S T R AT E G Y W H I T E PA P E RMobile Gaming:Excitement on the MoveMobile gaming is an exciting and rapidlygrowing activ...
A. Moreau, J. C. Sanchez, H. NiuMOBILE GAMING:EXCITEMENT ON THE MOVEMobile gaming is one of the fastest growing and most e...
MOBILE GAMING: EXCITEMENT ON THE MOVE  The mobile-networked gaming market, on the other                                 co...
MOBILE GAMING: EXCITEMENT ON THE MOVEAsian people, who are fond of singing their favorite songs                      Techn...
MOBILE GAMING: EXCITEMENT ON THE MOVE  In the absence of widespread e/m-commerce                            the players in...
MOBILE GAMING: EXCITEMENT ON THE MOVEbetween developers, network solution suppliers and                            Fig. 4 ...
MOBILE GAMING: EXCITEMENT ON THE MOVE  • Worldwide, 2004: As part of its new mobile phone    range with the 536 and 736 ha...
MOBILE GAMING: EXCITEMENT ON THE MOVEAbbreviations         2.5G    2nd and a half Generation mobile / GPRS           3G   ...
www.alcatel.com       Alcatel and the Alcatel logo are registered trademarks of Alcatel. All other trademarks       are th...
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Mobile Gaming: Excitement on the Move


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An article that I co-wrote in 2004 and published in the 'Alcatel Telecom Review', examining the quickly growing opportunity for mobile gaming.

This paper looks at the evolving customer demands and gaming market, the value chains and associated business models. It also highlights the underlying requirements for monetizing the emerging opportunity.

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Mobile Gaming: Excitement on the Move

  1. 1. S T R AT E G Y W H I T E PA P E RMobile Gaming:Excitement on the MoveMobile gaming is an exciting and rapidlygrowing activity that is currently being facilitatedby various technologies and business models.For the consumer, the abundance of affordableterminals possessing colour screens andoperating systems that allow game downloadingopens up a whole new world of mobile gamingexcitement.With countries in Asia such as Japan and Koreaalready leading the world with a staggeringadoption of mobile gaming, the futureworldwide looks extremely promising. Successcan be achieved through the provisioning of agame service utilising different technologies andbusiness models. Alcatel has the solutions formobile network operators to realise thispotential.
  2. 2. A. Moreau, J. C. Sanchez, H. NiuMOBILE GAMING:EXCITEMENT ON THE MOVEMobile gaming is one of the fastest growing and most exciting businessopportunities for mobile service providers.Introduction Differences between mobile and fixed gaming Mobile gaming is a nascent technology, but one that is There are three main differences between mobilecurrently experiencing rapid growth as a result of the gaming and fixed gaming:recent introduction of mobile terminals with color screensand operating systems that support the downloading of • Mobile network operators inherently have bettergames. However, what exactly is mobile gaming? Surely it access to and control over their subscribers.has been possible for a long time to play games on small, Consequently, they are in an ideal position toportable “mobile” handheld gaming consoles? provide network gaming services, such as location In order to understand the different gaming and subscriber presence, that enhance thetechnologies, we first separate wireless gaming important community aspects of gaming.technologies from fixed technologies. The latter typically • Extra revenue can be generated by a mobileinclude games played on Personal Computers (PC), network operator from the traffic involved both intelevision set top boxes, and dedicated gaming consoles, downloading and playing the game, as opposed tosuch as Microsoft’s Xbox and Sony’s PlayStation. Wireless receiving just a flat fee.gaming refers primarily to games played on mobile • The increasing importance of downloadable gamesnetworked or portable handsets (see Table 1). means that mobile network operators are playing a more important role in distributing such games by, for Tab. 1 Wireless gaming technologies example, providing a client-server Mobile-Networked connection to download Java archive and descriptor files. Not downloaded Portable Downloaded Network hosted Handset hosted Wireless Gaming Streaming Message based Technologies Downloaded Network hosted Network hosted Embedded Mobile-networked handsets, such Multi-Player multi- player