games industry for over a dozen years. His columns for The Reporter run exclusively on the Web site.