HELSINKI (Reuters) - Mobile gaming companies say they will book few new sales from Nokia’s N-Gage phones or Apple’s iPhone, but are betting on a market boost next year as more phones of these kinds are taken up by consumers.
Nokia launched its N-Gage gaming service six months ago, but it had so far gained little traction as users have to install the service to their phones themselves.
What gaming industry executives hoped for was a similar takeup, as with the App store on iPhone, which gave users easy access to buy new games or other software.
While Apple has talked about a total of 10 million phones on the market, Nokia’s leading position in cellphones gave it the potential to reach an audience at least 10-times larger.
The mobile gaming market suffered an unexpected slump last year, with many game developers and analysts pointing to telecom operators’ lack of investment in marketing.
“Merchandising has been a primary pain point for the mobile games industry, and the introduction of new platforms gives consumers a really simple way to discover and download games,” said Greg Ballard, chief executive of Glu Mobile, one of the largest mobile gaming firms.
N-Gage was a software platform that allowed one game, without special programing, to be used across many phone models, and was one of the cornerstones of Nokia’s new services strategy.
“In many ways the N-Gage design reflects an insider’s view of how to solve the merchandising challenges that we have all seen in this business for so long. It was like a bunch of us had gotten together and said, ‘Here, this is how it should be done,’” Ballard said.
Nokia aimed to ease the mobile gaming industry’s key challenges: making them easy to find and buy. It was directly on the phone’s home screen and offered free trial versions of games.
“All the right pieces are in place from our perspective. We’re very excited about this platform. It is very difficult for this not to be successful,” said Electronic Art’s Javier Ferreira, head of mobile publishing in Europe.
Electronic Arts was the largest mobile games provider after its $680 million acquisition of Jamdat in 2006.
Nokia opened the new service six months ago, but has since started to ship in volumes only one model with N-Gage preinstalled. It was now ramping up production of top-end models, the N85 and N96 of which it was set to sell several millions this year. Most of new Nokia’s multimedia phones would ship with pre-installed N-gage.
“That’s when the platform launches,” Ferreira said.
Nokia opened the service to users of five multimedia phones of which it has sold about 15 million, analysts said, but there was an open question as to how many have the application installed. Nokia declined to comment ahead of its earnings release next week.
“Volume on new platforms has been low, but that has been our expectation. We see new platforms as a 2009 story,” Ballard said. EA also expects new platforms to change the industry.
Ferreira said: “A lot of new platforms are really starting to hit the market. We are all excited about the catalyst it can bring to the market in coming months.”
“It’s an extremely exciting time to be in this market ... We feel very bullish about this market,” Ferreira said.
The third big player in the market, Gameloft, told Reuters last week it expected 2008 revenues from new platforms — N-Gage and iPhone — to top 2 million euros.
This compared to global market estimates for mobile gaming, which ranged from $4 billion to $8 billion.
Telecom carriers, so far the main sales channel for the games, were not likely to give up their position without a fight as games were a key driver for increasing data and service revenues from users.
“The relevancy of mobile games is increasing,” said Eitan Gelbaum, VP at Amdocs, a software and services provider to telecom carriers.
Mobile games represent up to 50 percent of all downloads, while just 18 months ago, the share of mobile games was 35 percent of all downloaded content, Gelbaum said.
Reporting by Tarmo Virki; Editing by Andrew Macdonald