Mobile-Gaming Boom May Force Changes in Mobile Payments

The booming market for mobile games is set to overtake that for ring tones as the largest digital-content market in m-commerce, with carrier-based billing remaining the dominant payment model for the foreseeable future. According to the most conservative projection offered by experts speaking this week at a conference on the prepaid wireless business, game downloads to mobile phones will reach $1.5 billion worldwide by 2008, up from $345 million annually now, driven by a trend toward multi-player and community games as well as high-speed wireless technology and new games geared to take advantage of it. The market “will surpass ring tones as the biggest mobile data category this year,” Andrew Elliott, manager for games and retail-channel business development at cell-phone manufacturer Nokia Group, said during a panel presentation at the Pay As You Go Mobile Executive Summit in Dallas. New releases developed specifically for over-the-air delivery and featuring snazzy effects like 3-D will lend impetus to the growth of the market, speakers said. “Today's mobile games are not leveraging the [mobile-phone] platform,” Elliott said. Other factors fueling the growth of the market include the development of technology permitting several users to play the same game at once, or to play solo but compare their results to point totals compiled by other players, which is known as community gaming, said speakers on the panel. The panelists don't look for any major developments soon in micropayment engines to accommodate the growth in mobile games, which can cost anywhere from under $1 to several dollars each, predicting that the prevalent billing model will continue to account for payments. “The current payment model will prevail for the next several years,” said Craig Dalton, director of business development at Digital Bridges Ltd., a content distributor. “The carriers have a grip on that.” However, the development of multi-player gaming could put pressure on the carriers to open the door to prepaid accounts and subscription-based payments. “As you move to multi-player gaming it's absolutely essential you move to prepay,” said Elliott. “You need that prepaid data.” Also, the rapid entry of third-party resellers, known as mobile virtual network operators (MVNOs), into the prepaid airtime market may force carriers to offer subscription-based payment models for digital content. “Subscription is the way to go,” said Mike Yuen, director of the gaming group at Qualcomm Inc. “What will happen when MVNOs take off in a big way, when a Wal-Mart comes in? That changes the landscape.” Such players, Yuen said, care little about mobile carriers' interest in billing systems. MVNOs already account for 49% of the prepaid wireless market today, up from virtually scratch three years ago, according to Atlantic ACM, a Boston-based research firm (Digital Transactions News, Feb. 9).