Mobile gaming is a rapidly growing activity facilitated by affordable mobile devices. Countries like Japan and Korea have highly adopted mobile gaming. It is a major business opportunity for mobile operators who can generate revenue through downloads, subscriptions, and data traffic. Successful gaming requires engaging content from developers, attractive billing options, and building online communities.

1. S T R AT E G Y W H I T E PA P E R
Mobile Gaming:
Excitement on the Move
Mobile gaming is an exciting and rapidly
growing activity that is currently being facilitated
by various technologies and business models.
For the consumer, the abundance of affordable
terminals possessing colour screens and
operating systems that allow game downloading
opens up a whole new world of mobile gaming
excitement.
With countries in Asia such as Japan and Korea
already leading the world with a staggering
adoption of mobile gaming, the future
worldwide looks extremely promising. Success
can be achieved through the provisioning of a
game service utilising different technologies and
business models. Alcatel has the solutions for
mobile network operators to realise this
potential.

2. A. Moreau, J. C. Sanchez, H. Niu
MOBILE GAMING:
EXCITEMENT ON THE MOVE
Mobile gaming is one of the fastest growing and most exciting business
opportunities for mobile service providers.
Introduction Differences between mobile and fixed gaming
Mobile gaming is a nascent technology, but one that is There are three main differences between mobile
currently experiencing rapid growth as a result of the gaming and fixed gaming:
recent introduction of mobile terminals with color screens
and operating systems that support the downloading of • Mobile network operators inherently have better
games. However, what exactly is mobile gaming? Surely it access to and control over their subscribers.
has been possible for a long time to play games on small, Consequently, they are in an ideal position to
portable “mobile” handheld gaming consoles? provide network gaming services, such as location
In order to understand the different gaming and subscriber presence, that enhance the
technologies, we first separate wireless gaming important community aspects of gaming.
technologies from fixed technologies. The latter typically • Extra revenue can be generated by a mobile
include games played on Personal Computers (PC), network operator from the traffic involved both in
television set top boxes, and dedicated gaming consoles, downloading and playing the game, as opposed to
such as Microsoft’s Xbox and Sony’s PlayStation. Wireless receiving just a flat fee.
gaming refers primarily to games played on mobile • The increasing importance of downloadable games
networked or portable handsets (see Table 1). means that mobile network operators are playing a
more important role in
distributing such games by, for
Tab. 1 Wireless gaming technologies example, providing a client-server
Mobile-Networked connection to download Java
archive and descriptor files.
Not downloaded
Portable
Downloaded Network hosted
Handset hosted
Wireless Gaming
Streaming Message based Technologies
Downloaded Network hosted Network hosted Embedded
Mobile-networked handsets, such
Multi-Player
multi- player streaming multi- message based multi-player as mobile phones, smartphones, and
online games, player games, e.g. multi-player online games, Personal Digital Assistants (PDA),
e.g. TibiaME Picofun soccer games, e.g. e.g. Pathway
Atomic Dove to Glory usually include a mobile network
Online
connection. Portable devices, on the
other hand, do not have a network
Single player
Downloaded Network hosted Network hosted Embedded
single player streaming single message based single player connection, but may be connected to
online games, player games, games played online games,
e.g. Ultima e.g. face to face alone, e.g. e.g. Galaxa
other devices via an ad hoc network,
Online animation Wireless Pets such as a Bluetooth or Wireless
Local Area Network (WLAN), giving
Downloaded Embedded Portable multi- the user multi-player capability. The
games played games played player games
Multi-Player
on ad-hoc on ad-hoc played on portable gaming market is
network, e.g. network, e.g. ad-hoc network, dominated by Nintendo, which has a
MotoGP Splinter Cell e.g. GameBoy
Offline
14 year history in this market. The
Advance (with
Bluetooth) range company has a large installed base,
but is experiencing slow growth. It is
Single player
Downloaded Embedded Portable games a market with a narrow demographic
games played games played played alone,
alone, e.g. alone, e.g. e.g. GameBoy
profile focus, being young and
Tetris Snake range sophisticated. Table 2 summarizes
the portable device market [1].
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3. MOBILE GAMING: EXCITEMENT ON THE MOVE
The mobile-networked gaming market, on the other content, or message based for simple Short
hand, has a mass market demographic profile of all ages, Message Service (SMS) types of game.
and is currently growing strongly from a small installed
base. Figure 1 reflects the worldwide growth potential Game genres include action, adventure, classic,
for gaming revenues in terms of the revenues generated educational, First Person Shooters (FPS), flight
from airtime charges, service subscriptions and download simulation, racing, real-time strategy, Role Playing Games
purchases [2]. (RPG), shoot-em-ups, space simulations, sports and
strategy.
