The iPhone effect: fear and trembling in the mobile games industry

Last week, I attended the Mobile Games Forum, an annual conference where developers, publishers and network operators get together to discuss the latest industry developments – which this year meant iPhone, iPhone and, oh yes, iPhone. Apple's hugely successful entry into the market (there are now around 20,000 applications on App Store, almost 2,000 of which are games) has sent out palpable shockwaves. Everyone's feeling unsettled.

And here's why.

Until Apple entered the scene, the mobile games market was dominated by the network operators, because a huge majority of mobile titles are sold through network portals like Vodafone Live or O2 Games Arcade – relatively few are sold 'direct to consumer', either through aggregation sites or a publisher's own online service. The network operators not only take 50% of the revenue from every game download, they also effectively control which games their customers get to see and play – only a small number of titles are 'featured' on the front pages of the portals, and these spaces are often paid for by publishers. The rest of the games are usually hidden away in difficult-to-navigate menu sections.

This has typically meant that original games have faired poorly – no-one wants to risk giving prominent deck space to an unknown quantity, especially as there's so little room on the mobile screen. At the same time, the customers themselves tend to be conservative, making few purchases and mainly concentrating on recognisable retro or TV brands – hence the huge popularity of Pac-Man, Tetris and Deal or No Deal. This caution is partly to do with the fact that these are 'casual' gamers, but also because the whole download process is often shrouded in doubt and uncertainty. Unless you're on an 'all you can eat' monthly data tariff, you'll pay for the game itself, then pay data charges to download it. The costs aren't always clear and can lead to horrible surprises when your bill shows up. No wonder only 5% of Java phone users ever download a game; many of those never do it again.

For developers and publishers the situation is further complicated by having to develop for an enormous array of devices. Although Java is ostensibly a one-size-fits-all platform, every game needs to be tweaked for every different handset. Many game publishers these days have to support up to 900 different models, which means up to half of the development time and budget goes on merely making a game work on all the target handsets.

So in comes Apple. Straightaway, two of the key problems are taken out of the equation. There's only one device architecture to deal with, so no more porting nightmares. Plus, publishers deal only with Apple to get their games on the App Store, immediately ejecting the network operators from the 'pipeline'.

There are enormous benefits for the gamer, too. Most iPhone owners are familiar with the App Store model thanks to iTunes – they trust Apple, they know how much they're going to be charged and they know that when they download the game it's going to actually work. What's more, the App Store offers ratings, proper charts, recommendations, and everything else we love from iTunes. It's a familiar, enjoyable browsing experience. It doesn't suck the very soul out of you.

So over the last couple of months, lots of developers and publishers have been eyeing up this new market with considerable interest. Sure, there's a lot of competition out there, plus, as publishers can name their own prices, there's been a lot of pressure to compete at the lower end of the scale, which naturally plays havoc with the revenues. But it's a level playing field, and Apple is taking a smaller cut of the revenue. The iPhone demographic is also more technologically astute and willing to experiment – hence, the regular presence of original titles like Slotz Racer and iShoot at the top of the download charts.

IPhone also solves another bizarrely disingenuous problem with mobile games – the lack of connectivity. In Europe, there's so much device and infrastructure fragmentation, that providing online gaming modes – or even bluetooth two-player – was a logistical headf**k of such astounding proportions, almost no-one was prepared to attempt it. Indeed, not only was it technologically complex, but most of the key network operators were not prepared to support online multiplayer features. So you had this situation where communication devices – you know, devices created and sold specifically to allow communication between people – would not allow multiplayer gaming. The best we could hope for was online high scores, or 'massively single player' gaming experiences like Digital Chocolate's excellent Café series of games, which provided little social additions to basic one-player games.

And guess what – iPhone simplifies the whole multiplayer situation; partly because there's only one device spec to worry about, but also because the data transfer isn't controlled by the network operator. There are already dozens of multiplayer titles available on the service.

Chatting to developers and publishers at MGF, there was a real feeling that a lot of smaller companies are going to ditch Java gaming altogether and concentrate on iPhone, with a few sidelines into other 'native platforms' such as Google Android, Symbian and Windows Mobile. Most are now exploring new ways to develop, market and cross-promote their own IP – so you've got companies like Real Arcade and Digital Chocolate putting their titles on Facebook to build buzz, before transferring them onto more straightforwardly 'monitsed' platforms like iPhone or the PC.

Another victim of the iPhone frenzy is N-Gage. Nokia's Xbox Live-Lite service kicked off last Spring and now has around 700,000 registered users, which is not particularly impressive. The Finnish mobile giant counters by claiming this has been a 'soft launch' and that they're expecting to attract a larger user base when the N-Gage app gets embedded on more handsets - all the latest N-series phones have it onboard straight out of the box, whereas older phones required a download.

But there may be other, deeper problems with the N-Gage set-up. I spoke to one industry veteran who told me that people are having trouble subscribing, often taking up to 45mins to go through the online registration process. Also, allegedly some games require you to actually play several levels of a demo before you get the option to buy. I've not encountered this, but it seems like a weird barrier to what should be a straightforward purchase. The same source reckons N-Gage is getting around one million downloads a month – I couldn't check because there don't seem to be official figures. In comparison, App Store did 60 million downloads in its first four weeks.

N-Gage is a great idea, that needs a lot of work – as EA memorably pointed out at Nokia's own games event last year. Whatever its current shortcomings are, any platform that can produce the excellent Reset Generation or Creatures of the Deep is worth backing. Plus, Nokia's director of games, Mark Ollila, seems to be working on some interesting stuff, which I'll blog about soon.

But the industry spotlight is most certainly on Apple and everyone else must now respond. The network operators, for example, are all scrambling to update their portals to be more App Store-esque, making the process of buying games easier, making the billing process more transparent, adding social elements. The problem is, although the heads of gaming I spoke to are passionate about providing a decent service, games represent a tiny portion of annual revenue for companies like Vodafone, T-Mobile, etc, so there's little impetus further up the management chain to put resources into a really exciting gaming proposition. Also, it's all a little late - operators have had five years to improve their games offerings. There's a sense that the old business model has missed its opportunity.

The important thing is, stuff is happening. It's a weird, uncertain time for mobile games, but for a lot of the developers I spoke to it's also exciting and liberating. Check out this month's Edge Magazine, for example, and you'll see that a mobile game – the iPhone title, Rolando – is the lead review. Okay, so there wasn't much else out this month, but it's a vindication of sorts. It's a start.