Analyst Angle: Measuring mobile games market share

Editor’s Note: Welcome to our weekly feature, Analyst Angle. We’ve collected a group of the industry’s leading analysts to give their outlook on the hot topics in the wireless industry. In the coming weeks look for columns from Strategy Analytics’ Chris Ambrosio, Ovum’s Roger Entner and Current Analysis’ Peter Jarich.
Retail revenues from sales of mobile games in the U.S. totaled about $500 million in 2006 after growing strongly in the second half of the year, representing revenue growth of 30 percent to 40 percent. The market remained highly competitive, with the total number of titles growing to 1,200 in December from 911 in January 2006 as Cingular and T-Mobile expanded the depth of their catalogs considerably. At the end of the year, M:Metrics counted 36 publishers with ten or more titles on operator decks. The problem of deriving accurate measures of market share using statistical sampling is difficult given the proliferation of new titles and the aggressive entry of new competitors such as Vivendi.
Publishers, operators and others in the mobile gaming sector use a number of measures from M:Metrics to track performance of competing content providers. Each month we derive estimates for new purchases of game titles from our survey of about 12,000 mobile subscribers aged 13 and higher in the United States. Survey respondents who purchased a new game are presented with titles based on their device, operator and genre of game downloaded.
M:Metrics also tracks the availability and promotion of games on carrier merchandising interfaces-which account for about 89 percent of all games purchased. Using a variety of automated and manual methods, our content classification team undertakes a comprehensive crawl that captures consistent data related to every SKU offered on leading 2G and 3G terminals for the national operators and leading MVNOs. Each month we enumerate the entirety of the carrier device storefront. On a weekly basis our team tracks titles which secure a premium position in the game deck. A premium position is defined as an end-cap category such as What’s New or What’s Hot as well as the top slots in the genre categories such as the top five games listed under the Sports or Arcade sub-menus. Our ongoing dialogue with companies in the sector indicates that securing a better slot on the deck is the most important determinant of success for titles other than the branded favorites such as Tetris, Bejeweled or Pac Man.
The table below shows various measures for mobile games publishers for the month of November 2006 for the top ten publishers in terms of placement on operator decks. Two metrics for placement are included. Percent of Appearances measures the relative number of slots on the premium portion of the deck assigned to titles for a publisher across all national operators. Percent of Weighted Appearances assigns a weighting value to these slots based on how crowded the deck is; the appearance of the sub-menu above or below the fold; as well as the portion of overall new purchases accounted for by the carrier. Thus a title placed in an end-cap category on Sprint will be assigned a higher weighting to a title on a more crowded Cingular end-cap and the Cingular title will be more heavily weighted due to the operator’s larger share of monthly purchases.

Our analysis clearly shows a correlation between weighted share at the top of the deck and market share-measured in terms of new purchased downloads in a month. EA benefits disproportionately from its deck placement due primarily to its ownership of the top selling Tetris and Bejeweled franchises. The differences in share of purchases between the fourth and tenth ranked publisher in terms of placement are all within margins of error given that these publishers each have share of between 2 percent and 5 percent of a low-incidence behavior-purchasing a mobile game title. While this data is instructive directionally it should not be used as a hard measure of market share. Instead tracking premium placement and changes in relative position on operator portals is a better way to understand which publishers are gaining ground.
Questions or comments about this column? Please e-mail Seamus at smcateer@mmetrics.com or RCR Wireless News at rcrwebhelp@crain.com.