Phones Could Be Open

One of the risks JAMDAT has identified is that phones could be more open in the future: They may be able to access Web pages. They might have Flash or full Java VMs, in addition to HTML browsers. They might be able to run applications that don’t originate in network operators’ walled-garden portals.

This one is actually a substantial risk for the entire mobile games industry. JAMDAT lists this as a risk among other risks that can be easily dismissed. And, of course, an S-1 filing has no requirement that every risk has a response. Openness is, however, the bear in the woods: Walled-garden portals and locked-down application execution environments mean that mobile application publishers can charge the full amount of the mobile premium – the amount people are willing to pay to take an application mobile. Many mobile games would be the equivalent of ad-supported games on the Web, and if the Web and its application execution environments appear in mobile handsets, that will be the end of Web shovelware commanding a price that is a high multiple of ad revenue.

The good news (if you are on the selling side) is that open handsets won’t be here soon, and they won’t be cheap. Network operators like their walled gardens, and will defend them. However, in three or four years, the walled garden may be under siege. At that point, mobile game publishers will have to have games that merit a price not just because alternatives are locked out.