Mobile gaming to bring windfall
By Zhu Boru (China Business Weekly)
Updated: 2004-05-27 09:04

Mobile gaming, an emerging business in China, is expected to become the most important source of revenue for telecoms carriers and service providers (SPs) among all value-added services, according to analysts.

"Mobile gaming is not the biggest contributor to revenues for carriers and SPs yet, but compared with other value-added telecoms services, it has the largest potential," Huang Jiali, said an analyst with Analysys Consulting.

Analysys Consulting is a leading domestic IT research firm.

Although SMS, or short messaging service, remains the dominant source of revenue, the market will grow less rapidly in coming few years, as it has already expanded considerably, said Huang.

Recent financial reports of four major domestic portal websites, including www.sina.com and www.sohu.com, show that their SMS revenues have achieved only one-digit growth or even negative growth, since late last year.

Meanwhile, revenues generated from MMS, or multi-messaging service, have been growing steadily rather than rapidly, due to the higher fees and relatively complicated downloading process, she said.

Mobile gaming, however, has grown rapidly since September, when China Mobile launched its "Treasury Box," which offers mobile gaming services.

In "Treasury Box", users of GPRS-functioned (general packet radio service) handsets can download games from the Internet.

It is estimated that the number of mobile gaming users reached 2 million earlier this year.

According to the latest Analysys report, the domestic mobile gaming market will be valued at 550 million yuan (US$66.27 million) by the end of this year.

Lured by the huge market potential, domestic content providers (CPs) and SPs, including those which are successful in developing online PC games, have set up special teams for developing mobile games, said Huang.

Shanghai-based Shanda Networking, China's No 1 SP of online PC games, has invested heavily into mobile gaming and vowed to become the top player in the field, she said.

MTone Wireless, a domestic SP of wireless interactive entertainment, expects to launch a mobile game soon through co-operation with a world-leading handset maker.

"It will be the world's first large mobile game based on wireless JAVA technology," Victor Wang, MTone's president and chief executive officer, told China Business Weekly.

JAVA, a programming language, is widely considered the most promising technology in developing mobile games, as it provides better video and audio, and costs little when applied to handsets. "Treasury Box" also requires JAVA-supporting handsets.

According to Wang, the new game will be installed on the chip of a certain model of handset, and owners of the handset are able to play the game without downloading.

Wang declined to elaborate on the partner, but said it was one of the world's top three handset makers.

However, the fast-growing mobile gaming market is being challenged by the limited number of handsets available, unitary charging and poor quality games, said Huang.

Despite the huge number of handset users in China -- 269 million by the end of last year, only about 10 million of their handsets are able to run mobile games by supporting technologies such as GPRS, WAP, JAVA or BREW, she explained.

Those games-enabled handsets are medium and high-end handsets which youngsters, the majority of the gamers, cannot afford, added Huang.

Meanwhile, SPs and carriers need to find different charging methods for mobile gaming, she suggests.

Currently, there are only two charging methods.

Users are charged based on how many times they download a game and the time they spend playing it, but that is far from satisfactory for users with diversified needs, said Huang.

In addition, most SPs and CPs are not able to invest heavily in producing high quality games -- due to the weak financial positions -- and second rate games will not attract users who are used to top online PC games, she said.

According to international research house Frost&Sullivan, the global mobile gaming sector will be worth of US$4.4 billion by the end of 2006.

Asian countries, mainly China, South Korea and Japan, have a bigger potential compared with Europe and the United States.

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