The mobile gaming market, like the rest of the mobile entertainment world, certainly has some optimistic forecasts attached to its growth: Gartner, for one, predicts that worldwide the mobile gaming industry brough in some $2.9 billion in revenues in 2006, and that this number will rise to $9.6 billion by 2011. Because of the numbers, mobile gaming has attracted a huge amount of interest and investment, not just from the usual roster of gaming companies like EA and Sony, but also from mobile-specific gaming companies like Digital Chocolate and even other media brands, like MTV, that believe they would have something to offer as well in the sphere of competitive, interactive entertainment. In this world, Qualcomm likes to position itself as an enabler to anyone and everyone, says Mike Yuen:
Given the advances handset vendors are making into services, and Qualcomm’s interest in services, do you think Qualcomm regrets having sold off its handset division all those years ago?
I don’t think so. In the early days it was tough to get anyone to do anything with us, so we set up a handset group and a networking group to get those products into the market. The core roots of Qualcomm are that we’re a technology company. Nokia is consumer facing. We don’t really care in the end. We will enable anybody. However, there might be a way to work with ODMs like HTC to get something out there.
Do you think you might sell your technology into other kinds of handheld devices?
Yes, we are looking into this strategically but we’re not ready to announce anything. The Sony PSPs, Nintendos of the world…there are a number of opportunities where we could work with them.
What’s happening with that agreement with Microsoft from a couple of years ago?
Well, in the mobile world it takes a long time to get things done. In the case of Microsoft and Live Anywhere [that’s the service that Qualcomm and Microsoft said they would work on together] even there, to get it done assumes there is a device that an operator wants to take, and that it would have Brew on it and it would need integration. It’s a long process.
What’s the natural home for portable gaming? The phone or other handheld devices, like the PSP?
Gameboys and PSPs do well but their volumes are still nowhere near those of phones.
How much is your business centred around downloads versus straight licenses?
We do have a division focussed on this. We see downloads as an opportunity but it’s very small today. If content does take off, you can make a decent revenue stream from download revenue shares. The key question for games companies like Sony and Nintendo is that they built up a business based on packaged software, but the idea of digital distribution will destroy their relationships with retailers. The challenge for them is how do you evolve your digital distribution without upsetting your existing ecosystems? Those are different non mobile areas we want to look at. But you’ve got to get people used to downloads before this becomes a bigger business.
GSM network progress?
We have some GSM customers using the Brew platform. Telecom Italia is doing Brew 3D games; their non-3D games are still Java. Operators like O2 have taken our UI1 technology. O2 has put it into Cocoon and Ice devices. What we are hoping is that we can persuade them to eventually run Brew games on those platforms.
Brew market penetration compared to Java?
Java is much bigger as a footprint. But Brew developers from a gaming standpoint make good money though. Java is not native, it’s a slower platform. With gaming they tend to want to push the envelope a lot more. This past March we announced that we have paid out more than $1 billion to developers. In the Java world, it’s more fragmented and so no one has come out and said Java developers have made $x-billion.
Interoperability between different platforms?
The operator can close anything it wants—but any game can theoretically be opened up across platforms, operators or whatever. It can be done technically but it’s a question of whether operators want to open up to that or not.
Discovery: better off or on portal?
The majority is still on-deck but the future will be both. If the economics can be worked out, you can’t avoid the reach of the Web. We’ve built a solution for that as well called Brand Extend. MLB is our first customer; it can sell stuff directly off its Web site. But that doesn’t mean that we’re going out there and enabling companies to go around the operators. You need them in the value chain. The MLB might do the customer support but you still need the operators for downloading.
Advertising versus per-use downloads versus one-off fees: what’s the best revenue model going forward?
There’s a difference between product placement and in-game advertising. Product placement works today but pure in-game advertising, where you can swap ads in and out, is a long way away. They’re trying to figure out how to do that on PCs with consoles but on mobile you have to ask yourself the value of putting an ad on such a small screen. The business models are not defined yet for advertising but it will happen somewhere. It might be ad subsidised or something like that. Each operator may end up doing it differently depending on games interest among subscribers.
What do you think about the idea of operators doing wholesale data deals with content owners?
I think there’s something there. From a consumer standpoint it makes a lot of sense: if I pay $9.99 for a data plan, why do I have to pay extra costs? There is merit in that conceptually. But to make it work, the tier-one operators need to support that and they still feel very territorial and want to be able to say, I want that customer to know he is a Vodafone customer and not a Disney or EA customer. The guys below that tier-one level might be more willing to do this. They might say I don’t care; if I wholesale data, at least that might be a way to get paid for it. If you’re going to buy $3 million dollars worth of airtime then I’ll be willing to give that up because at least it would be another way of competing rather than on the big guys’ own terms. This is like mobile advertising though: there’s been a lot of talk but we haven’t seen anything real out of it. I’m sure behind closed doors those operators are all trying to work out how they might use this idea. It’s easier said than done for operators, content providers etc to step up. And then there’s a question about executing on that strategy. It can be a good idea but if you don’t execute then it’s viewed as a failure. When someone sells into Wal-Mart or BestBuy, there is a vehicle for publishers to go in there and market properly but it’s a bigger risk on new platforms like banner ads.
Is there more of a chance of success for mobile services if they get deployed on a hardware level versus via the operators?
Conceptually the devices are now open, but in some parts of the world they are not. In another part of the world, I don’t think Motorola would have gotten as far as they have in China with music for example. But vendors like Nokia or Sony Ericsson have some limitations too: if you’re Sony Ericsson and you have a good music service, you are confined to your own ecosystem. You’re not about to start licensing that to other handset makers.
