Research Notes

Nokia N-Gage Launch – Strand Consult viewpoint

Today Nokia is launching their new games platform N-Gage – and the questions on everybodys lips are whether this new platform will play a major role in the mobile evolution and how big will the mobile gaming market really be?

In connection with the launch of Nokia’s new terminal N-Gage, many people in the mobile sector have asked us whether we think N-Gage will be a success -and our answer has been a straightforward “Yes – and No”

With the introduction of N-Gage, Nokia would like to introduce analternative platform to the existing Gameboy market. Therefore, from a theoretical point of view, there is absolutely nothing wrong with their strategy and the launch is a natural step in the mobile telephone evolution as we move away from simple voice and SMS services and on to MMS, GPRS, JAVA and WAP.

The big question is: how many mobile consumers will be interested in buying a game-focused platform like N-Gage? Strand Consult has been analysing the mobile markets since 1994. Based on our knowledge and experience, we believe that that N-Gage will have the same limited success that we saw from the Nokia 5510 (the Nokia SMS keypad phone) and from the Nokia 9210 Communicator. In our opinion, N-Gage will achieve more of the status of a “concept product” which will be very good at profiling Nokia and introducing the concept of mobile gaming as one of the upcoming major services in the mobile universe.

So even if N-Gage only achieves limited sales success, it will have a number of very positive side-effects with regard to showing mobile consumers that mobile phones are in the middle of a paradigm change.

Mobile gaming can in general be divided into four main areas that will compete internally for the attention of the mobile consumers:

– Classic games: arcade style etc.
– Betting, Lotto, Pools
– TV voting – often with prizes at stake
– Interaction with Game Shows and Quiz shows

Looking at these areas as a whole, the value of the mobile gaming market will be very large and the types of games that will be the primary focus of the N-Gage platform will actually only comprise of a modest percentage of the total mobile gaming revenue. In Strand Consults latest report “How to make money on Mobile Services” – _ – we have broken down mobile revenue in all the mobile markets in Europe – both by country and mobile services – from 2002 to 2005 and when you add up the total gaming market figures for Western Europe our predictions show that mobile gaming will already generate Euro 500 million in 2003, Euro 1.5 billion in 2004 and over Euro 3 billion in 2005. (UK numbers for the same periods are Euro 75 million in 2003, Euro 265 million in 2004 and over Euro 520 million in 2005).

As most of the arcade style game types for the new generation of mobile phones will be developed by 3rd party developers – using the mobile operators revenue sharing models – there is little doubt in our minds that they will be going for the mass market segments. In other words, most of the mobile game development will be for standard mobile phones with colour screens that are JAVA enabled. So in reality for Nokia, the largest competition N-Gage will face will in actual fact be from other Nokia mobile phones! Another thing that points to this conclusion is that our research from the mobile services market in South Korea – a mobile market 2 to 3 years ahead of the European – shows that the mobile games market has been growing by around 160% pr. annum in the last couple of years – based on mobile games that can reach a wide mobile audience.

So if you measure the success of the N-Gage platform in the value it will have by showing the mobile consumers that mobile phones are leaping forward in their capabilities and non-voice mobile services – including mobile games – will be a part of everyday life in the near future, N-Gage will be a huge success. As for the sales figures, even if doesn’t become a bestseller, we have an idea that Nokia will not be too unhappy.

More information “How to make Money”
More Information “Korea mobile services”

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