A main topic of interest in the interactive entertainment
industry is wireless games. DFC Intelligence is actively involved in
researching this market and recently published The Themis Group’s report on
Online and Wireless Gaming. This month we take a brief look at some of the
issues involved with the wireless game market.
Even when compared with the emerging online game market,
wireless games must be considered a tiny, nascent market. This is definitely
true in North America, but it is also true in Europe where the market is more
advanced than it is in the U.S. The Themis Group estimates that 2001 wireless
game revenues in Europe were around $10 million, and under $1 million in North
America. Only in Japan and Korea have mobile games flourished, with revenues of
$100 million and $50 million respectively.
Today, the venture-backed wireless game companies are now
facing the necessity of consolidation and transformation, as they move from the
failed platform provider business model to becoming game developers and
publishers. Those wireless game firms that survive should begin to generate the
bulk of their revenues from application sales.
Over the course of the rest of 2002/2003, several North
American carriers will launch services offering J2ME (Sprint) or BREW (Verizon
and Alltel) downloads on an application sale basis (Nextel already offers J2ME
games). J2ME games should become more widespread in Europe, as should MMS games
and location-based web/SMS hybrid games like Botfighters.
In the long term, wireless game companies should generate
substantial revenues from a share of “transport” revenues. The carriers, over
time, are likely to stop billing customers for the use of airtime minutes and
instead bill on the basis of bytes transmitted during a data session. This is
what DoCoMo already does in Japan. Some portion of that revenue will be shared
with game providers in order to encourage them to develop networked games that
drive network usage.
Growth in the wireless game market will be driven by the
spread of PDAs and smart phones, as well as improvements in handsets, and JDME
and BREW technology. The Themis Group expects wireless game revenues to
increase to $1.5 billion worldwide and $660 million in North America by 2006.