streaming multi- message based multi-player as mobile phones, smartphones, and online games, player games, e.g. multi-player online games, Personal Digital Assistants (PDA), e.g. TibiaME Picofun soccer games, e.g. e.g. Pathway Atomic Dove to Glory usually include a mobile network Online connection. Portable devices, on the other hand, do not have a network Single player Downloaded Network hosted Network hosted Embedded single player streaming single message based single player connection, but may be connected to online games, player games, games played online games, e.g. Ultima e.g. face to face alone, e.g. e.g. Galaxa other devices via an ad hoc network, Online animation Wireless Pets such as a Bluetooth or Wireless Local Area Network (WLAN), giving Downloaded Embedded Portable multi- the user multi-player capability. The games played games played player games Multi-Player on ad-hoc on ad-hoc played on portable gaming market is network, e.g. network, e.g. ad-hoc network, dominated by Nintendo, which has a MotoGP Splinter Cell e.g. GameBoy Offline 14 year history in this market. The Advance (with Bluetooth) range company has a large installed base, but is experiencing slow growth. It is Single player Downloaded Embedded Portable games a market with a narrow demographic games played games played played alone, alone, e.g. alone, e.g. e.g. GameBoy profile focus, being young and Tetris Snake range sophisticated. Table 2 summarizes the portable device market [1].2 | Alcatel Telecommunications Review - 4 th Quarter 2003/1 st Quarter 2004
  3. 3. MOBILE GAMING: EXCITEMENT ON THE MOVE The mobile-networked gaming market, on the other content, or message based for simple Shorthand, has a mass market demographic profile of all ages, Message Service (SMS) types of game.and is currently growing strongly from a small installedbase. Figure 1 reflects the worldwide growth potential Game genres include action, adventure, classic,for gaming revenues in terms of the revenues generated educational, First Person Shooters (FPS), flightfrom airtime charges, service subscriptions and download simulation, racing, real-time strategy, Role Playing Gamespurchases [2]. (RPG), shoot-em-ups, space simulations, sports and strategy. Tab. 2 Total sales in the portable device market Successful Gaming Markets (Source: Games Analyst) While mobile-networked gaming exists in the advanced Machine Date released Units (mil.) mobile markets, like Western Europe, it has grown Nintendo Game Boy (including Color) Apr-89 119.0 massively in two distinct Asian markets. Nintendo Game Boy Advance Mar-01 33.8 Korea and Japan are currently considered as the most Sega Game Gear Oct-90 12.0 advanced markets for mobile application usage, and users Atari Lynx Jun-89 5.0 have adopted mobile-networked games as one of their Bandai WonderSwan Dec-00 2.0 top five applications. The Korean mobile-networked Neo Geo Pocket Fall 1998 0.4 gaming market reached US$ 85 million (100 billion Won) Game Park GP32 Nov-01 0.1 in 2002, including airtime charges, service subscriptions and download purchases. This represented an increase from 4.4% in 2001 to 6.9% of the total mobile-networked Fig. 1 Projected mobile-networked gaming gaming market [3]. Estimates for 2003 and 2007 are revenues up to 2007 (Source: ARC Group) US$ 180 million and US$ 470 million, respectively [4]. In China, the world’s largest single mobile service $m market, the three most popular SMS applications are $5,000 gaming, ringtone and character downloads, and news and M p Multi-platform/ information subscriptions. In 2002, these services $4,000 networked Downloads contributed about 4% of total mobile revenue, $3,000 Messaging based representing approximately 15 billion sent messages. SIM/embedded The success of SMS games may be attributed to their $2,000 lower prices and minimal handset requirements. Nevertheless, the Chinese mobile-networked gaming $1,000 market is shifting from SMS games to richer games based on Java and Qualcomm’s Binary Runtime Environment $0 for Wireless (BREW) technologies. BREW is used 2002 2003 2004 2005 2006 2007 primarily on Code Division Multiple Access (CDMA) networks. The markets for portable and mobile-networked gaming Market Factors Driving Gamingare expected to develop separately for at least the next Classical fixed game developers who have considerablefive years. expertise in the traditional games industry are again There are several possibilities for games played on a offering the most attractive content. Using the improvedmobile-networked