mGAMING UNLOCKS OPPORTUNITIES ACRESS EUROPE
By David E. Bedarida, Forrester Research

November 6, 2001 . . . European mobile operators struggling with market
saturation and UMTS debts look to mGaming as a killer application to
increase their revenue. But actual development remains slow. In fact:

* Europe's mGaming success stories don't go much further than SMS.
Operators and media companies have approached mGaming thus far more as a
marketing tactic than a revenue driver.

* In contrast, mGaming makes big bucks in Japan. Japanese incumbent
operator NTT DoCoMo claims that 6.3 million of its 27 million i-mode users
download games and other entertainment-related content onto their phones.
Game publishers like Sega have been quick to offer downloadable console
hits like "Sonic The Hedgehog" to users with Java-enabled phones, sharing
revenues in exchange for using DoCoMo's billing platform.

* Phone manufacturers lay the groundwork for progress. In July, Ericsson,
Motorola, Nokia, and Siemens launched the Mobile Games Interoperability
Forum with a goal to develop a universal mobile gaming platform. The
manufacturers aim to create standards that let users play multiplayer
networked games running on operators' servers regardless of what kind of
device they own.

To assess how European mobile operators should use mGaming as part of their
service mix, we assembled seven variables that predict mGaming demand. Then
we weighted the results to determine whether mGaming should receive low,
medium, or high priority for operators in 13 countries. We found that:

* Operators should lead with mGaming in four countries. In the
German-speaking countries and Belgium, mobile penetration reaches 72%, half
of adults own a game console, and 58% play computer games. In Switzerland,
for example, Swisscom should make mGaming the core of a marketing campaign
and build a gaming offering in-house to boost market share among young
adults.

* In six countries, operators should defer to game companies. Operators in
the UK, Ireland, the Nordics, and Italy should give mGaming a secondary
role. They should rely on partnerships with gaming heavyweights like
Electronic Arts and Nintendo to target young consumers, who use portable
consoles like the Gameboy Advance and PC games. In a revenue-sharing model
with game companies, operators should offer a mobile-tailored version of a
Gameboy game in which players can earn new skills or items that they can
then use on a portable game console -- players unlock the items with a code
delivered on their mobile phone.

* Easily appealing games will relaunch SMS and set the market for mGaming.
Spain, France, the Netherlands, and Finland don't offer mobile operators
fertile ground for a heavy mGaming offering. Operators in these countries
should take measured, tactical steps toward mGaming -- exploiting content
with broad appeal by offering, for example, mobile dating games supported
by multi-user SMS chat.

In contrast to operators, game publishers want to know which countries
offer them the greatest absolute number of potential mGaming subscribers.
We found that game publishers should:

* Go after Germany and the UK first. In addition to high mobile
penetration, Europe's biggest markets boast widespread game console
ownership, a high percentage of people playing computer games, and
consumers' strong tendency toward entertainment. These two markets already
offer room for game publishers to launch mGaming with a
multiple-revenue-stream model: pay per download, online play with operator
revenue sharing, and sales of CD-ROMs with mobile episodes of PC games for
game-addicted subscribers.

* Target France, Italy, and Spain next. These three countries have big
populations but don't have consumer bases conducive to mGaming. Here, game
publishers must market games not as ends in themselves but as extensions to
other entertainment properties with broader appeal. For example, in Italy,
Electronic Arts should promote a mobile version of the Fantacalcio
role-playing game where players could actually integrate their weekly
scoring with penalty kicks played over their mobile phones.

* Focus on promotions for the rest of Europe. In European countries where
the population size and mGaming sensitivity both rank low, game publishers
must avoid expensive mGaming marketing that won't deliver many users.