• by Betsy , Joel Gehman , July 11, 2005

Mobile gaming is about to explode, fueled by the collision of two powerful trends: cell phones and video games. Handset makers, wireless carriers, and game developers obviously stand to benefit, but marketers looking to remain culturally relevant must also find ways to play.

The ubiquity of cell phones is hardly new news. By 2009 there will be more than 2.3 billion wireless subscribers worldwide according to In-Stat, up from just over 1.5 billion in 2004. By the end of 2004 there were182 million subscribers in the United States according to CTIA. And, we all have a tendency to constantly upgrade our phones, driving sales of 692 million new mobile phones worldwide in 2004 according to IDC. The upshot is that today there are an estimated 300 million cell phones that are video game capable.

Likewise, it's no secret that video games are big business. According to NPD, U.S. retail sales of video games, including portable and console hardware, software and accessories totaled nearly $10 billion in 2004. Software alone totaled $7.3 billion and 248 million units in 2004 according to the Entertainment Software Association (ESA). Contrary to popular belief the market for video games is still dwarfed by the $180 billion film business and the $23 billion book publishing business.

In synthesizing the two trends a recent IDC report noted that the U.S. market for wireless gaming is "on track to become the single largest wireless data application category from a revenue perspective, overtaking ring tones in 2005 and rising to nearly $1.5 billion annually by 2008."

That's nearly a fivefold increase from U.S. wireless gaming revenue of $345 million in 2004. Worldwide, the market for mobile games is expected to reach $11.2 billion by 2010, up from $2.6 billion this year according to Informa.

Venture capitalists have taken notice, spending more than $180 million to fund mobile gaming companies in 2004. Some notable investments include a total of $84 million into Mforma over two rounds and an additional $20 million into Sorrent (now known as Glu Mobile). But one of the biggest players in the U.S. market, Jamdat Mobile, is already public and worth nearly $700 million with an expected 2005 revenue of $80 million. Its claim to fame include selling over 6 million copies of Jamdat Bowling at $7.50 apiece, and spending $137 million for an exclusive 15-year license to develop Tetris games for phones.

Others are getting in on the act too. VeriSign purchased mobile game and European ring tone developer Jamba in 2004 for $273 million. Console gaming giant Electronic Arts recently unveiled a lineup of 20 mobile phone games it plans to launch over the next year.

Others jumping into the space include InfoSpace Mobile, which recently partnered with BMW WilliamsF1 Team to launch a mobile Grand Prix racing game. Another recent mobile gaming announcement that caught my attention calls for porting Etch-A-Sketch to cell phones. Adidas and mobile games developer Overloaded have partnered to launch Adidas 1 Challenge. The free download will coincide with the launch of "the world's first intelligent shoe" and challenges gamers to run through three levels - Forest, City, and Suburbia - as quickly as possible.

Overall, mobile gaming harnesses the huge installed base of cell phones and the entertainment value of video games to create a new opportunity for marketers. Given the advertising clutter so prevalent in virtually every medium, the promise of three or five or 10 minutes of undivided player attention will prove irresistible to hundreds of brands.