The Game Developer Conference (GDC) went on this week, a good opportunity to build on my previous post on mobile gaming. In particular, game guru Trip Hawkins - EA founder and Digital Chocolate CEO - had some valuable comments in his keynote (thanks joystiq for the coverage), where he admitted that games on mobile phones still offered a below par and undifferentiated experience: "I am sick and tired of mobile gaming being a wasteland of second-hand properties, high royalty fees, and retro titles ... games that are downloaded by a tiny portion of cell phone users (5%), and even then only to 'waste time'... What we need to do, is find out how to make mobile a first-rate platform ... something people want to pick up to play. If we do, there are potential billions out there for mobile sales." Hawkins compares the future shift to the success of the Nintendo DS: "If Nintendo handled the DS like most developers handle mobile games, we'd have ended up with watered-down ports of Mario games. Instead, DS gameplay have been created with the system's features in mind, and that makes it good."
Also, Nielsen released some stats on console gaming penetration in the US (thanks again joystiq) that shows that 40% of the US households and 50% of the population have access to console gaming. But the top 20% gamers accounts for more than 75% of gaming time... As console gaming is a 'razor & blade' business (you lose money on each console sold but you recoup through the games), it means even a higher share of the profits is concentrated in this top 20%. Money is in the core gamers, not the casual ones - unless Nintendo proves me wrong over the long term with its Wii - and the same applies on mobile phones.
At 3GSM, I attended a panel about mobile gaming (more out of personal interest I have to admit...). Panelists included execs from Real Networks, Gameloft, EA Mobile, Telefonica and Orange. It was an example of the kind of discussion where people are willing to maintain the hype about a topic and refuse to admit that, unless something radical is done, penetration of the given service/application will remain low...I feel rather free to express my views about mobile gaming and its relative failure (even with all the buzz around) because I am (was) a pretty involved gamer and experienced the rise of this form of entertainment from niche teen geekitude to mass market with a size larger than the movie box office ($30bn and rising)....
Some statistics to start with. 40% of mobile users use the games they have on their phone. But only 5% will purchase games, and out of this 5%, only half will do more than one purchase. What is clear here is that even though a lot of people (40% in markets in Western Europe where penetration is close to 100%) play snake or solitaire (pre-installed) on their mobile while on the tube or waiting for a friend, only a negligible fraction (2.5%) is generating value out of mobile gaming ! How do you build a healthy ecosystem out of that where all participants can have a profitable business ? Hiding behind aggressive forecasts sizing the market at $10-15bn 5 years from now won't solve some very basic issues that block the widespread adoption of gaming, i.e.:
- User experience on a mobile phone is pretty bad. If you are used to a console or even a PSP or DS Lite, a numeric keypad won't do it (even the N-Gage was not good enough). Therefore heavy gamers will rather avoid convergence and have a dedicated device for gaming in addition to their mobile
- The bulk of the market is therefore formed of casual gamers that play on a very low frequency to "kill time" and fill boring moments. Snake will do for them and, though they might get a new game once in a while, you can't build a valuable ARPU business out of them
- Mobile games are just (very bad) ports of traditional games (like a 1995 version of Doom) and don't leverage of the mobile specificities (communities, LBS...). Hence for a mobile operator the only revenue out of mobile gaming would come from the sale of the game (e.g. mobile retailer) and none from the usage
As long as we (as the mobile and gaming industries together) don't find a way to fix these problems, i.e. improve user experience to attract high ARPU gamers, increase game portfolio and buiild on the mobile specificities, mobile gaming will remain a vertical with a negligible contribution to mobile content and overall mobile revenues. Easy to criticise, but I don't have the answer either...but at least let's try to be more realistic
Not everything is lost though. I am looking forward for the new reincarnation of the N-Gage platform on Nokia multimedia phones. Also Nvidia showcased at 3GSM their mobile graphics card enabling pretty impressive 3D graphics (a rarity on mobile games so far). In addition to more advanced positioning and presence solutions, could it support the real take off of mobile gaming ?