Mobile-Game Sales Rising, But New Content Threatens Growth

Digital games are ringing up solid increases in sales on mobile phones in the U.S., but face rising competition from emerging content like video and full-track music, according to a report released on Monday. Games sold on mobile operators' portals reached $151 million in revenue in the fourth quarter of 2006, a healthy 61% increase over the year-ago period. These portals, or digital stores operated by the wireless carriers, accounted for 74% of game sales, with off-portal sales from distributors' own sites accounting for the balance, leading to the conclusion that total U.S. mobile-game sales topped $200 million in the quarter. The number of persons downloading games came to 17.4 million in the quarter, up 45% over the fourth quarter of 2005, according to Telephia Inc., a San Francisco-based researcher. Customers for these games turn out to be a mixed bunch, defying the stereotype that the bulk of buyers are young men. In fact, women buy 65% of all mobile games, the report says. Persons aged 25 to 36 account for 40% of sales. But the digital games business may soon face competition from other content, Telephia says. “The industry is faced with a new challenge in order to sustain its growth,” said Kanishka Agarwal, vice president of mobile content at the research firm, in a statement. “Several new mobile-content services such as mobile video and full-track music are competing for the mobile consumer's attention and wallet.” To get ahead of competitors, the firm says, some game publishers have begun to preload their product on handsets, so that game demos are ready to use when the consumer buys the phone.