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Wireless Carriers Bet On Mobile Gaming...
Submitted by Beau Buck, Managing Director, Modezilla (www.modezilla.com) - October 30, 2002
There is no question that Mickey marketeers in the cellular industry know how to sell cute little wireless devices.
Sure, cellular service is spotty at times, and can be downright expensive as you bounce from digital to analog and back again - even without roaming too far from your home base. And those cellular contracts! A friend of ours once had a sweet deal with a cellular provider that provided hundreds of hours of service per month and a couple of cell phones under a contract that had absolutely no early termination penalties! However, once our friend tried to add a third phone, he was forced to sign over his life and wireless limbs as part of a two-year contract.
Then there are those clever and cutting edge commercials. You know, the ones featuring the guy dressed in the rumpled black trench coat who seems to be everywhere and in everyone's face? Or, perhaps the Robert Downey look-a-like with a penchant for wandering through office buildings and family picnics asking if anyone can hear him. A circuit judge I know might describe these activities as stalking, but we recognize it as all good Madison Avenue fun in the wireless biz.
The latest batch of commercials is aimed at pushing higher-speed wireless services, offering the ability to zap color photos back and forth and play ant-size versions of video games. Las Vegas icons (for lack of a more libelous word) Seigfreid and Roy are even featured in one of these ads promoting high-speed wireless, although they come off as being castoffs from a Clockwork Orange remake rather than as high-tech hucksters.
My point is (and yes, I occasionally do have a point!) does all this hoopla surrounding high-speed wireless, as well as offering colorful entertainment applications on cell phones really matter? The answer is a resounding yes! Apparently, users are really excited about the evolution of cell phones, the roll out of higher-speed networks, and the availability of wireless games.
And contrary to what analyst types may tell you about wireless' attraction to the youth market and the swift adoption of wireless gaming by the downloadable ring tone and instant messaging set, wireless gaming is not a pastime reserved strictly for young folks. According to a coupe of developers I ran into the other day at a meting where everyone was searching for the next 'big thing', wireless games are mostly played by adults who average about 27 or 28 years old. These are the same people who may be stuck each day in a killer train commute, and who have the expendable cash to fork over a few hundred dollars for a new phone and a hundred or so dollars a month for unlimited high-speed service.
Play Money
Most people in the industry recognize that mobile gaming will be the first big revenue generator in high-speed and highly-mobile wireless. In fact, some industry researchers predict that consumer-based gaming will easily surpass mobile enterprise applications as the bread winning products for most wireless carriers. This makes sense considering the length of time your average game players spends staring intently into a game screen, and how familiar game players already are with mobile systems like the GameBoy. The wireless phone might very well be the technology pacifier for kids trying to pass the time during those long car trips, or business-traveling adults standing in multiple security lines at the airport.
There are a couple of problems, however. First, there is the lack of any widespread and fast wireless infrastructure. All of the major wireless service providers are jumping on the high-speed services bandwagon by developing and tolling out systems that offer faster transmission and delivery speeds. The idea is to speed up data delivery so that we can quickly move away from the painfully slow systems most users subscribe to right now, which are great for voice and an occasional text-based instant message, but fall flat on their bandwidth faces when it comes to juggling full-color graphics and multimedia content.
The big buzz in the industry has always been so-called 'third generation' services, or 3G, which promise to offer broadband speeds and services on small wireless devices. However, 3G is still quite a ways off in terms of real-world application. The state-of-the-art for the moment, though, is 2G and 2.5G services, which are slower than 3G but still 10-20 times faster than the fastest current wireless communications speeds.
There are actually a number of different variations of these higher-speed wireless networks. One of the more popular, however, is wideband-CDMA (w-CDMA), which is based on the traditional CDMA architectures licensed in chip form by Qualcomm Corp. (which was formerly a handset manufacturer, and now focuses just in promoting the CDMA standard and the use of its chips in next-generation cell phones).
Right now, Japan's NTT DoCoMo is reportedly the only wireless carrier in the world with a working w-CDMA network. Competing systems to this include global packet radio service (GPRS), which also a respectable share of followers in the hardware manufacturing and software development industries.
The Price of Playing
Another problem is the expected cost of connecting to these wireless gaming systems, which right now might cause the Monopoly Man to blanche! These prices are expected to range from a dollar to as much as five dollars per download! Prices will come down a bit, but they will have to remain fairly high initially to support all the various 'players' that are involved in bringing those games to you! These include the wireless carriers, sponsors of these games, the game creators, and content providers. All of this collaboration doesn't come cheap! After all, look how much you pay to see a first-run movie and munch on a few snacks. This is just another form of entertainment folks! Sure, it's mobile, but it's also all about money!
At least one industry report calls for wireless carriers to get closely involved in the development, promotion, and distribution of mobile games and related content; partner with content aggregators and brokers who can sniff out the best and brightest games; and look for multiple sources of revenue from the game-playing public. This report, and others, also recommends that wireless carriers develop new ways to lock in customers and promote customer loyalty, and to explore unique promotional and billing methods. I don't know about you, but this sounds awfully similar to the business model that initially launched the tobacco industry. It's all about addiction, isn't it?
In order for the wireless gaming industry to take off, there has to be a significant base of users of these co-called next generation phone that can slice, dice and handle sophisticated multimedia graphics. But, this may be a problem right now since most people are looking to hold onto their current phones for a while and squeeze more capabilities out of them by using add-on devices like extended batteries and headsets (one manufacturer outside the U.S. has even developed a battery with an embedded Bluetooth short-range communication chip inside). Other users may be locked into extended contacts, which feature generous hourly connection allowances, but restrict customers from trading in old phones foe fancy and more capable new ones.
There is no question that cell phone use is increasing, especially as an alternative to wired long distance calling. At the moment, more than 51 percent of the people residing in 44 of the top U.S telephone markets own wireless handsets, and roughly half the U.S. population (140 million people) report they are cell phone owners and users, according to cell phone researcher Telephia. But, a relatively small percentage of these users have the latest phone technologies - primarily because the required infrastructure is just no rolling out.
There is also that big unknown: Will people in the U.S. embrace wireless phone gaming and entertainment that way people have in countries like Japan? Most wireless manufacturers are betting they will, although they have to make the jump to services like Sprint PCS Vision, which offers wireless connection speeds ranging from 60k bits/second to 80k bits/second.
 Recently, Verizon Wireless even introduced a new service called "Get It Now," which lets subscribers download games or business applications onto their cell phones. At the moment, the company offers two phones that can handle such downloads, and plans to unveil a third (from Motorola) sometime soon. Some marketers are getting very creative: BigDigit (BigDigit.com) is working with carriers to produce their first annual 'mobile film festival' displaying JAVA short films, allowing the carriers to show their stuff, and sell higher-end phones and services.
The question is will users be willing to pay for such shrunken down entertainment? And the answer, it seems, will take some time to reveal itself as consumers continue to hold on to their dollars and their still useful older phones.
Agree? Disagree? Modezilla would love to hear from you.
Modezilla
Modezilla (www.modezilla.com) is a strategic communications firm serving the mobile, wireless, and personal communications technology industries.
Beau Buck is Modezilla's cofounder and Managing Director. He can be reached via email at beau@modezilla.com
or in Los Angeles at 310-277-3456.
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