Wireless Entertainment: The State of Play

The heralded wireless gaming revolution has yet to happen outside Japan, but the prospects for the fledgling industry are great. Cell phones have reached massmarket penetration in many areas around the world, and the games are certainly one of the most popular services offered by wireless devices. The tremendous success that NTT Docomo is enjoying with iMode in Japan hasn't slowed despite the sluggish economy. The continuing success of (still rather basic) wireless gaming in Japan is still reassuring countless developers and operators outside Japan that there's money and success to be had in the wireless market.

Cultural Differences

Undoubtedly, part of iMode's success in the Japanese market is down to simple cultural differences. You just have to take a look at the majority of cell phones on sale in Japan. They look like little plastic toys instead of the techy and sleek Nokia's, Motorola's and Ericsons available elsewhere. Most Japanese consumers like to customize their phones by adding little ribbons and such to their phones instead of downloading new ringtones or graphics, which is a very successful business in Europe. It is important to remeber that iMode phones are connected to the iMode network all time, you don't have to access it separately. A press of a button whisks you to the iMode network where Docomo has handily has included everything you might want. Certainly this ease of use is far more inviting than traversing through countless separate, slow to load WAP sites. Docomo's inspired strategy of sending Hello Kitty messages and little applications to subscribers is simple, to say the least, but a few hundred yen for every update when you have over 22 million users… well, you do the math.

An interesting point was brought up at the recent Game Developers Conference Europe when discussing why mobile phone take-up in the US is still very slow when compared to Europe and Japan. An average consumer in Europe buys a new cell phone around every 12-16 months (though this is very quickly changing to a 18-36 month cycle). Right now, the prices of new cell phones drop drastically in less than six months (by around 40 percent) after their introduction to the market. So far each new revision of a popular cell phone line brings enough new features to warrant a purchase for most consumers, even if we are only talking about extended battery life. As indicated by the slowing take-up rate, this is changing. A similar thing is happening in Japan. While the US market has most of the same phone models, in terms of appearance and technology, as Europeans, the take-up has been relatively slow despite the excellent economy right up until recent times.

Cultural differences come in to play and it's quite probable that much of the reasons why the US isn't adopting cell phones are simple ones, like the beeper and the answering machine. In Europe, beepers and to a lesser extent answering-machines have never been popular, making cell phones far more attractive than they are for American consumers who still suffer from lacking cell phone network coverage.

It's the simple things like the fact that a large majority of Japanese and European consumers use the train and/or the bus to go to work. Since the distances travelled are quite lengthy, there's plenty of time to make it go faster by messing around with your cell phone or PDA. iMode being so easy to use, not much incentive is required to get a user hooked, same with Nokia's hugely popular Snake game. Easy to use and grasp, those are the ingredients of successful wireless applications right now. Japanese consumers like to use their phones in their homes as well, during th eir off-time. Right now US consumers tend to turn their phones off when they get home, who wants more distraction when you are having your off-time?

While customs in Europe and US (where personal cars instead of public transportation are the main choice for commuters) differ, but it's all the small cultural differences combined that have resulted in the varied success of wireless gaming across the world.

Payment methods and customs are another obstacle. Wireless services are mostly paid per download in Japan and Europe. For consumers in the US, having gotten used to free locals calls and having to pay by minute for wireless services, it just isn't very inviting. The cost of downloading the latest Destiny's Child single as your new ringing tone isn't high at all, for Europeans the money spent on such services is accumulated into the monthly cell phone bill, whereas many US consumers have pre-paid credit which makes you rather vary of spending valuable credit on such extras. Paying for wireless services isn't a problem in Europe, but it is one of the hurdles in the US wireless entertainment market.

It can be argued all too convincingly that the killer app content isn't there, but another major problem is the still the shaky and limited nature of US cell phone networks. Calls often hang up in the middle of a conversation and many areas, even in large metropolitan areas, feature weak coverage areas. The support stations being few and far between, the quality of transmissions isn't at high enough levels all across the US and a weak signal also drains batteries far faster than when running under "optimum" conditions. The general consensus still seems to be that cell phones just don't work well enough in the states to warrant full usage, Europe had a similar attitude only a few years ago but now line-problems are a very, very rare occurrence.

So far, no one is buying a cell phone for the games it offers, but rather for their afore-mentioned technological advances. Actually, Nokia's finding out that the majority of it's users preferred the original and simpler version of Snake than the current one which tries a bit more in terms of visuals. With the advent of more sophisticated phones and services, users will slowly but surely get into more complex games and features.

Content and Games

Cell phones are massmarket items and the cell phone massmarket consists of casual gamers, not hardcore gamers. Think of the average office employee who works in a Windows environment, more than likely he's played a quick fix of Solitaire and Scrabble. While he could try out something far cooler, he more than likely isn't all that interested in more complex games.

