M:Metrics: What Ails the Mobile Games Industry?

Consumers Bemoan Selection, and Pricing, M:Metrics Prescribes More Effective Marketing and Merchandising

With E3 on the horizon, mobile gaming finds itself in the spotlight, with even Paris Hilton getting into the game. But despite Hilton's proclamation that, "Mobile gaming is hot right now," the audience for downloaded mobile games is stagnating.

M:Metrics, the mobile market authority, has found that pricing, choice and lack of interest were the top reasons cited by players of downloaded games in the U.S., U.K. and Germany as the reasons they did not buy another game in the month of March.

M:Metrics found that 4.2 percent of U.K., 2.5 percent of German and 2.7 percent of U.S. mobile subscribers downloaded a game in March, a figure that has remained relatively constant month over month across all geographies. The firm's findings suggest that games purchases are directly tied to handset purchases, and fluctuate in relation to the device sales cycle. A significant portion -- as much as 30 percent -- of those who downloaded games in the month were first-time game downloaders. The rate at which new subscribers are being drawn into the market is relatively low, with between 0.5 percent and 0.8 percent of mobile subscribers downloading their first mobile game in the month. The level of repeat purchase is between 20 percent and 30 percent of the universe of downloaded games players.

Mobile Games Consumption: March 2006

                      Percent              Percent               Percent
             Germany   German      U.K.      U.K.       U.S.       U.S.
Activity     (000s)  Subscribers  (000s)  Subscribers  (000s)  Subscribers
--------     ------- -----------  ------  -----------  ------  -----------
Played
 Mobile Game  9,910     22.8%     13,691     31.8%     45,042     24.2%
Played
 Downloaded
 Mobile Game  3,097      7.1%      4,347     10.1%     15,514      8.3%
Dowloaded
 Mobile Game
 in Month     1,092      2.5%      1,813      4.2%      4,957      2.7%
First-Time
 Downloaders    236      0.5%        344      0.8%      1,520      0.8%

"This data shows that operators must do a better job at converting those that played a mobile game into a player of downloaded games," said Seamus McAteer, chief product architect and senior analyst, M:Metrics. "There is no shortage of new titles being launched on operator portals, many offering innovative game play and superior production value, but these do not appear to be resonating with consumers. Subscribers that had played a downloaded title cite the pricing, lack of interest and selection as reasons they did not purchase another title in the month of March."

Germany: March 2006

Top Reasons for Not Purchasing  Subscribers  Percent of Subs Playing
New Game in March 2006*           (000s)     Downloaded Game in Last Month
------------------------------  -----------  -----------------------------
Games were too expensive            994                39.90%
Interested, but couldn’t
 find right game for me             508                20.40%
Not Interested                      436                17.50%


U.K.: March 2006

Top Reasons for Not Purchasing  Subscribers  Percent of Subs Playing
New Game in March 2006*           (000s)     Downloaded Game in Last Month
------------------------------  -----------  -----------------------------
Already have downloaded
 games I like                     1,113                36.12%
Games were too expensive            732                23.75%
Interested but couldn’t
 find right game for me             461                14.95%


U.S.: March 2006

Top Reasons for Not Purchasing  Subscribers  Percent of Subs Playing
New Game in March 2006*           (000s)     Downloaded Game in Last Month
------------------------------  -----------  -----------------------------
Already have downloaded
 games I like                     4,483                39.72%
Games were too expensive          2,350                20.82%
Not interested                    1,958                17.35%

*Among those who played a downloaded game in the last month only.

"Despite the growing selection of games on the operators' portals, consumers still are not finding games that appeal to them and are complaining that prices are too high," observed Paul Goode, vice president, product development and senior analyst, M:Metrics. "Faster networks and devices with larger screens will help improve the discovery process, operators and games publishers must do a much better job of marketing and merchandising mobile gaming content."

M:Metrics data shows that men and women are equally predisposed to playing mobile games, but that men are far more likely to download them.

Males 18-34 are the largest audience for game downloads, accounting for 35 percent of the U.S market, 30 percent of the U.K. market and 33.7 percent of the German market. The top five genres of games in all three markets are in the chart below.

