Retail and other Off-portal Channels to be Growth Drivers in Steadily Expanding European Mobile Gaming Markets

Frost: The impending launch of handsets and game titles will support steady growth in mobile gaming markets across Europe. Inherent challenges such as gaming being a niche market application, the complications of super-distribution and effective billing mechanisms as well as high porting costs will, however, cause growth to be steady rather than overtly exponential.

The European Mobile Gaming Markets earned revenues of 850 million euros in 2006 and estimates this to reach 2,400 million euros in 2012.

The future of gaming will be determined by the type of mobile devices available to customers and the quality of games delivered onto these handsets. The processing capabilities and screen sizes available on Smart phones/PDAs combined with quality 2D and 3D games will be key to promoting the growth of mobile gaming in Europe.

Off-portal storefronts combined with super-distribution will be the most important sales channel for the mobile games markets. With gaming being all about competing with other players in a real time gaming environment, there will be a compelling need to ensure interoperability between devices and applications.

While operators will attempt to create awareness and educate customers about with embedded offerings, the market will grow and mature only with the variety offered by large off-portal storefronts who play the role of discounted super-markets.

Super-distribution capability will drive the small but high value segment within the mobile gaming market, generating higher revenues for the entire industry,. The creation of communities using IMS and other IP-based ecosystems is already supporting enhanced games usage.

However, due to mobile gaming being a niche market in general, steady and not exponential growth is being projected.

Not everyone likes to play games, therefore the gaming market is a niche market. Operators and the industry should understand that while there is a scope for higher usage, the varied circumstances that users find themselves in during the course of a day, is likely to limit the number of subscribers who will purchase a game.

The 80:20 rule inevitably applies to this market as well. The mobile device is currently best suited for casual gaming and while the current trend shows a rise in game plays on mobile handset devices, this is a reflection of the use of embedded games, therefore not translating directly into revenues for the market. Frost & Sullivan sees this trend is likely to persist in the future as well.

At the same time, high porting costs are further increasing the cost of game development in a market already fraught with risk. Porting costs are often as expensive as the cost of game development, therefore adding to the cost of the game to the consumer. Besides, high porting costs means that publishers and even operators cannot often make the game available to as many devices as they would like it to be compatible with.

The need is to create, innovative purchase mechanisms while incentivising mobile gaming services for customers, through marketing and promotional bundles with other content applications - driving non-gamers, or casual gamers using only embedded content, to see some value in purchasing mobile gaming. Handset manufacturers and game developers need to work closely to limit the number of APIs, screen sizes and other software and hardware which are often barriers to game deployment.

If you are interested in a virtual brochure, which provides manufacturers, end users, and other industry participants with an overview of the latest analysis of the European Mobile Gaming Markets, 2003-2012Publ 20060814