Mobile Entertainment

Few subjects can generate more heat among the mobile games community than the trend for operators to outsource their game decks to third party service providers. The main opposition comes from content providers fearing that margins will get squeezed, and they will have less influence on the marketing of their products.

But what’s fuelling the movement towards outsourcing is retailing. The entire trade must recognise it has challenge growing market penetration beyond the typical three to five per cent of mobile subscribers, and that we must collectively focus on breaking through this glass ceiling.

Retailing in the physical world and the net is a low margin/high volume business that requires specialization and economy of scale to be successful. It’s about understanding consumer behaviour and decision making; about psychology; a nose for trends; and data. The latter is especially significant – in mobile games we can use data to make almost hourly adjustments to the deck, and underpin decisions on changes to pricing strategy, portfolio and packaging.

Given that 90 to 95 per cent of mobile gaming is controlled by operator portals, we can’t expect mainstream consumer behaviour to change dramatically in the short term. Gaming revenues mean operators can’t justify the investments in technology, process and skill that are so needed to really take games retailing to the next level. Many content teams are under heavy pressure on cost and may consist of only a few persons (or even less) to manage sourcing, retailing, deployment and marketing of not only games but often also ringtones, pictures, music, gambling and mobile TV. And often a lot of time is lost on trying to get data out of archaic billing systems that were not designed to support a dynamic retail business.

So it’s no surprise that End2End’s phone is ringing a lot these days. Operators are starting to outsource platforms, management and operations to gaming experts like us – experts that have the required economies of scale to invest in the best content management and retailing tools, the best front ends, the best reporting and business intelligence tools, the best retailing staff and so on. Meanwhile the operator keeps the marketing gets the time to focus on marketing and its relationships with key content providers.

So publishers have little to fear, except better marketing, better logistics, better business reporting and better retailing. They should get closer contact with consumers rather than the other way around, and there are already real-world case studies that show significantly increased sales after outsourcing. It’s good news for the mobile gaming industry.