device: capabilities of today’s handsets and networks, games developers can now reproduce the experience players • Game can be downloaded over the operator’s have become used to on fixed consoles and computers. network, or embedded as part of the device’s Namco is claiming to have performed the most ambitious preloaded software. mobile game adaptation from its best selling PlayStation • Online or offline, with online games requiring a car racing game “Ridge Racer”; J-phone users can enjoy network connection during play. the same game play and full 3D motion on their mobile • Single player games, or multi-player games devices. involving players from other mobile access devices, The success of mobile-networked games in Korea and or even players from the fixed access gaming Japan can be attributed to the strong gaming culture in world. Multi-player games can also be played offline these two countries. At the same time, this success is also via an ad hoc network, such as Bluetooth or WLAN. in line with the national usage share of mobile • Games can be hosted on a server to provide applications. For example, downloadable applications, streaming games with enhanced audio and visual such as mobile karaoke, are proving a real success with Alcatel Telecommunications Review - 4 th Quarter 2003/1 st Quarter 2004 | 3
  4. 4. MOBILE GAMING: EXCITEMENT ON THE MOVEAsian people, who are fond of singing their favorite songs Technical trends, such as migration to the Universalin front of a screen. Historically, the Japanese have always Mobile Telecommunications System (UMTS), CDMA, Javabeen enthusiastic about arcade and console games. and BREW, have also played a role. In the meantime, Korea has also developed a strong Revenue-sharing models that provide developers with aenthusiasm for online PC games. It is the same experienced high share of the revenues have also been a key factor inactors in this established industry that have created the encouraging experienced gaming companies to extend“extension to mobile”, leveraging existing market factors, into the mobile arena.such as user demand, branding, license recognition and anestablished non-mobile gaming environment. Mobile-networked Gaming Economics: The successful launch of mobile data networks by Value Chainoperators in northern Asia has also contributed to the Mobile-networked gaming represents a significantsuccess of gaming, which is only one of the many business opportunity for all the players involved.possibilities offered by mobiles. While developers in other However, the associated business models vary dependingcountries have to face the challenge of adapting games for on the games.each type of device on the market, phone subsidizing and Figure 2 outlines the value chain related to deliveringbranding in Japan and Korea have helped to ease both games that are downloaded to mobile terminals. While thegames development and service adoption by users. value chain is fairly straightforward, the business model Operators in Korea and Japan have exerted a lot of and actors involved will depend on which player “owns”influence on the interfaces and outputs of mobile devices, the user (i.e. who provides access to game services,and have provided manufacturers with strict definitions of billing and customer service).the specifications they will accept. This has considerably Aside from the Mobile Service Provider (MSP), who iseased the job of the games developer in these markets. In the traditional supplier of services to mobile users, atthe more fragmented General Packet Radio Service least two other types of “retailers” have emerged in the(GPRS) handset market, a developer or operator is faced gaming arena:with the need to customize the application according tothe implementations of the standard by different handset • Games developers, such as Game Loft and THQ, aremakers. leveraging their established branding via the web to Unlike Korea and Japan, Chinese operators have almost complement their existing indirect marketingno control over handsets, and are not able to subsidize channels, and are selling directly to the gaminghandsets significantly because of the low Average community.Revenue Per User (ARPU). However, mobile-networked • Entertainment portals, such as Zingy,gaming is still taking off for other reasons: myphonegames.co.uk, and Kiwee, have emerged. These are primarily “e-tailers”, aggregating a range • Huge mobile user base: 240 million in mid 2003. of existing games (licensed from the developers), • Social context which means