Tab. 2 Total sales in the portable device market Successful Gaming Markets
(Source: Games Analyst) While mobile-networked gaming exists in the advanced
Machine Date released Units (mil.) mobile markets, like Western Europe, it has grown
Nintendo Game Boy (including Color) Apr-89 119.0 massively in two distinct Asian markets.
Nintendo Game Boy Advance Mar-01 33.8 Korea and Japan are currently considered as the most
Sega Game Gear Oct-90 12.0 advanced markets for mobile application usage, and users
Atari Lynx Jun-89 5.0 have adopted mobile-networked games as one of their
Bandai WonderSwan Dec-00 2.0 top five applications. The Korean mobile-networked
Neo Geo Pocket Fall 1998 0.4 gaming market reached US$ 85 million (100 billion Won)
Game Park GP32 Nov-01 0.1 in 2002, including airtime charges, service subscriptions
and download purchases. This represented an increase
from 4.4% in 2001 to 6.9% of the total mobile-networked
Fig. 1 Projected mobile-networked gaming gaming market [3]. Estimates for 2003 and 2007 are
revenues up to 2007 (Source: ARC Group) US$ 180 million and US$ 470 million, respectively [4].
In China, the world’s largest single mobile service
$m
market, the three most popular SMS applications are
$5,000
gaming, ringtone and character downloads, and news and
M p
Multi-platform/ information subscriptions. In 2002, these services
$4,000 networked
Downloads contributed about 4% of total mobile revenue,
$3,000
Messaging based representing approximately 15 billion sent messages.
SIM/embedded The success of SMS games may be attributed to their
$2,000 lower prices and minimal handset requirements.
Nevertheless, the Chinese mobile-networked gaming
$1,000 market is shifting from SMS games to richer games based
on Java and Qualcomm’s Binary Runtime Environment
$0 for Wireless (BREW) technologies. BREW is used
2002 2003 2004 2005 2006 2007
primarily on Code Division Multiple Access (CDMA)
networks.
The markets for portable and mobile-networked gaming Market Factors Driving Gaming
are expected to develop separately for at least the next Classical fixed game developers who have considerable
five years. expertise in the traditional games industry are again
There are several possibilities for games played on a offering the most attractive content. Using the improved
mobile-networked device: capabilities of today’s handsets and networks, games
developers can now reproduce the experience players
• Game can be downloaded over the operator’s have become used to on fixed consoles and computers.
network, or embedded as part of the device’s Namco is claiming to have performed the most ambitious
preloaded software. mobile game adaptation from its best selling PlayStation
• Online or offline, with online games requiring a car racing game “Ridge Racer”; J-phone users can enjoy
network connection during play. the same game play and full 3D motion on their mobile
• Single player games, or multi-player games devices.
involving players from other mobile access devices, The success of mobile-networked games in Korea and
or even players from the fixed access gaming Japan can be attributed to the strong gaming culture in
world. Multi-player games can also be played offline these two countries. At the same time, this success is also
via an ad hoc network, such as Bluetooth or WLAN. in line with the national usage share of mobile
• Games can be hosted on a server to provide applications. For example, downloadable applications,
streaming games with enhanced audio and visual such as mobile karaoke, are proving a real success with
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4. MOBILE GAMING: EXCITEMENT ON THE MOVE
Asian people, who are fond of singing their favorite songs Technical trends, such as migration to the Universal
in front of a screen. Historically, the Japanese have always Mobile Telecommunications System (UMTS), CDMA, Java
been enthusiastic about arcade and console games. and BREW, have also played a role.
In the meantime, Korea has also developed a strong Revenue-sharing models that provide developers with a
enthusiasm for online PC games. It is the same experienced high share of the revenues have also been a key factor in
actors in this established industry that have created the encouraging experienced gaming companies to extend
“extension to mobile”, leveraging existing market factors, into the mobile arena.
such as user demand, branding, license recognition and an
established non-mobile gaming environment. Mobile-networked Gaming Economics:
The successful launch of mobile data networks by Value Chain
operators in northern Asia has also contributed to the Mobile-networked gaming represents a significant
success of gaming, which is only one of the many business opportunity for all the players involved.
possibilities offered by mobiles. While developers in other However, the associated business models vary depending
countries have to face the challenge of adapting games for on the games.
