Mobile Internet

January 7, 2003
Analysts forecast explosive growth for mobile gaming

BANGALORE -- The convergence of wireless and games is throwing up billion-dollar opportunity in form of online gaming. In fact, industry analysts forecast explosive growth for the wireless gaming market over the next four years. According to Datamonitor, by 2005, over 200 million people, about 80 percent of all wireless phone users in the US and western Europe are likely to play online games using wireless devices. It estimates that the wireless gaming market will grow to a $6 billion market in Europe and the United States by 2005. IDC projects computer and video games' sales at $16.9bn by 2003, excluding an estimated $1.1bn that will come in as online games revenues.

To cater to this growing market, handset makers and wireless networks are teaming up with game console companies to address the market that is currently led by the youth. In the meantime, several operators and portals are in the process of developing communities over the Internet by feeding sports news and services, thereby preparing the users for mobile gaming.

So why is wireless gaming considered a big draw today? One, wireless gaming will increase bandwidth usage, delivering better profitability for bandwidth providers. Next, service providers are looking at it as the next killer application. New technologies like GPRS and cdma/1x, and forthcoming 3G technologies will enable games on mobile devices, besides offering memory storage capability such as memory cards. Top equipment vendors like Ericsson, Nokia, Motorola are investing heavily in gaming. Most of the action in the area has resulted in alliances primarily between equipment providers and creative content providers.

According to Eric Mottet, a gaming icon and co-founder of Infogrames Entertainment, a leading gaming software vendor, "In India, the Internet will spur the growth of online gaming. Gaming parlours will mushroom similar to cybercafes.''

Microsoft pits Xbox against Nintendo, Sega
Microsoft is pushing for alliances in this area since entering the gaming console market. Its Xbox is pitted against products from Nintendo, Sega and Sony Playstation. These alliances result from the need to bring complementary skills together.

According to Datamonitor, classic card and quiz games -- even bingo, will be the most popular mobile pastimes. "While you likely won't play Quake on your phone, several companies are developing specific games for current mobile devices,'' it observes.

Rajesh Rao, CEO of Dhruva Interactive, a Bangalore-based game developer, said, "In recent times, the explosive growth in PC penetration due to the Internet and the resulting need for engaging compelling content is presenting an unprecedented opportunity for gaming and interactive entertainment in India.''

Cheaper bandwidth, Internet-over-cable, dropping prices of PCs will result in games invading Indian homes. "The development of high-quality, localised content will play an important part in the growth of this market,'' Rao pointed out.

"Computer games seem to be the current craze in the Indian entertainment market with the leading market researcher AC Neilsen pegging the market at over Rs 500 crore over the next three years. Today, the market is flooded with gaming consoles like Microsoft's Xbox, Sega's Dreamcast and PlayStation from Sony. These products are showing signs of becoming mainstream and mass-market consumer products here like in the US, Europe and Japan. Not to be left behind, Nokia has joined the gaming console bandwagon with its N-Gage mobile gaming deck device. The interactive entertainment industry in the US is now already bigger than Hollywood. Over 42 percent of all Americans own at least one game console.

Content delivery schemes for entertainment services
Two main streams of content delivery currently dominate the gaming industry.
Web: The Web offers a variety of hosted and networked games. Most networked games are still in their infancy.

Gaming consoles: The potential of mobile gaming is evident by evaluating the video games sector. With annual sales of £1billion in the UK alone, it is a bigger market than movie industry. In future, mobile gadgets like PDAs, WAP phones, and 2.5/3G phones will carry a major chunk of games traffic.

Gaming is also about entertainment, including broadcast media, information access, educational programming, interactive commerce, advertising and content downloads. For example, a typical revenue channel for a gaming service provider will be through an alliance with a broadcast media service provider to enhance TV game shows like "Who wants to be a millionaire". These game shows can be integrated with telecom infrastructure like SMS or WAP to offer interactive entertainment services. In this case, the concept of gaming is deeply intertwined with the TV software.

However, playing computer or video games is not yet a mainstream social activity. This could be either due to low PC penetration, lack of parental/social acceptance of games as a medium of entertainment and prohibitive pricing of gaming software.

To steer the fledgling gaming market in the country, Dhruva Interactive, a Bangalore-based interactive game developer, is planning to offer online gaming content. The company, engaged in developing gaming programs for the last five years, is currently talking with leading ISPs, cybercafes and cable broadband companies across the country to include its gaming content in their services portfolio.

Dhruva became the first Indian developer to work on a major game title with an international publisher when it developed the PC version of the successful 3D game title 'Mission: Impossible' for Infogrames Entertainment. Along with this next generation of games, 128-bit consoles are being rolled out in the global markets, featuring even more spectacular graphics and gameplay.

Online gaming is likely to see rapid growth as well. By the end of 2001, approximately 35 million gamers visited sites featuring 3D games, generating revenue of $152.2 million. Online 3D gaming subscription revenue is expected to grow at a CAGR of 19.7 percent through 2007 as these sites offer unique experiences and even episodic updates to gamers.

Commenting on the online gaming industry in India, Sudhir Mathu, head of Arena Multimedia, said: "India has not been left untouched by this wave of proliferation of gaming as a popular form of entertainment. In the last year itself, around 10 Indian companies have ventured into gaming.''

The opportunities in mobile gaming are real, but the challenges are many. The next step in this effort is to develop a comprehensive architecture that will lay the foundations to seamlessly develop, and integrate next-generation and legacy technologies to provide a compelling solution for entertainment service providers.