that people have long which they then distribute to users via the fixed or commuting times during which they can play mobile Internet. Their core competencies are in games. the area of branding (i.e. creating brand • Large number of innovative service providers and recognition and association) and assuring ambitious operators. customer service. Fig. 2 Mobile-networked gaming value chain MSPs Billing Co. SW Client Game ASP Supply Entertainment Portal Handset Supply Game Developers Supply Platform License Develop Animate Service Service Customer Content Games Aggregate Operate Community Access Billing Service4 | Alcatel Telecommunications Review - 4 th Quarter 2003/1 st Quarter 2004
  5. 5. MOBILE GAMING: EXCITEMENT ON THE MOVE In the absence of widespread e/m-commerce the players involved while reflecting their cost structures.facilitators, such as PayPal, both of these players Figure 3 illustrates a typical revenue sharing scenariocurrently rely on existing credit card companies or between the mobile operator and games provider fortelecommunication operators (fixed and mobile, using downloading a game (game price $3) and unlocking thepremium charge numbers or premium SMS) to bill for next level for further game play (price $1).services. As the mobile-networked gaming market continues to However, the mobile operator is well placed to play a develop, driven by richer and more diverse games and abroader role in the mobile-networked gaming value chain. wider range of compatible terminals, the businessBy combining their established customer relationship opportunities will multiply.(including service access, billing and customer service)with a back-end operating role (games aggregation, Mobile-networked Gaming Evolutionplatform operation and, in some cases, the animation or If mobile operators are to continue to add value to thisstimulation of extra revenues through additional features service, and avoid simply becoming a data transport pipe,and services), they can reap the rewards of having they will need to provide service enhancements linkinggreater control over the value chain. In this case, the the gaming experience with the user’s personal servicemain operating expenses are related to the payment for environment. The following domains have the potentialthird-party games, licensed once again from developers. for further gaming evolution:Vodafone (via its joint venture Vizzavi), Sonera (viasubsidiary Zed) and SK Telecom (South Korea) are • Flexible billing options:examples of this type of advanced mobile operator. - Differentiated service charging: the ability to However, some MSPs are unwilling to take on an charge for game play based on session time,operating role, preferring to outsource the service to validity period, etc, with different rates accordingspecialized games Application Service Providers (ASP). to the time of day, date and player profile.While the games ASP aggregates and operates the gaming - Provision of playing bonuses and rewards: freeservice, its core competency has become the animation of game levels, bonus calling minutes, etc.the gaming business through targeted campaigns (using • Gamer communities and communication:customer data mining), posting of high scores, unlocking - Defining and managing gamer groups: subscribenew game levels and other techniques to incite further to a closed game community, complete withinterest in game playing and thereby generate increased forums and newsletters accessible via therevenue. In-Fusio and Zed are typical games service Internet.providers. - Presence information for communities: see which members of your game community are physicallyRevenue Sharing available to play the game, and seamlessly invite When the mobile operator outsources its gaming them to participate at the click of a button.operations to a specialist games ASP, it will need to - Enabling communication between players: allowsdevelop a revenue-sharing model that is equitable for all gamers to chat before, during and after a game using a variety of integrated communication means, such as Fig. 3 Typical revenue sharing model SMS, Multimedia Messaging Service (MMS) and instant Game Download Unlocking new level messaging. This adds a personal (Using premium SMS) aspect to multi-player gaming. • Location awareness: 8% Hosting Content - Location–dependent presence: 45% 50% Provider/Hoster 37% Content Provider allows players to find nearby Operator gamers, providing a more 28% Operator Share 55% of Premium Fee 50% exciting and interactive game 27% session. Airtime - Location-aware games: integrate player’s local environment with Game Download Unlocking Game Level the game. Such features provide Price for User = $ 3.00 Price for User = $ 1.00 a new dimension to the gaming Operator’s Revenue = $ 1.65 $ 0.15 (SMS send)+ $ 0.85 (premium SMS service) experience. Game Provider’s Revenue = $ 1.35 Operator’s Revenue = $ 0.575 (0.15 + 0.425) Providing these types of features Game Provider’s Revenue = $ 0.425 requires increased cooperation Alcatel Telecommunications Review - 4 th Quarter 2003/1 st Quarter 2004 | 5
