For years, so we have repeatedly been told, we have been on the cusp of mobile gambling really taking off. For years, the shepherd boy has been crying wolf only for a combination of what Juniper Research refers to as ‘a dispiriting morass of proscriptive and/or uncertain legislation, suspicious consumers and technological constraints’ to come along and spoil the party. Add to that the need to leak revenue throughout the business process and it’s a small wonder anyone originally thought it was a party worth going to in the first place.
And yet, 2011 is the year when finally mobile gambling as a phenomenon is really going to take off. Growth in gross wager has been broadly in line with expectation over the past two years within most markets, notwithstanding the economic downturn. Mobile transactions worth several billion dollars per annum are being generated and, most importantly, all the technology and widespread adoption of Smartphones has finally unlocked the shackles which have held mobile gambling back in the bad old days of Java. And while, at the time of writing, Java still probably represents the mass of mobile gamblers out there, Smartphone wielding users are rapidly replacing them as the cost of Smartphones fall and the inevitable phone upgrade cycle of 12-18 months continues to churn handsets. Indeed, as prices fall, Smartphones are set to push beyond 30% per penetration of UK mobile ownership, in which market Apple has been the rising star, selling more than 4 million iPhones in the UK alone. Meanwhile, Google’s Android Operating System continues to rise rapidly and looks set to become the mass market Smartphone of choice, although it is worth noticing that all mobile handset providers flavour their implementation of Android in slightly different ways and that, for example, iPhone owners currently surf the mobile Internet more and have more apps and do more transactions on their phones than Android users. Nevertheless, as Smartphones begin to take over the world, it is interesting to note the recent announcement of a tie up between Nokia and Microsoft which could lead to Symbian, the former market leader in Smartphones, becoming defunct and Microsoft’s Live becoming the platform of choice.
Be that what it may, it would nevertheless be wrong just to look at mobile phones when we are considering mobile gambling. The very way in which people choose to receive information or enjoy online experiences is changing just as quickly. The success of the iPod Touch shows just how much people are using them for web and Apps on Wi-Fi systems at home, while the launch of Android tablets to compete with iPad is opening us up to a new type of usage. Tablets are about enabling us to consume media both at home and on the move. A recent report from Ofcom highlighted how much more time we are spending ‘multi-tasking media consumption’- in other words, what we are doing is effectively cramming eight hours and 48 minutes of media usage into seven hours of the day. A lot of this obviously is about using laptops, mobiles and, increasingly, tablets in front of the TV. And meanwhile, TV itself is becoming internet enabled. Manufacturers like Samsung, notwithstanding a number of false starts, are building internet into TV and are providing developers with an open platform on which to develop Apps specifically for TV. And whilst, currently, internet TV Apps are mostly used for direct communications, such as Skype, or TV related services, such as Lovefilm streaming, the inherent ability to not only adapt games but also to deliver new ones, makes this a fascinating arena for the future.
The other big fly in the ointment is the direct correlation between a growing user base and increased fragmentation of the various platforms. Mobile web sites are, quite frankly, a no-brainer. Despite working to the lowest common denominations and still being quite slow, the games are miles better than the Java versions. However, they remain a long way off the ultimate user experience. This will be, to a large extent, combated by the evolution of the mobile web as more and more handsets, including Android, support Flash which provides a much smoother user experience. Apple, however, does not support Flash.
The question, therefore, quickly becomes one of which different systems do you provide your Apps for. Apple, on the one hand, provide a single platform where operators can either produce an App by wrapping their mobile web products as an App or create a native operating system App that they know will provide a much better and more satisfying gaming experience. On top of that, the fact that Apple has around 4 million iPhones, 2 million iPods and roughly 1 million iPads in the UK alone means that they already have access to, and salience with, an extremely big marketplace in which to market this ‘better’ gaming experience. That’s why the adoption of Android which supports Flash has created another alternative to consider. However, the different portings of the Android Operating System across the different handsets by manufacturers, not to mention the many different versions of the Android Operating System, means that Android, itself, is fast becoming a more and more fragmented platform to develop for. Moreover, if, on top of all that, you throw in the wealth of Tablets that are about to hit the market with different screen sizes, the fact that Microsoft will be powering Nokia Phones and that HP is now using Web OS, and it becomes obvious that the same problem that the market had with Java gaming is in danger of being replicated again: multiple platforms, multiple handsets, multiple portings and increased cost to develop for each handset.
So despite, at long last, this being the year when mobile gambling comes into its own, there remain some reasonably significant challenges that lie ahead.
For the developers, the challenge will be to provide a breadth and depth of gaming across the multitude of mobiles and tablets. This will enable operators to offer a vast panoply of options to both their existing and new customers. However, at least to begin with, they are still going to have to support Java as Java games are likely to continue to generate significant revenues over the next 12-18 months until such time as Smartphones gain the upper hand in mass penetration.
For the operators, the challenge will be to establish a presence in this growth market. For while it may be helpful for operators in the short term to generate additional revenue and extend a customer’s lifetime by providing an additional platform for them to play and transact with, the real challenge will be to acquire new customers across a highly fragmented mobile advertising landscape of mobile search, web, App store and in App advertising. Will these new customers, for example, be growing the market for interactive gaming per se or will they be capable of being migrated from the mobile web and, indeed, vice versa.
So there are any number of different considerations to be borne in mind, although some next steps are reasonably obvious. No one, I very much doubt, will be fired for giving mobile web a go. It seems unlikely, too, that many written warnings will be dispensed to those who have launched an Apple App across iPhone, iPod, and iPad, provided, of course, they have a marketing strategy to support it. There are, after all, over 300,000 Apps in the iTunes App store. After that, it is all a lot more uncertain. Will the market with Android, for example, become too fragmented for Game developers to keep up? And, if it does, does that mean that operators will be unable to provide as good a user experience as they need to in order to capitalise on the size of the opportunity?
