This past Monday, I attended the inaugural MIT Interactive Entertainment Special Interest Group (SIG) event. The speakers on the panel included Mathew Bellows (GM of Floodgate Entertainment), Jeff Burden (VP Digital Media & Games for Hasbro), and Beth Marcus (Founder of Zeetoo.net).
The panelists painted a bleak picture for the $1 billion mobile gaming industry. There are currently two major obstacles facing mobile game producers, Carriers and Hardware:
- Carriers
- There was agreement on the panel that the single largest obstacle facing game makers is the phone carriers themselves. The "$6 per game" business model has been undercut by the payments demanded by the major carriers. According to Jeff Burden, roughly 35-50% of a game's revenue is taken by the carriers upfront.
- Carriers reserve the right to terminate data packets if they deem them burdensome to the network. Therefore, even if a game is successful, a carrier may pull the rug out from under it because the game is causing too much traffic on a mobile network.
- Hardware
- The market for handsets is too fragmented. Differences in screen size between handsets make standardization of game resolution impossible.
- Memory on most cell phones is not large enough to support high quality games.
The margins for mobile gaming companies are small due to the market's small size and the obstacles thrown up by the carriers. Matthew Bellows observed that there are not many marketing costs associated with getting a mobile game to market, except taking Execs out to dinner! Matt insinuated that there was no effective way to market to consumers. But this point of view avoids the potential of in-store bluetooth downloads and other means of getting consumers to download and interact with video games directly in retail environments.
Mobile gaming companies have a slight advantage over game makers for traditional gaming platforms because of the relatively low cost of creating a mobile game. The cost of producing a major PC title typically runs from $4 - $12 million. The cost of Mobile games on the other hand runs from $150k - $750 per title. The low end mobile games are 2D, single/multi player whereas the high end games are 3D, multiplater, and bluetooth compatible. This results in mobile game makers throwing a bunch of games at a "wall" and hoping that they'll stick.
Mobile gaming has yet to see a game with a viral component. The first real "big" mobile game will probably arise from a synergy of a mobile social network(Mocospace) and a mobile game. Additionally, there has yet to be a game with any tie-in on the Internet. The old model of designing PS2 games for a mobile handset is a dead-end and there is a great amount of potential innovation to be seen within this industry.
One way to move the mobile gaming industry forward is to look outside of the physical handset for motivation. Local interactive media company Locamoda has developed technology that allows users to interact with LCD screens hooked up to the Internet via local access numbers. Using Locamoda's technology and a mobile phone, consumers can control the content on LCD screens, whether it be at a mall or a bar. This technology could radically alter how the industry develops and looks at mobile games because it would allow game users to bypass the carriers and play games via local access numbers against people in the same room instead of having to use bluetooth or data plans. This work-around would also allow game makers to do what they are good at: producing high quality games! Since the games themselves would now be embed applications hosted outside of the handset itself, the level of interactivity and social aspect could be increased drastically . Additionally, projecting mobile games onto an external high quality screen would overcome the fact that it's just not fun to play a game on a tiny mobile screen.
The next MIT Interactive Entertainment SIG event, Financial Game - VC Funding in the Gaming Industry, will be taking place on December 5th.