  6. 6. MOBILE GAMING: EXCITEMENT ON THE MOVEbetween developers, network solution suppliers and Fig. 4 Alcatel’s Scalextric demonstration at CeBit:service operators to develop games that implement the (Left) real car track, and (right) virtualrequired integration between application and network car trackenvironment. However, if they are to be widely accepted,enhancements like these need to offer real value forgamers, to be user friendly, and to be based on businessmodels that are fair for all those involved. This will be made possible by various platformscovering aspects like service access control, billing andcustomer care, communication services (i.e. SMS, MMS,instant messaging, and instant voice), and onlinecommunities with presence or even location information[5,6]. Alcatel’s application platforms support all thesedomains; as a result, Alcatel is currently playing a leadingrole in this field. Real Car Track Virtual Car TrackAlcatel’s Current Initiatives Fig. 5 Game playing on Alcatel is actively involved in the mobile-networked Adelaide (Australia), an Alcatel Onegaming arena through a number of initiatives: Shanghai (China), Touch 735 Taipei (Taiwan), • 3GSM World Congress, Cannes, 2001: Alcatel Kuala Lumpur provided the world’s first demonstration of a two- (Malaysia), Milan player, real-time interactive online game over a (Italy), Lisbon UMTS network using “Galleon”, a pirate action game. (Portugal), Paris • CeBit, Hanover, 2002: Alcatel demonstrated (France), Malmö “Scalextric”, a real-time interactive virtual/real car (Sweden), Rijswijk racing game (see Figure 4) played over a UMTS (Netherlands), and network which provided the necessary real-time Stüttgart (Germany). multiplayer interactivity and quick response times. Other centers are planned in the near future for • Worldwide, 2002: Alcatel teamed up with In-Fusio Tokyo (Japan), Seoul (South Korea), London (UK), to provide a pre-packaged, ready for market, Sao Paulo (Brazil) and Plano (USA). downloadable gaming service on the Alcatel 535 and 735 handsets. Coupling In-Fusio’s extensive Fig. 6 Alcatel/BeTomorrow games optimized games catalog and know-how with the ease of use for UMTS terminals and style of Alcatel’s mobile phones has enabled Alcatel to make a bold entry into the expanding world of downloadable gaming (see Figure 5). • Western Europe, Asia Pacific, Americas since 2002: With its 3rd Generation Reality Centre (3GRC) program, Alcatel has created a live and comprehensive end-to-end environment (2.5G, Enhanced Data rate for GSM Evolution or EDGE, 3G) for the development, validation and testing of Brick Smasher Stacker Super Tank advanced mobile applications and data services, including games. External partners, including local content and applications providers, as well as other • Europe, 2003: In conjunction with BeTomorrow, handset suppliers, are invited to contribute. In the Alcatel has implemented a number of online and gaming domain, the 3GRC is used for interoperability offline games developed and optimized specifically testing, ensuring and validating that gaming services for UMTS terminals. This was done within the work as expected on terminals from different scope of a 3G trial (providing the required real-time vendors. In certain cases, it is used for prototyping multiplayer interactivity) with leading international (e.g. with games developer BeTomorrow) new mobile operator Orange [5]. Games include Brick mobile-enabled games. Finally, through the Smasher (an offline shooting game), Stacker (an partnership program, Alcatel is able to tap into the on/offline strategy puzzle), and Super Tank (an innovation of local gaming content and application online 3D graphics combat/action game), as shown developers. Such centers are already operational in in Figure 6.6 | Alcatel Telecommunications Review - 4 th Quarter 2003/1 st Quarter 2004
