One of the hottest-selling video games today doesn't feature photorealistic graphics, multiple plotlines or a Hollywood cast of characters.
It's "Tetris," an old-fashioned puzzle game that has sold more than 2 million copies via downloads on cellphones.
"The industry is still very small but it's growing exponentially," said Mitch Lasky, chief executive of Jamdat Mobile Inc., a Los Angeles cellphone game publisher that recently spent $137 million to acquire Blue Lava Wireless, which owned the rights to sell Tetris on cellphones.
Jupiter Research estimates that U.S. sales of cellphone games will grow from just $72 million in 2004 to $430 million in 2009. IDC, which pegged sales at $345 million last year, projected that the figure would top $1.5 billion by 2008.
"While it's still a very young market, it's growing rapidly," said Julie Ask, an analyst at Jupiter Research. "It's tripled from 2003 to 2004, and we expect it to at least double this year."
Although mobile phone game revenue is tiny compared with the $10-billion U.S. game industry, wireless carriers and game publishers are turning to titles for phones to eke out extra income and inject growth. Sprint Corp., for example, now carries 200 downloadable games, up from 35 in 2002 when the cellphone company began offering games.
The games sell for about $4 to $10 a pop. Subscribers can also pay monthly fees of about $3 a title.
Game publishers are attracted by the hundreds of millions of people with cellphones who might turn on a game to while away some downtime.
"There are more cellphones than desktop computers," said Greg Ballard, chief executive of Sorrent Inc. in San Mateo. "That represents a huge market opportunity."
It's that potential that has attracted a number of traditional video game publishers to the field, including THQ Inc., Electronic Arts Inc., Konami Digital Entertainment, Square Enix Co., Sega Corp. and Bandai Games.
Cellphone games have come a long way from the days of "Snake," a simple game Nokia embedded in its cellphones in 1997.
Thanks to handsets with larger color screens, faster chips and longer-lasting batteries, publishers can serve up a wider menu of games, from simple titles such as "Frogger" to complex three-dimensional action adventure games that can take dozens of hours to complete, such as "Tom Clancy's Splinter Cell: Pandora Tomorrow."
For all their technological progress, however, mobile phone games face considerable hurdles before they gain a mainstream audience.
The largest of these impediments is the cost of ensuring that games can be played on dozens, or hundreds, of different handsets. Such costs can eat up 30% to 50% of publishers' average budget of $150,000 a game.
"It's by far the worst barrier," said Gilles Raymond, co-chief executive of In-Fusio, a French mobile game publisher. "There are about 120 handsets in the world today. By the end of the year, there are going to be more than 200. Multiply that by six languages and you're looking at 1,000-plus versions for a single game."
Handset manufacturers have little desire to standardize, said Tim Walsh, president of THQ Wireless.
"We have an industry driven by technology, which is all about new features," Walsh said. "That's great for technology, but a headache for those who sell entertainment. For us, we need stability and standards. And that just isn't there."
That's changing, carriers say.
To ease the burden of working across multiple handsets, Sprint Corp. last fall asked manufacturers to include a new chip technology that creates a common platform across future handsets. By the end of the year, five of the carrier's 35 handsets capable of playing games will have the platform, said Jason Ford, Sprint's general manager of mobile games.
Even though games, ring tones, messaging and other data services make up just 5% of U.S. carriers' revenue, Sprint has an incentive to do what it can to ensure people can easily play games on their cellphones, said Ask of Jupiter. That's because carriers typically take a 30% cut of game sales and see the revenue as a way to boost their subscribers' average monthly payments.
Still, other obstacles remain for the nascent mobile games business.
Most people, for example, don't turn to their cellphones for anything else but calls. For many who buy a game, it's a one-time deal.
In a Jupiter Research survey of 2,129 wireless subscribers in December, 7% said they paid for a cellphone game in the previous six months, compared with 15% who said they bought a ring tone. Of those who sprang for a game, only 2% said they bought more than one title. Asked to choose from a list of a dozen features they'd like to see in their next phone, the ability to play games ranked last.
"Phones are still about voice" calls, Ask said.
That's reflected in the design of cellphones, said Schelley Olhava, an analyst at IDC. "The buttons are awkward," Olhava said. "The screens are small. And the sound isn't that great."
Finally, navigating the menus to browse through hundreds of titles is cumbersome, said Robert Tercek, chief marketing officer of Mforma Group Inc., a Bellevue, Wash., mobile games publisher.
"It's just too darn difficult to find these services on a mobile phone," Tercek said. "It's suboptimal, and we all have to work together to make it more fun and entertaining because we want to cajole people to come back. We're just beginning to learn how to do that. It's a big new playground."
Cellphone Game Industry Is Poised to Ring Up Big Sales
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