The Global Mobile Games Industry – 10 Years On!

UK based research group the Multimedia Research Consultancy has just completed a second (and substantially expanded) review of the world's mobile games industry, the culmination of three years of research.

This has involved the production of a worldwide database, in which almost 2,000 actively trading mobile games enterprises (Developers, Aggregator-Distributors, Publishers and Portals - DAPPs for short!) have been profiled.

Enhanced and updated in the last three months of 2007, the database covers 1,968 actively trading mobile games enterprises in 93 countries. DAPPs dealing with all variants of mobile phone games (i.e. Java, BREW, i-Mode/Doja, Smartphone, Symbian, Mophun, ExEn/EGE, Palm Treo, NSeries/N-Gage, iPhone and Blackberry compatible) have been included.

The database is now available for sale (for full details see www.multimedia-research.com). However, the Multimedia Research Consultancy have allowed us to publish selected extracts from the unique overview of the world's mobile game industry that the database provides.

The Global Mobile Games Industry: Evolution and Natural Selection

In 2007 the global mobile games industry celebrated its tenth anniversary. A decade earlier Snake was the first game to be embedded onto a mobile handset (Nokia's 6110), effectively marking the birth of today's industry.

Following this tentative first step the number of enterprises drawn to the then fledgling industry rose from just six in 1997, accelerating year-on-year through to 2003, when the number of new entrants reached its peak (451).

However, whilst the number of market entrants has declined since 2003 the overall total of active enterprises continues to increase year-on-year. We see this as a classic market development pattern suggesting sector maturity and consolidation, rather than decline.

We estimate that 57% of today's actively trading enterprises were originally start-ups, having entered the mobile games market within months of being formed. Conversely 43% of the current universe moved into mobile games by diversifying, either from mainstream console, PC or handheld video games, or from other unrelated commercial activities. Our research has revealed that the industry debuts of these diversifiers generally lagged slightly behind those of the start-ups.

Numbered amongst these diversifiers are a raft of international media and marketing conglomerates, like News Corp (USA), Bertelsmann (Germany), Vivendi (France), Boungiorno SpA (Italy) and LaNetro Zed (Spain), which have moved into mobile content as a means of extending their reach into new media.

Ephemeral or Here to Stay?

Whilst the number of new market entrants has fallen since 2003 the number of mobile games enterprises attaining a sense of longevity and maturity, in what is an aggressively dynamic market place, is encouraging. 53% of enterprises have now been trading for five years or more, dispelling fears that mobile games are just an ephemeral market phenomenon. In fact 17% have now been active in mobile games for seven years or more.

Meanwhile, given the earlier stranglehold on portal development by incumbent mobile network operators, it is not surprising to see that mobile games portals (and, in particular, off-deck D2C Portals) have been around for less time than the other enterprise types.

The Story of 2007

2007 has maintained the trend of recent years with the mobile games industry continuing to consolidate. Whilst there have been some casualties in the past 12 months we estimate that relatively few (<50) could be classed as genuinely defunct (in that their businesses literally failed).

At the same time we estimate that 55 Mobile Games DAPPs were involved in mergers and acquisitions in 2007, most of which were principally designed to provide a complementary strategic fit for the predatory enterprises. In around two-thirds of cases the target enterprises have subsequently been absorbed by their new parents and their trading names eliminated. Legion Interactive Ltd (Australia) acquired by belong group and Moai Technology Co Ltd (South Korea) acquired by UI Magic are cases in point.

Meanwhile the remaining third of the targeted enterprises have had their trading and brand identities retained by their new owners, although history suggests that total absorption and elimination of the targets' brand identities cannot be ruled out in the long term. I-Play (UK) acquired by Oberon Media, SoGoPlay (UK) acquired by SCi Entertainment and Alltel Wireless acquired by TPG Capital and GS Capital Partners are prime examples.

Meanwhile, the global mobile games space continues to attract new enterprises, with nearly 80 entering the market in 2007, either as start-ups or by diversification.

Finally, a small number of enterprises abandoned their mobile games activities (Infospace being a prime example) over the past year, focussing instead on other gaming platforms or moving into other mobile related fields.

Global Surge in D2C Mobile Games Portals

As part of our industry assessment we checked all the Mobile Network Operator (MNO) portals to see whether they offered games and discovered that 60% currently do, so considerable potential still exists amongst the remaining 40%. Portals offering mobile games downloads are particularly prevalent in the deregulated telecommunications territories of the world, having been initially driven by incumbent MNOs.

By comparison MVNO (Mobile Virtual Network Operator) portals, which piggyback on existing MNO networks, frequently offer no frills, aggressively priced mobile services, so it comes as no surprise to learn that only 11% currently offer games, with Virgin Mobile being a prime example.

Of the 524 portals which currently offer mobile games downloads, just over a quarter of these (28%) are operated by MNOs such as Vodafone, Orange, T-Mobile, Verizon, Telefónica and NTT DoCoMo, whilst just 7% are the creations of MVNOs.

However, the big story in this segment has been the sharp growth in off-deck, D2C (Direct to Consumer) mobile games portals (329 as at December 2007). Examples include Clickgamer.com, MOABC.com, Games2go and MobGames. The limited resources and consequent limited range of games offered by the Mobile Network Operator portals have helped to inspire this global surge. D2C portals now account for 65% of the portal universe, and 17% of the DAPPs universe, and remain the fastest growing sub-grouping in this space.

At the same time those multinationals with D2C portals have continued to extend their territorial reach (either organically or through acquisitions), increasing the number of countries in which they have a commercial presence. La Netro Zed (HO Spain), Buongiorno SpA (HO Italy) and News Corp (HO USA), with their Zed, Blinko/Bippie and Jamba!/Jamster portals, are leading examples..

The large South Korean mobile phone manufacturers (LG Mobile and Samsung) also boast extensive networks of D2C portals, with Samsung's FUN Club alone currently serving 34 countries.

Meanwhile, a residual group of ‘other' Portals (3%) have a mobile games focus (invariably providing reviews, recommendations, games ratings and scores, bulletin boards etc), but do not offer games for sale and/or download. They do, however, frequently offer links to other sites which will allow downloads. MobileTopSoft.com is a case in point.

At a regional level Greater Europe boasts the single largest concentration of portals by some considerable margin. Of the 524 Mobile Games Portals worldwide 249 (48%) can be found in Greater Europe. In contrast only 5% are to be found in Japan & South Korea and just 18% in the Americas. The development of D2C sites, plus the partial deregulation of Europe's telecommunications industries, has helped to strengthen this position, allied, of course, to its large number of constituent territories.

With mobile games activities now present in 93 countries, the industry has at long last assumed the status of being a truly global phenomenon. Helping to extend its territorial reach even further has been the surge in D2C Portals, which are now impacting countries previously untouched by mobile games.