  7. 7. MOBILE GAMING: EXCITEMENT ON THE MOVE • Worldwide, 2004: As part of its new mobile phone range with the 536 and 736 handsets, Alcatel is ensuring an exciting gaming experience by supporting the Java Mobile Information Device Profile (MIDP) 2.0. These capabilities will enable Innovative programs like the 3GRC are bringing gaming users to play a wider range of games with rich 3D content and application developers into an end-to-end color graphics and increased interactivity. Coupled solution that can be created and tested in a live environment. with other mobile services that Alcatel is Alcatel’s advanced terminals are also helping to deliver a developing [6], such as MMS, instant messaging, richer and more enjoyable gaming experience for users, while push-to-talk, presence, and location, and supported ensuring compatibility with ongoing market developments. by our extensive portfolio of flexible charging Through selected strategic partnerships and field trials, products, mobile operators will benefit by being Alcatel is ensuring that these solutions help drive the able to offer a wider range of games titles, allowing popularity and global acceptance of mobile-networked them to address broader market segments and gaming, while ensuring that these services are profitable helping to ensure profitability. for the mobile operator and other key players.Conclusion References Mobile-networked gaming has quickly become a key [1] “Games Analyst”, volume 2, no 13, 11th July 2003.business focus for mobile operators worldwide. Various [2] “Mobile Games - Expanding Roles and Revenuebusiness models exist, each of which provides distinct Opportunities”, Worldwide Market Analysis & Strategicadvantages for the operator and the other key players Outlook 2002-2007, ARC Group, November 2002.involved. [3] “Mobile Gaming Market Structure”, iPark Beijing, China- Numerous technologies can help deliver a profitable Korea Value Added Service Seminar, 20th June 2003.gaming service. With this in mind, Alcatel is currently [4] “Mobile Gaming Forecast in Korea”, Marketing Researchoffering mobile network operators solutions that will Institute, Chinese Ministry for the Information Industry, 8thenable them to realize their current business August 2003.opportunities, while actively developing solutions that will [5] S. Wolfe, S. Robinson: “Offering the Town … Orange 3Gaddress the challenges of tomorrow’s mobile-networked Services!”, Alcatel Telecommunications Review, 4th Quartergaming market. These solutions include flexible charging 2003 /1st Quarter 2004, pp 31-33 (this issue).and billing options, support for messaging services and [6] J. Tessot: “Instant Messaging”, Alcatel Telecommunicationspresence information to support communities, as well as Review, 4th Quarter 2003 / 1st Quarter 2004, pp 34-38location-aware games facilities. (this issue). André Moreau is a research engineer in the Mobile Huarong Niu is Application Domain Manager, Strategy Project of the Network Strategy Group, Network Strategy Group, Shanghai, China Antwerp, Belgium (andre.moreau@alcatel.be) (huarong.niu@alcatel-sbell.com.cn) Juan Carlos Sanchez is Senior Business Consultant within Solutions Marketing, Mobile Services Division, Vélizy, France. (juan-carlos.sanchez@alcatel.fr) Alcatel Telecommunications Review - 4 th Quarter 2003/1 st Quarter 2004 | 7
  8. 8. MOBILE GAMING: EXCITEMENT ON THE MOVEAbbreviations 2.5G 2nd and a half Generation mobile / GPRS 3G 3rd Generation mobile / UMTS 3GRC 3G Reality Center ARPU Average Revenue Per User ASP Application Service Provider BREW Binary Runtime Environment for Wireless CDMA Code Division Multiple Access EDGE Enhanced Data rate for GSM evolution FPS First Person Shooter GPRS General Packet Radio Service GSM Global System for Mobile communication IM Instant Messaging MIDP Mobile Information Device Profile MII f Information Industry MMS Multimedia Messaging Service MSP Mobile Service Provider PC Personal Computer PDC Personal Digital Cellular RPG Role Playing Game SIM Subscriber Identification Module SMS Short Message Service SP Service Provider UMTS Universal Mobile Telecommunications System WIPI Wireless Internet Protocol for Interoperability WLAN Wireless Local Area Network8 | Alcatel Telecommunications Review - 4 th Quarter 2003/1 st Quarter 2004
  9. 9. www.alcatel.com Alcatel and the Alcatel logo are registered trademarks of Alcatel. All other trademarks are the property of their respective owners. Alcatel assumes no responsibility for the accuracy of the information presented, which is subject to change without notice. © 06 2002 Alcatel. All rights reserved. 3GQ 00006 0010 TQZZA Ed.01