each type of device on the market, phone subsidizing and Figure 2 outlines the value chain related to delivering
branding in Japan and Korea have helped to ease both games that are downloaded to mobile terminals. While the
games development and service adoption by users. value chain is fairly straightforward, the business model
Operators in Korea and Japan have exerted a lot of and actors involved will depend on which player “owns”
influence on the interfaces and outputs of mobile devices, the user (i.e. who provides access to game services,
and have provided manufacturers with strict definitions of billing and customer service).
the specifications they will accept. This has considerably Aside from the Mobile Service Provider (MSP), who is
eased the job of the games developer in these markets. In the traditional supplier of services to mobile users, at
the more fragmented General Packet Radio Service least two other types of “retailers” have emerged in the
(GPRS) handset market, a developer or operator is faced gaming arena:
with the need to customize the application according to
the implementations of the standard by different handset • Games developers, such as Game Loft and THQ, are
makers. leveraging their established branding via the web to
Unlike Korea and Japan, Chinese operators have almost complement their existing indirect marketing
no control over handsets, and are not able to subsidize channels, and are selling directly to the gaming
handsets significantly because of the low Average community.
Revenue Per User (ARPU). However, mobile-networked • Entertainment portals, such as Zingy,
gaming is still taking off for other reasons: myphonegames.co.uk, and Kiwee, have emerged.
These are primarily “e-tailers”, aggregating a range
• Huge mobile user base: 240 million in mid 2003. of existing games (licensed from the developers),
• Social context which means that people have long which they then distribute to users via the fixed or
commuting times during which they can play mobile Internet. Their core competencies are in
games. the area of branding (i.e. creating brand
• Large number of innovative service providers and recognition and association) and assuring
ambitious operators. customer service.
Fig. 2 Mobile-networked gaming value chain
MSPs
Billing Co.
SW Client
Game ASP Supply
Entertainment Portal Handset
Supply
Game Developers
Supply Platform
License Develop Animate Service Service Customer
Content Games Aggregate Operate Community Access Billing Service
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5. MOBILE GAMING: EXCITEMENT ON THE MOVE
In the absence of widespread e/m-commerce the players involved while reflecting their cost structures.
facilitators, such as PayPal, both of these players Figure 3 illustrates a typical revenue sharing scenario
currently rely on existing credit card companies or between the mobile operator and games provider for
telecommunication operators (fixed and mobile, using downloading a game (game price $3) and unlocking the
premium charge numbers or premium SMS) to bill for next level for further game play (price $1).
services. As the mobile-networked gaming market continues to
However, the mobile operator is well placed to play a develop, driven by richer and more diverse games and a
broader role in the mobile-networked gaming value chain. wider range of compatible terminals, the business
By combining their established customer relationship opportunities will multiply.
(including service access, billing and customer service)
with a back-end operating role (games aggregation, Mobile-networked Gaming Evolution
platform operation and, in some cases, the animation or If mobile operators are to continue to add value to this
stimulation of extra revenues through additional features service, and avoid simply becoming a data transport pipe,
and services), they can reap the rewards of having they will need to provide service enhancements linking
greater control over the value chain. In this case, the the gaming experience with the user’s personal service
main operating expenses are related to the payment for environment. The following domains have the potential
third-party games, licensed once again from developers. for further gaming evolution:
Vodafone (via its joint venture Vizzavi), Sonera (via
subsidiary Zed) and SK Telecom (South Korea) are • Flexible billing options:
examples of this type of advanced mobile operator. - Differentiated service charging: the ability to
However, some MSPs are unwilling to take on an charge for game play based on session time,
operating role, preferring to outsource the service to validity period, etc, with different rates according
specialized games Application Service Providers (ASP). to the time of day, date and player profile.
While the games ASP aggregates and operates the gaming - Provision of playing bonuses and rewards: free
service, its core competency has become the animation of game levels, bonus calling minutes, etc.
the gaming business through targeted campaigns (using • Gamer communities and communication:
customer data mining), posting of high scores, unlocking - Defining and managing gamer groups: subscribe
new game levels and other techniques to incite further to a closed game community, complete with
interest in game playing and thereby generate increased forums and newsletters accessible via the
revenue. In-Fusio and Zed are typical games service Internet.
providers. - Presence information for communities: see which
members of your game community are physically
Revenue Sharing available to play the game, and seamlessly invite
When the mobile operator outsources its gaming them to participate at the click of a button.
operations to a specialist games ASP, it will need to - Enabling communication between players: allows
develop a revenue-sharing model that is equitable for all gamers to chat before, during and after a game
using a variety of integrated
communication means, such as
Fig. 3 Typical revenue sharing model SMS, Multimedia Messaging
Service (MMS) and instant
Game Download Unlocking new level messaging. This adds a personal
(Using premium SMS) aspect to multi-player gaming.
