Games Mean Big Bucks

SAN JOSE -- With mobile voice services becoming increasingly commoditized, network operators are turning to mobile data-related offerings to boost falling revenues. Gaming will be a key part of that strategy.

By attracting a huge pool of customers and driving up network traffic, gaming promises to raise profits and should become a mainstay of operators' plans.

New analysis from Frost & Sullivan, World Mobile Gaming Markets, reveals that this industry generated revenues totaling $436.4 million in 2001. Steady growth for messaging-based, web-based and downloadable mobile gaming could push total revenues to $9.34 billion in 2008.

Before this sector can realize its full potential, market participants will have to implement micro-billing systems. As consumers are apprehensive about making over-the-air payments with credit cards for mobile services, network operators will need to use billing-on-behalf-of-others (BOBO) techniques to collect revenues for content providers.

"Most network operators in North America and Europe will have to work hard to implement micro-billing systems for third-party content," says Frost & Sullivan Research Analyst Kshitij Moghe. "Although they recognize the importance of the BOBO model, few had the mechanism in place at the end of 2001."

Until these secure systems are installed, consumers are likely to stay away from mobile gaming. Naturally, operators will have to convince them to pay to play.

"Network operators will face an uphill challenge in getting consumers to pay for premium mobile content such as games," says Moghe. "The Internet model of free content has become well engraved in consumer attitudes, especially in North America."

Frost & Sullivan