The same could very well apply to the massmarket cell phone user, they are very content with Snake and Solitaire and might not want to play anything else or use other services. In a way this is a good thing, as it's far easier (and cheaper) to cater for this market than it is for hardcore gamers. The much maligned hardcore gamer doesn't really exist in the console market anymore, but with general gamers having enough to choose from it's the massmarket that's gonna be playing games on their cell phones.

It's an obvious fact to state, but cell phones are being bought by everyone from kids to grandmothers, In Europe and Japan cell phones have achieved true massmarket penetration and you have to take that into account when developing. Forcing the latest action epic or complex games on the massmarket consumer who aren't that much into games probably isn't a very good idea at all. Tetris is a good example. It's a game that everyone, universally got into as it was simple and addictive.

Currently most PDA's offer far more processing power than even Nokia's hefty Communicator and there's some rather nifty games available in full color, but if you look at the amount of downloads made on the net for this kind of software it's nowhere near enough to sustain a business.

Into the Future
WAP bombed in spectacular fashion, and while it's clearly an transitional phase the basis of WAP will be what far better things will be built on. iMode is successful but it's only available in Japan via Docomo, everyone else in the world is working on WAP and it's variants.

The fact that the new iMode (iAppli to be exact) phones have color displays takes cell phone gaming to a new level which the Japanese have been enjoying for a while now. The effect of playing in full color instead of a monochromatic screen is tremendous and not to be under estimated even if the few games in high-end, color-supporting, cell phones are mediocre at best.

3G and GPRS are getting closer for consumers but the networks are far from being finished anywhere in the world. When the next-generation of cell phones and other wireless devices get here, they'll offer far more speed and processing power which translates into full-color screens, downloadable video and more multimedia capabilities. This'll bring a whole new level of problems to solve from payment to cross-platform issues -- but more about that later.

Nokia's latest version of the Communicator offers a full-color screen and online capabilities and while the snowboarding game it offers runs in full color, it really isn't much better than the monochromatic efforts…not just yet.

It's interesting to note that with 3G the expectations in Europe are that there will be an all encompassing cell phone supporting all that 3G can offer: video, color, far higher connection speeds. In the United States, a collection of task-specific 3G devices is anticipated. The technologies that are already implemented or on the horizon are Java, EMS (Extended Text Messaging), Brew, and whatever WAP will evolve into. Obviously Java is a very important development on wireless machines, allowing easier cross-platform development, but for consumers it's more than likely going to be EMS that they are going to be taking advantage of at first. Java is still slow and the performance loss on various platforms is still, according to some developers, too great.

With the advent of more sophisticated phones and services, users will slowly but surely get into more complex games and features. There will be persistent game worlds and multiplayer gaming, but perhaps communication will be far more prevalent (i.e. SMS text messaging) than blasting others in Quake.

As for videogame developers, both Sony and Nintendo have taken notice of Docomo's success but have yet to take advantage of it. Both the PSone and well as the PS2 can be linked up to a cell phone which will then connect to iMode, but so far this is more of a novelty feature than anything else. Similar plans are afoot in Europe to allow Playstation users to access the Internet via their phones, but no details have been released and with the current staggering speed of 9,600bps the isn't much practical use available for the connection.

Making Money

Docomo's success isn't entirely down to cultural issues. The company is involved in all aspects of the wireless gaming market from manufacturing the actual cell phones, offering entertainment, self-produced content (albeit based on many lucrative licenses), operating the network, and doing the billing. The positives of having very few middle-men in the process is an blatantly obvious one: NTT Docomo pockets most of the profits. In Europe and the United States, you have the operator, content provider, developer and possible technology partner involved, all wanting their share.

Another obvious fact is that there is a tremendous amount of support from developers towards wireless gaming right now. Almost every developer has dipped it's toes into the market in some way. It doesn't cost all that much to develop, at least for now and the market predictions are tremendous.

For game (and entertainment) content producers, working with well established operators can be a tad difficult at first. Neither has much experience working with the other. While the relationship is different than a developer-publishers, some say it could be far worse.

Depending on the kind of game or service you developer for an operator or content provider, payment differs. If you've produced the kind of content that the operator will have available for consumers for longer periods of time, it's only reasonable to expect that you as the developer get a slice of the generated revenue every month. The problem is, of course, that operators aren't very open to such a proposition as they are used to paying once for the content and that's it.