• Location awareness:
8% Hosting Content - Location–dependent presence:
45% 50% Provider/Hoster
37% Content Provider allows players to find nearby
Operator gamers, providing a more
28% Operator Share
55% of Premium Fee 50% exciting and interactive game
27% session.
Airtime
- Location-aware games: integrate
player’s local environment with
Game Download Unlocking Game Level the game. Such features provide
Price for User = $ 3.00 Price for User = $ 1.00 a new dimension to the gaming
Operator’s Revenue = $ 1.65 $ 0.15 (SMS send)+ $ 0.85 (premium SMS service) experience.
Game Provider’s Revenue = $ 1.35
Operator’s Revenue = $ 0.575 (0.15 + 0.425)
Providing these types of features
Game Provider’s Revenue = $ 0.425
requires increased cooperation
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6. MOBILE GAMING: EXCITEMENT ON THE MOVE
between developers, network solution suppliers and Fig. 4 Alcatel’s Scalextric demonstration at CeBit:
service operators to develop games that implement the (Left) real car track, and (right) virtual
required integration between application and network car track
environment. However, if they are to be widely accepted,
enhancements like these need to offer real value for
gamers, to be user friendly, and to be based on business
models that are fair for all those involved.
This will be made possible by various platforms
covering aspects like service access control, billing and
customer care, communication services (i.e. SMS, MMS,
instant messaging, and instant voice), and online
communities with presence or even location information
[5,6]. Alcatel’s application platforms support all these
domains; as a result, Alcatel is currently playing a leading
role in this field. Real Car Track Virtual Car Track
Alcatel’s Current Initiatives
Fig. 5 Game playing on
Alcatel is actively involved in the mobile-networked Adelaide (Australia),
an Alcatel One
gaming arena through a number of initiatives: Shanghai (China),
Touch 735
Taipei (Taiwan),
• 3GSM World Congress, Cannes, 2001: Alcatel Kuala Lumpur
provided the world’s first demonstration of a two- (Malaysia), Milan
player, real-time interactive online game over a (Italy), Lisbon
UMTS network using “Galleon”, a pirate action game. (Portugal), Paris
• CeBit, Hanover, 2002: Alcatel demonstrated (France), Malmö
“Scalextric”, a real-time interactive virtual/real car (Sweden), Rijswijk
racing game (see Figure 4) played over a UMTS (Netherlands), and
network which provided the necessary real-time Stüttgart (Germany).
multiplayer interactivity and quick response times. Other centers are planned in the near future for
• Worldwide, 2002: Alcatel teamed up with In-Fusio Tokyo (Japan), Seoul (South Korea), London (UK),
to provide a pre-packaged, ready for market, Sao Paulo (Brazil) and Plano (USA).
downloadable gaming service on the Alcatel 535
and 735 handsets. Coupling In-Fusio’s extensive Fig. 6 Alcatel/BeTomorrow games optimized
games catalog and know-how with the ease of use for UMTS terminals
and style of Alcatel’s mobile phones has enabled
Alcatel to make a bold entry into the expanding
world of downloadable gaming (see Figure 5).
• Western Europe, Asia Pacific, Americas since
2002: With its 3rd Generation Reality Centre (3GRC)
program, Alcatel has created a live and
comprehensive end-to-end environment (2.5G,
Enhanced Data rate for GSM Evolution or EDGE,
3G) for the development, validation and testing of Brick Smasher Stacker Super Tank
advanced mobile applications and data services,
including games. External partners, including local
content and applications providers, as well as other • Europe, 2003: In conjunction with BeTomorrow,
handset suppliers, are invited to contribute. In the Alcatel has implemented a number of online and
gaming domain, the 3GRC is used for interoperability offline games developed and optimized specifically
testing, ensuring and validating that gaming services for UMTS terminals. This was done within the
work as expected on terminals from different scope of a 3G trial (providing the required real-time
vendors. In certain cases, it is used for prototyping multiplayer interactivity) with leading international
(e.g. with games developer BeTomorrow) new mobile operator Orange [5]. Games include Brick
mobile-enabled games. Finally, through the Smasher (an offline shooting game), Stacker (an
partnership program, Alcatel is able to tap into the on/offline strategy puzzle), and Super Tank (an
innovation of local gaming content and application online 3D graphics combat/action game), as shown
developers. Such centers are already operational in in Figure 6.
