Mobile gaming growth slows

Despite gaming developers’ and publishers’ high hopes for mobile games, second-quarter earnings indicate a slowdown in the market’s growth as the industry fails to attract new gamers. According to a report released by iSuppli this week, sales for title publishers in the second quarter declined by 9% sequentially as compared to the 11% growth experienced in the first quarter.

Growth in the second quarter was slightly positive compared to the same period a year earlier; however, it was not up to publishers’ expectations, according to David Carnevale, vice president, multimedia content and distribution for iSuppli.

“While the third-quarter performance and the fourth-quarter outlook appear optimistic, the pace of growth is slowing, causing great concern to content providers hoping to cash in on this market,” Carnevale said in the report.

Robert Nalesnik, senior director of marketing for mobile communications at Broadcom, which this week announced a partnership with EA Games to enable its mobile game titles to be played with high-definition quality on mobile phones, agreed that while the multimedia experience is growing more compelling as the displays are getting larger and the cost of memory lower, the market won’t really take off for a few more years. Mobile phones are still a step behind multimedia players, he said.

“It is the typical electronic cycle, the market is driven by how good is the technology, how cheap is the technology and what the content is, and you have to get all three of those right to really ignite the market,” Nalesnik said. “Mobile gaming is a fairly small portion of the mobile phone market….I think you’ll see that market really start to pick up as the power as these devices increases, the screen sizes get a little bigger and the costs go down.”

Revenue will also pick up as awareness of mobile game titles spreads, iSuppli’s Carnevale said, adding that game publishers and developers will have to target the right demographic and put the focus on characteristics that set mobile gaming apart. Outside of mobility, these characteristics include connectivity, community and location awareness.

“Because the current crop of mobile games is centered on casual players, one way to encourage a new demographic to play games on their mobile handsets would be to develop titles that support networked and/or multiplayer gaming,” Carnevale said in the report. “Allowing other users to play against and with their friends via wireless networks will encourage groups of gamers to adopt the platform quicker. These types of games also could reduce the churn-and-burn effect among targeted subscribers, an area of particular concern and importance for operators.”

While the second-quarter earnings decline is notable, it is only a short-term setback, according to iSupply, which expects Mobile gaming revenue to nearly triple by 2011, growing to $6.6 billion from $2.3 billion in 2006.