TECHNOLOGY SPECIAL REPORT

Mobile Gaming: The Latest Wireless Cash Cow

Wireless carriers are finding online gaming via use of cell phones to be the latest cash cow to boost revenues. “Carriers have been surprised that wireless gaming is even more lucrative than ringtones,” Ken Hyers, a senior analyst with market research firm In-Stat/MDR, told TechNewsWorld.

Online gaming, where users download video games onto their cell phones and then test their skills, is helping wireless carriers raise revenue in two ways.

First, when users play games online, carriers receive the per minute charges. “There are some cases where users get hooked on a particular game, play it repeatedly, and are surprised when the month’s cell phone bill arrives,” said Rob Enderle, chief analyst at the Enderle Group.

In addition, carriers receive money from download charges on the transmission of games to users who play them at their convenience.

Sprint’s Moves in this Area

Sprint PCS has been moving aggressively in this area. Since launching its Sprint PCS Vision service (which focuses on cellular data services) in 2002, the firm has downloaded more than 9.5 million titles to customers. In January, the company decided to upgrade its offering with Game Lobby, an online gaming information center and store.

The service enables a gamer to rely on a single user name and password to access games written by various publishers; a centralized listing of high score postings across all Game Lobby games regardless of the publisher; and a buddy list for identifying and tracking friends.

To date, the service has attracted 60,000 subscribers who pay from US$2 to $5 for each game downloaded to Java-enabled PCS Vision phones.

Old-Style Games

Online gaming has become possible because of recent technical advances in cell phones, such as the advent of high-resolution graphics, multiplayer features, Bluetooth connectivity, and color screens. However, the quality of the gaming experience is not as rich as that found with current game consoles, but instead is comparable to 1980s video games.

In fact, many popular wireless gaming titles come from that era; Verizon Wireless lists Tetris as its most popular online game and Pac-Man and Ms. Pac-Man are in the top 10.

Cell phones’ small size and limited amount of memory are the reasons why the old school games are proving popular. While cell phones’ screen size and graphic features have improved, they are still limited to basically a handful of colors on a screen measuring a few square inches.

Because a phone is not able to support items like a “joystick,” players’ data input options are limited. “Online gaming doesn’t offer the realistic, fast paced interaction found with today’s gaming consoles,” Enderle told TechNewsWorld.

Nokia’s Bid

To address cell phone limitations, Nokia last fall unveiled N-Gage, a device that looks more like a mobile game console than a cell phone. The product is designed to be held horizontally; the screen is in the middle and flanked by game controls and a number keypad for user input.

The device includes an embedded Bluetooth chip, so users can play with opponents who are standing in front of them, as well as those on cellular networks.

“Since gaming is so popular, I expect to see more N-Gage type products announced in the coming months,” said Schelley Olhava, a program manager at IDC.

Younger Players

Software suppliers also have taken steps to tailor their products to the online gaming market’s current capabilities. Instead of popular console games, they have focused on game shows, such as “Jeopardy” and “Wheel of Fortune,” and on trivia, where data input is simple. Titles associated with various forms of entertainment, such as movies and music, have also proven to be quite popular.

As a result, the core of the online gaming market is similar to that of the gaming console. “When you mention online gamers, the bulk of the individuals you are talking about are pimply faced, teen-aged boys who may be a bit insecure and antisocial,” In-Stat’s Hyers told TechNewsWorld.

In fact, wireless carriers have concentrated on attracting adolescent males by offering sleek cell phone designs; a focus on music services, such as ringtones; and an emphasis on entertainment content.

Still, older players also are using gaming services. “A number of the games are designed for short — 10 to 15 minutes — simple interactions, such as when a person has to kill time during a break at work,” Enderle told TechNewsWorld.

The focus on older players is one reason why analysts expect the services to continue gaining traction.

“The cellular carriers have been throwing a lot of data services against the wall to see which ones will stick,” In-Stat/MDR’s Hyers told TechNewsWorld.com. “Because online gaming has garnered interest from a wide range of individuals, it is an area where they have been investing a significant amount of money, and those investments would seem to ensure continued success” he said.

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