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7. MOBILE GAMING: EXCITEMENT ON THE MOVE
• Worldwide, 2004: As part of its new mobile phone
range with the 536 and 736 handsets, Alcatel is
ensuring an exciting gaming experience by
supporting the Java Mobile Information Device
Profile (MIDP) 2.0. These capabilities will enable Innovative programs like the 3GRC are bringing gaming
users to play a wider range of games with rich 3D content and application developers into an end-to-end
color graphics and increased interactivity. Coupled solution that can be created and tested in a live environment.
with other mobile services that Alcatel is Alcatel’s advanced terminals are also helping to deliver a
developing [6], such as MMS, instant messaging, richer and more enjoyable gaming experience for users, while
push-to-talk, presence, and location, and supported ensuring compatibility with ongoing market developments.
by our extensive portfolio of flexible charging Through selected strategic partnerships and field trials,
products, mobile operators will benefit by being Alcatel is ensuring that these solutions help drive the
able to offer a wider range of games titles, allowing popularity and global acceptance of mobile-networked
them to address broader market segments and gaming, while ensuring that these services are profitable
helping to ensure profitability. for the mobile operator and other key players.
Conclusion References
Mobile-networked gaming has quickly become a key [1] “Games Analyst”, volume 2, no 13, 11th July 2003.
business focus for mobile operators worldwide. Various [2] “Mobile Games - Expanding Roles and Revenue
business models exist, each of which provides distinct Opportunities”, Worldwide Market Analysis & Strategic
advantages for the operator and the other key players Outlook 2002-2007, ARC Group, November 2002.
involved. [3] “Mobile Gaming Market Structure”, iPark Beijing, China-
Numerous technologies can help deliver a profitable Korea Value Added Service Seminar, 20th June 2003.
gaming service. With this in mind, Alcatel is currently [4] “Mobile Gaming Forecast in Korea”, Marketing Research
offering mobile network operators solutions that will Institute, Chinese Ministry for the Information Industry, 8th
enable them to realize their current business August 2003.
opportunities, while actively developing solutions that will [5] S. Wolfe, S. Robinson: “Offering the Town … Orange 3G
address the challenges of tomorrow’s mobile-networked Services!”, Alcatel Telecommunications Review, 4th Quarter
gaming market. These solutions include flexible charging 2003 /1st Quarter 2004, pp 31-33 (this issue).
and billing options, support for messaging services and [6] J. Tessot: “Instant Messaging”, Alcatel Telecommunications
presence information to support communities, as well as Review, 4th Quarter 2003 / 1st Quarter 2004, pp 34-38
location-aware games facilities. (this issue).
André Moreau is a research engineer in the Mobile Huarong Niu is Application Domain Manager,
Strategy Project of the Network Strategy Group, Network Strategy Group, Shanghai, China
Antwerp, Belgium (andre.moreau@alcatel.be) (huarong.niu@alcatel-sbell.com.cn)
Juan Carlos Sanchez is Senior Business Consultant
within Solutions Marketing, Mobile Services Division,
Vélizy, France. (juan-carlos.sanchez@alcatel.fr)
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8. MOBILE GAMING: EXCITEMENT ON THE MOVE
Abbreviations
2.5G 2nd and a half Generation mobile / GPRS
3G 3rd Generation mobile / UMTS
3GRC 3G Reality Center
ARPU Average Revenue Per User
ASP Application Service Provider
BREW Binary Runtime Environment for Wireless
CDMA Code Division Multiple Access
EDGE Enhanced Data rate for GSM evolution
FPS First Person Shooter
GPRS General Packet Radio Service
GSM Global System for Mobile communication
IM Instant Messaging
MIDP Mobile Information Device Profile
MII f Information Industry
MMS Multimedia Messaging Service
MSP Mobile Service Provider
PC Personal Computer
PDC Personal Digital Cellular
RPG Role Playing Game
SIM Subscriber Identification Module
SMS Short Message Service
SP Service Provider
UMTS Universal Mobile Telecommunications System
WIPI Wireless Internet Protocol for Interoperability
WLAN Wireless Local Area Network
8 | Alcatel Telecommunications Review - 4 th Quarter 2003/1 st Quarter 2004

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