Thursday, November 04, 2004

Conclusion #2: Passive Media Pave the Way

Only a miniscule minority of mobile handset users play games. JAMDAT can reach 850 million potential customers today. If they sell $40M worth of games in 2004, they will have reached 5-7M individual customers – about 0.75% of the total available market.

There are two ways to interpret this number:
  • One way to look at it is to see upside in the current low penetration rate. JAMDAT could grow twenty-fold, or even forty-fold, to revenues over $1billion, based solely on today’s-technology today’s-price mobile games.

  • Another way to look at it is to see lack of uptake, awareness, and/or acceptance of mobile games as entertainment.
Two billion people, and likely more, will have mobile handsets, almost all of them capable of playing mobile games, within the timeframe for mobile game publishing investments to realize their potential. There are two facts that make mobile handsets particularly interesting as an entertainment medium:
  • They are the one device that will be carried at almost all times by every human that can afford one.

  • They can connect to the Internet from any point on the planet those humans are likely to be.

These two facts taken together: universality and pervasive connectivity, mean that mobile handsets can become a more powerful entertainment medium than terrestrial and satellite television. A company that establishes a dominant, or even a long-term viable, position in a business that could become that large will be very valuable. But only if people actually begin to see their mobile phone as an entertainment medium.

One possible outcome is that the problem of awareness of mobile games is solved by passive media, such as music, paving the way for universal awareness of mobile content and commerce. This could also have a positive effect on prices: MMO players see their $10-$20 per month subscriptions as a good value compared to cable TV.

There is good evidence for passive media paving the way for mobile interactive media in developments such as Qualcomm’s FLO technology. Passive media have the advantage of a readily adaptable backlist and large sources of new content, and passive media are easier to understand. There is nothing wrong with the continued viability of ring-tones as a business, particularly if it leads to mobile phones becoming competitors to broadcast radio and television media. Such developments can only cement the place of the mobile handset as the “fourth screen.”

When will mobile interactive media emerge to challenge passive media, as MMOs challenge TV at home? At least one uniquely mobile type of game product will have to emerge. More likely, there will be, in a large, mature mobile entertainment market, a set of several genres and types, each with a distinct audience, and value that supports pricing comparable to – for example – an XM Radio subscription.

Just as videogame history was replayed at high speed in the early development of mobile games, so will be the relationship of passive and active media that emerged in the development of the Internet.


Post a Comment

<< Home