Monday, July 31, 2006

Steve Palley: Mobile Gaming's Vitamin Q

Steve Palley at Foci Mobile blogs that the supply side of the mobile gaming "industry can be broken down into three major components--logistics, entertainment, and medium. “Logistics” covers stuff like game discovery, downloading, and billing; it’s a catchall category for the commercial activities that connect seller to buyer. “Entertainment” simply refers to the game itself. “Medium” is all about the device that allows the consumer to first navigate mobile gaming’s logistics and then enjoy his or her theory, at least."

Palley writes that:

Publishers tend to believe that logistics are paramount, and wonder loudly why the carriers aren’t spending more on marketing. Carriers, meanwhile, argue that publishers should work on the entertainment factor, because it’s awfully difficult to sell boring, low-quality games. Handset makers worry about handsets playing second fiddle to carrier networks promotionally, while also jousting with publishers over consumer demand for fancy gaming capabilities in phones. Analysts roll their eyes at the other groups and try to sell them answers based on proprietary data sets.

The carriers are on top, because they control the download deck, which is the only point of sale that matters; publishers know this, so they sell to the carriers, not the consumers; and handset makers, sensing disinterest from carriers and consumers alike, optimize their devices for low-effort, high-margin forms of mobile entertainment (like ringtones).
Palley defines this as the iron triangle, which "would probably be sustainable into perpetuity with occasional adjustments. It inhibits growth and innovation, but it’s also reasonably profitable and very low risk."

He then wonders whether the new Motorola (MOT) Q "(as well as the spread of competing devices that Motorola’s competitors will inevitably release) will have profound effects on the mobile gaming market." He writes:
All of a sudden, the consumer has a mobile web browser that actually works, instead of a crippled WAP portal, meaning that he or she can easily browse on over to a game publisher’s site, look at preview graphics, and buy games from the source. The Motorola Q doesn’t just let consumers wander around off-deck, it doesn’t have a deck at all--Get It Now is missing in action! Somebody had better step into the breach and take advantage of this opportunity quickly.

In addition, the Q’s audiovisual, keyboard, network and storage capabilities open up all kinds of new horizons for game designers, who might now be able to make the kinds of games they’ve been dreaming about for years. The Q is a mobile PC, and it’s bound to push all three pillars of the mobile gaming market towards ground that PC gaming has already covered. Ultimately, this means full-fledged internet retailing, free competition, networked gaming, downloadable content, and happier, more interested customers.
Palley concludes with:
I’m not the first analyst to have this idea--M:Metrics released a similarly upbeat assessment on the Q a few weeks ago--but my personal experience with the Q has really driven the point home: this is the magical device/price point combination that mobile entertainment has questing after. Hopefully, publishers will agree, and begin to invest their resources accordingly.