Offering long-term wireless services -- be it games or something else -- requires constant monitoring, stable servers and continuous updating of the product. For a developer this is a very costly hurdle. The amount of hardware and software required to run such features is better left to the operator to handle. The safest and best business model for developers seems to be the normal development deal, get funded by an operator or service provider for the software you are creating for them. However, when you do that it'll be the operator/content provider who will get the revenue steam. In the future this will probably change to the afore-mentioned model of getting a slice of the consumer sales. With WAP, you have to connect to the network every time you use the service, but with the arrival of GPRS and UMTS the connection will be constant and new revenue models will be required. By then developers will definitely need their share of the constant revenue operators will get.

Getting the consumer to pay could be handled as it's done now in Europe: via the operator whose connection you are using. But with the developer, separate content provider, brand-holder, manufacturer and whatnot stepping in, a different method is required. Using your credit card could be a solution, and a web-based credit system seems to be in the cards for next-generation wireless commerce. Company Enition has been working on such a system. Known as Nettoll Mobile, the consumer downloads content and pays for it via virtual credit. The value of the credit is based on the agreements between the content provider and the operator. The amount the consumer ends up paying will be based on the downloaded amount, so basically the longer it takes to download, the more you pay. However, it's difficult to see such a system to catch on very quickly.

Show me the money!
We know that Docomo's making huge profits, and everyone wants a slice of that. WAP has mostly bombed in Europe and 3G is still at least a year away. Despite that, the predictions regarding the wireless market are lucrative to say the least. According to some rather dubious estimates, by the year 2005 the value of the EU and US wireless market could be up to $6 billion, with nearly 198 million users. The figure is highly questionable but even if the market reaches half of that, we are talking about a very lucrative opportunity which no one wants to miss.

There's no doubt that to reach that kind of money, there needs to be some pretty good killer apps and services for the consumers. Outside Japan the wireless market is still relatively small, but there are companies out there making a lot of money already.

What is successful right now is SMS, services that use the text-messaging functions. People are sending tons of messages to each other every hour. SMS is tremendous business already and it can be used in a variety of ways.

In Finland, a cable television company came up with the idea of SMS based real-time chat, basically bringing IRC to television at premium rates. The hook is that there's a host in a studio visible in a small window besides the chat area who. The host responds to messages and can handily act as a censor on the more "dirty" messages. The chat consists more of exclamations and taking the shots at the host, but the interactivity (it's possible to alter your message colors, have an alias, and the like) is working. The first month the service was introduced, it generated over $90,000 in revenue with users being as hooked on the service just as some are on IRC. The fact that a single message costs a whopping 90 cents to send hasn't stopped tens of thousands from becoming frequent users.

The attraction is understandable. Some come in to chat with other frequent chatters and talk to the host while others send in derogatory comments about the stupidity of such activity --all the while the service provider gets a sizable chunk of the money generated by the sent messages.

There's a massive untapped market out there, even after Europe and US are conquered. In China, for example, piracy in wireless gaming should be near impossible (so it should take about six months to be cracked then right?). Combine relatively low development costs and low levels of piracy and you've got another reason that wireless gaming sounds inviting, as long as you get the consumer to pay for the services in an easy manner.

Inventing

Some companies, such as G-Cluster, are taking advantage of PDAs and wireless comms in an interesting way. Using iPaq PDA's as terminals and it's own proprietary technology and WLAN, the company offers near high-end PC quality gaming on what it calls G-Screens. Basically a server housed nearby runs most of the code which is then transmitted via WLAN (though it could be done just as well via 3G) to the G-Screen. The plan is to rent such equipment at restaurants and airports. The consumer isn't limited to just iPaq PDA's, any next-gen wireless device, be it a phone or a PDA, will be able to run the software. Payment for now is happening via a credit-card reader.

With the advent of G3 and GPRS devices, cell phones and PDA's will be getting closer in terms of specs and functions. Thus easily portable code will be extremely important for development teams. Java will help, but some start-ups have got better ideas.

One such start-up which has been receiving plenty of attention is Fathammer with it's X-Forge technology. Basically, the technology can be seen as the Renderware of the wireless market, it allows developers to quickly port their games to various mobile devices and operating systems as long as the games are being developed on the flexible X-Forge platform. Billing and client-side technologies are included within the package and with industry luminaries such as RJ Mical working for the company, the prospects for Fathammer are very good.

The Tricky Bit: Convergence

Convergence was the keyword on everyone's lips a while ago, but the slow speed of the new emerging technologies and networks (UMTS, GPRS, 3G) has lessened the hoopla. Maybe we can now come up with just what convergence means...various wireless devices communicating with each other allowing users to enjoy a variety of games and entertainment regardless of the device used...maybe.

Many thanks to the various speakers, including Ian Baverstock and Chris Wright, at Game Developers Conference Europe for tackling the subject of Wireless Gaming in ways which were most helpful in compiling this feature.