Mobile Gaming, Licensing and Original IP

Last year was a great year for wireless in the United States: 2006 handset sales were strong, and consumer adoption of short message service (SMS) and other established and emerging services -- such as full track music download and mobile video -- grew incrementally. In fact, NPD’s consumer tracking service showed that new mobile phone sales reached 143 million. By the end of last year, nearly 75 percent of mobile subscribers used their phones for something other than making voice calls.

From a game content standpoint, 20 percent of mobile consumers played games on their handsets – a number that held steady throughout the year. Just over 3 percent of mobile phone owners downloaded a mobile game in Q2 2006, and that percentage increased only slightly to just shy of 4 percent by Q4 2006.

While consumer usage and the incidence of game download are important metrics to gauge the industry, revenue is probably a more accurate measure of market health. By that measure, the mobile game market is doing quite well. In Q4 2006 the industry took in nearly $107 million in mobile-game-related revenue. This data-service revenue was topped only by short message service (SMS) revenues, which reached $482 million for the quarter, and ringtone downloads, which reached $172 million.

In the past three quarters, the average sales price (ASP) for a mobile game download topped out at $3.79. It is important to remember that many games available for download are free, and when this factor is taken out of the equation, the ASP for games rose to $4.41.

The following chart shows the 10 top-selling games for the second half of 2006, by title, publisher, unit share, dollar share, and whether the games are licensed or original IP.

Game Publisher Unit
Tetris EA Mobile 9.3% 9.6% Licensed
Bejeweled EA Mobile 6.1% 7.0% Licensed
Tetris Deluxe EA Mobile 2.5% 2.8% Licensed
Pac-Man Namco Networks 2.3% 2.1% Original
Ms. Pac-Man Namco Networks 2.0% 2.0% Original
Diner Dash Glu Mobile 1.6% 1.7% Licensed
Zuma Glu Mobile 1.3% 1.3% Licensed
World Poker Tour Hands On Mobile 1.3% 1.4% Licensed
Monopoly Glu Mobile 1.1% 1.2% Licensed
Frogger Konami 1.0% 1.1% Original

When NPD reviewed the top-selling mobile game downloads, it became apparent that it was not whether the games are licensed or based on original intellectual property (IP) that made the games popular, but rather consumer brand awareness of the game title. In essence, the most popular games are also those that are available in other non-mobile formats, from which we can infer that it remains difficult for mobile game developers and publishers to gain consumer traction with mobile games that are limited to the wireless arena alone.

When all is said and done, mobile gaming will still be a significant revenue generator for some time to come. At this point, however, the most important purchase driver for any particular game is its popularity and name recognition outside the mobile realm.

- NPD's Wireless Research Team

© 2007 The NPD Group

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