'Gamemaking God' Turns to the Small Screen But will his sports games make it in Japan?

Back to Contents of Issue: February 2003

People like to play games; people like to move; people like to communicate. Add these variables up, and they point to a potentially large market for interactive gaming on mobile phones.

by Jon Metzler

MOBILE GAMING. INTUITIVELY, IT just seems to make sense. People like to play games; people like to move; people like to communicate. Add these variables up, and they point to a potentially large market for interactive gaming on mobile phones. Indeed, the global mobile gaming market is projected to reach anywhere from $2 billion to $6 billion by 2005 or 2006, depending on which research firm you ask.

The concept of mobile gaming is no great shakes to a Japanese audience. Datamonitor, a research agency, posits that there are 39 million mobile gamers in Japan already. But in the fractious and admittedly behind-the-curve US wireless market, mobile gaming is still new, and a number of variables come into play. Will carrier networks be sufficient to keep play responsive and entertaining? Will there be a critical mass of game-ready (J2ME or Brew-enabled) handsets in consumers' hands? And, perhaps most importantly, if you build it, will American consumers, who proved notoriously unwilling to pay for most Internet content, actually pay for it? And will they keep paying for it after their bills for data usage start coming in?

NTT DoCoMo customers know bill shock. DoCoMo's average revenue per user, or ARPU, spiked after the introduction of Java i-appli, then headed right back down once customers saw the spike in the data portion of their bills. In this case, America's behind-the-curve status could be a blessing -- content developers and the carriers can learn from what's already happened elsewhere.

One promising game developer and publisher is Sorrent, headquartered in San Mateo in Silicon Valley. Within the gaming world, the company's pedigree is blueblood: It was founded in April 2001 by Scott Orr, a 20-year gaming veteran who spent 10 years at Electronic Arts (EA), where he developed hits such as John Madden Football and NHL Hockey. All told, the games Orr has worked on have done over $2 billion in sales. Orr was dubbed a "gamemaking god" in 2001 by Wired magazine, and given his track record, the label seems appropriate.

Orr is sticking to his sporting roots with Sorrent. The company's first round of releases largely consists of head-to-head sports content -- football and basketball. "We know it's a segment that we understand," Orr says. "I've been building sports games for 20 years. I created seven out of 10 of EA's top sports franchises. Depending on the platform, sports represents anywhere from 15 to 35 percent of the market. We think sports can represent 20 to 25 percent of the cell phone gaming market; early indications are that the best-selling cell phone in the US is Bowling from Jamdat."

Isaac Babbs, Sorrent's president and vice president of business development, adds: "Everybody around the world plays sports. You look at that demographic -- the 15-to-34 demographic that we're going for, mainly male but some women: Sports fits in with them. It also crosses many geographic zones. Basketball, soccer, football maybe less, but they cross over."

In an attempt to boost its profile out of the gate, Sorrent is going with branded content for its first round of releases -- the sports titles are all co-branded with Fox Sports. "Our sense is that the carriers are new to the game business, and given what we're seeing from the competition, the carriers really want branded or recognizable content," Orr says.

The US carriers are going with the same carrier-content/provider relationship that is practiced in Japan -- the carriers provide billing services and take a cut in return, in addition to data revenue. Given the intense price competition in voice minutes, the carriers definitely need some sort of content to push data usage. As such, Sorrent and its chief competitor, Jamdat, are in a good position.

Robert Hayes, an associate with Sienna Ventures, one of two major Sorrent VC backers, is bullish on what game developers can do for the carriers, pointing to a need for content that can take advantage of next-generation networks and handsets. Sorrent is also backed by New Enterprise Associates. Competitor Jamdat just took an $8 million investment led by Qualcomm, and is also backed by Sun, Intel and Patricof & Co. Ventures.

Orr takes pains to emphasize that Sorrent isn't just going for the mobile phone market. "The idea behind Sorrent is broader than cell phone games; it's really about convergent gaming. You can play games from different devices or platforms, simultaneously in some cases." To that end, the company is pushing what it calls the player's Mobile Persona -- a customer's gaming personality, which is consistent across mobile phone and PC platforms. In short, you can be yourself, regardless of what game you're playing and where you play it.

Orr is sanguine about potential carrier resistance to players taking their games off the network. "I think the carriers recognize that giving consumers more choices rather than less, allowing consumers from different carriers to play against each other, is something that is a win for everybody," he says. "Now, do we bring it up every time? No. They like the notion of connected gaming because it will drive data usage."

Company management does have previous experience entering the Japan market. Babbs managed the launch of Shockwave Japan, the Japan edition of Macromedia's spin-off interactive content site. Interestingly, two years after that launch, most of the content on Shockwave Japan is completely different from that found on Shockwave US. Some of this is due to rights concerns, but some is just because of a need for local relevancy.

"I do feel Sorrent's sports titles can scale to markets such as Japan," says investor Hayes, "but a certain degree of localization will be required and a certain degree of cultural context will have to be established."

Japanese gaming trends definitely have an impact. "These phones will have location-based services on them, so why can't I play a game with someone in the same lobby as me? Or maybe I can push 'Talk' when I'm done with the game," Babbs says. "You could start doing things around the community, around your Mobile Persona. When I get close to someone, you can click on 'Want to play?' or maybe someone has sent me a message proactively. Of course there would have to be opt-in, opt-out options to all that, but if users opt in, there's all sorts of things you could do. It could even be like the Lovegety. Your phone could be a way to communicate and facilitate meetings beyond just voice." @

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