Genre of Games Currently Installed on Handset: March 2006

         Subscribers           Subscribers            Subscribers
Germany    (000s)     UK         (000s)     U.S.        (000s)
-------  -----------  -------  -----------  --------  -----------
                      Arcade                Arcade
Card        871        puzzle    1,829       puzzle     7,463
Arcade                Retro
 puzzle     833        arcade    1,343      Card        4,612
Quiz        773       Card       1,086      Casino      4,131
                                            Retro
Strategy    716       Sports     1,058       arcade     3,414
Board       664       Board        876      Strategy    2,634

M:Metrics measures the consumption of mobile content and applications and benchmarks the performance of mobile operators, device manufacturers, platform providers and publishers using a multi-dimensional methodology that includes the largest monthly surveys of mobile subscribers in the U.S, the U.K. and Germany. The following are the results of its Benchmark Surveys for the quarter ending 31 March, 2006.

U.S. Mobile Subscriber Monthly Consumption of Content and Applications
M:Metrics Benchmark Survey: March 2006

                     Subscribers  Percent U.S. Mobile  Percent
Activity                (000s)       Subscribers       Change
--------             -----------  -------------------  -------
Sent Text Message       64,834          34.9%            0.8%
Used Photo Messaging    20,186          10.9%            2.7%
Browsed News and
 Information            18,471           9.9%           (1.9%)
Purchased Ringtone      18,349           9.9%           (1.5%)
Used Personal E-Mail    13,297           7.1%           (3.0%)
Used Mobile Instant
 Messenger              11,710           6.3%           (3.0%)
Used Work E-Mail         7,592           4.1%           (7.0%)
Purchased Wallpaper
 or Screensaver          6,968           3.7%           (4.4%)
Downloaded Mobile Game   4,957           2.7%           (9.7%)

Source: M:Metrics, Inc., Copyright © 2006.  Survey of U.S. mobile
subscribers. Data based on three-month moving average for period
ending 31 March  2006, n= 35,500.


U.K. Mobile Subscriber Monthly Consumption of Content and Applications
M:Metrics Benchmark Survey: March 2006

                     Subscribers  Percent U.K. Mobile  Percent
Activity                (000s)       Subscribers       Change
--------             -----------  -------------------  -------
Sent Text Message       35,880          83.4%            4.7%
Used Photo Messaging    11,752          27.3%            7.9%
Browsed News and
 Information             4,787          11.1%            9.2%
Purchased Ringtone       2,690           6.3%            0.8%
Used Personal E-Mail     2,582           6.0%            6.1%
Downloaded Mobile Game   1,813           4.2%            9.7%
Used Mobile Instant
 Messenger               1,500           3.5%           13.7%
Used Work E-Mail         1,110           2.6%            1.0%
Purchased Wallpaper
 or Screensaver          1,055           2.5%            2.3%

Source: M:Metrics, Inc., Copyright © 2006.  Survey of U.K. mobile
subscribers. Data based on three-month moving average for period
ending 31 March  2006, n= 15,025


German Mobile Subscriber Monthly Consumption of Content and Applications
M:Metrics Benchmark Survey: March 2006


                     Subscribers    Percent German     Percent
Activity                (000s)        Subscribers       Change
--------             -----------  -------------------  -------
Sent Text Message       34,523          79.4%            3.1%
Used Photo Messaging     8,426          19.4%            0.7%
Purchased Ringtone       3,140           7.2%           (0.7%)
Used Personal E-Mail     2,777           6.4%            2.9%
Browsed News and
 Information             1,780           4.1%            2.6%
Used Mobile Instant
 Messenger               1,509           3.5%           14.3%
Purchased Wallpaper
 or Screensaver          1,285           3.0%           (4.1%)
Used Work E-Mail         1,256           2.9%            4.7%
Downloaded Mobile Game   1,092           2.5%           (2.8%)

Source: M:Metrics, Inc., Copyright © 2006.  Survey of German mobile
subscribers. Data based on three-month moving average for period
ending 31 March  2006, n= 15,303

About M:Metrics

M:Metrics is the mobile market measurement authority. As the only research firm to measure the audience for mobile media, M:Metrics provides the most accurate metrics on actual mobile content consumption by applying trusted media measurement methodologies to the mobile market. M:Metrics' monthly syndicated data service gives clients the critical insights and intelligence required to inform smart business strategies and the competitive benchmarks needed to evaluate the performance of competitors and partners. M:Metrics is a private, venture-funded corporation headquartered in Seattle, with offices in San Francisco and London.

About M:Metrics Data

Based on continually refreshed samples of nationally representative mobile phone consumers, M:Metrics reports summarise market size, device reach, and key demographic and mobile phone usage characteristics.

The data presented here is drawn from an extensive survey questionnaire that collects specific device model and carrier subscription information from each month's sample of mobile phone subscribers, and also drills down into specific details related to current and past usage of various mobile phone applications and content. Data collected from each sample are statistically balanced and projected to the total national population of mobile phone subscribers.

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