Mobile Gaming Revenue Falls in Q2

El Segundo, Calif. -- The mobile-gaming market suffered a reversal of fortune in the second quarter of 2007 as revenues for title publishers declined by 9 percent sequentially, compared with 11 percent growth in the first quarter, according to iSuppli Corp.

"While growth compared to the same period a year earlier was slightly positive, the second quarter dealt a significant blow to manufacturers that were expecting their profits to continue to rise," said David Carnevale, vice president, multimedia content and distribution

for iSuppli. "While the third quarter performance and the fourth quarter outlook appear optimistic, the pace of growth is slowing, causing great concern to content providers hoping to cash in on this market."

One of the main problems is that number of subscribers for mobile games remains quite small. Game publishers' and developers' moves to broaden the awareness of mobile games will help build the subscriber base-but only if they target the right demographic. In the coming months, expect to see game innovators focusing on characteristics that separate mobile gaming from other types of gaming, including:

*Mobility
*Connectivity
*Community
*Location awareness

Because the current crop of mobile games is centered on casual players, one way to encourage a new demographic to play games on their mobile handsets would be to develop titles that support networked and/or multiplayer gaming. Allowing other users to play against and with their friends via wireless networks will encourage groups of gamers to adopt the platform quicker. These types of games also could reduce the churn-and-burn effect among targeted subscribers, an area of particular concern and importance for operators.

Despite the short-term setback, mobile gaming revenue is expected to nearly triple by 2011, growing to $6.6 billion, managing a Compound Annual Growth Rate (CAGR) of 23.2 percent from $2.3 billion in 2006.

Figure 1 attached presents iSuppli's forecast for worldwide mobile-gaming revenue for the period of 2006 through 2011.

Watching mobile video

With some uncertainty associated with mobile gaming, operators and
content providers instead are turning to the mobile-video market. While still in its early stages, mobile-video holds the most upside potential among the premium content categories.

Most of the early mobile-video deployments are coming from operators that are streaming video over their networks. Mobile television services are debuting simultaneously worldwide and consumer acceptance has been most prolific in Japan and Korea. Notably, MobiTV announced that by February of this year their subscribers topped 2 million
worldwide.

Mobile TV is a catalyst for the expansion of the mobile video market. As mobile TV services continue to garner subscribers, other services such as Video on Demand (VoD) and interactive viewing become more appealing to consumers.

Mobile-video operators are expecting big things from this market. iSuppli forecasts mobile-video revenue will reach $14.6 billion by 2011, rising at a whopping CAGR of 71.7 percent from $977 million in 2006.

Figure 2 attached presents iSuppli's forecast for the worldwide mobile-video market for the period of 2006 through 2011.

While significant barriers remain-including content availability, spectrum accessibility and uncertain business models-the earlier these obstacles are breached, the faster this segment can become the largest mobile content opportunity for operators and content providers.

Find out more about the mobile gaming and mobile music markets with Carnevale's latest report: Mobile Gaming and Music Growth Slows; Companies Look to Video. For more information about this report, please visit, http://www.isuppli.com/catalog/detail.asp?id=8981

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iSuppli range from electronic component research to device-specific application market forecasts, from teardown analysis to consumer electronics and from display device and systems research to multimedia content and services. More information is available at www.isuppli.com

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