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Bypass will Enable Mobile Gaming Expansion

As wireless handsets continue to gain computing power, they are becoming increasingly capable video game platforms, prompting game publishers to offer more advanced titles that are targeted specifically at the mobile market, according to iSuppli Corp.

Early mobile phone games were simply ported over from other platforms, an approach that didn't maximize the advantages of mobile gaming. However, with mobile phone gaming revenues rising by a whopping 80 percent in 2005, game publishers now are creating game titles specifically designed for handsets, thus providing a much better experience for users.

"With more games, better quality games and increased consumer awareness, mobile gaming has become a prime opportunity for the title publishers, along with the entire wireless handset value chain," said Mark Kirstein, vice president of multimedia content and services at iSuppli. "In the coming years, expect to see mobile games that leverage multi-player capabilities and 3D graphics. The emergence of games with these advanced features will further expand the market."

Kirstein predicts the number of mobile gaming users worldwide will grow substantially through the remainder of the decade, reaching 134 million average users a month by 2010, up from 38 million average users in 2005 -- an increase of more than threefold.

As the number of users grows, more and higher quality games will be made available from publishers. Furthermore, publishers will become increasingly interested in how these games are being delivered to users. These companies already have begun encouraging mobile phone service providers to feature game titles on their service menus.

"As sales climb for mobile gaming, publishers will have more influence on the limited menus that service providers now offer," Kirstein said. In contrast, I believe that other delivery channels will prosper, and mobile phone service providers will suffer from over-the-top bypass models. In essence, mobile operators will no longer be the gatekeeper of mobile multimedia applications or the associated content, as publishers wise-up to the market reality.

In concert with expanding usage, global mobile gaming revenue is set to grow by more than threefold, driven by heavy adoption of gaming-capable wireless handsets and services, primarily in China and India. The mobile gaming industry is set to expand to $6.1 billion by 2010, rising at a Compound Annual Growth Rate (CAGR) of 27.2 percent from $1.8 billion in 2005, iSuppli forecasts.

Casual games will remain the mainstay of the mobile market as these are low-priced offerings that are generally Java-based. However, smartphones with additional support for multi-player games, peer communication and location-based networking features could represent an attractive segment.

Despite the market's strong promise, Kirstein believes there are potential barriers that could hamper mobile gaming's growth if they are not addressed by game publishers during the coming years, including:

- Lack of consumer awareness.

- Difficulty in finding games through operator service menus.

- Complexity of downloading the games.

- High data fees and lack of cost transparency.

- Mobile game piracy -- especially in Asia.

- The cost and complexity of developing games compatible with a wide variety of mobile phones.

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