China Mobile ended 2012 with 400 million registered users of its mobile game services. The mobile operator currently offers titles from more than 600 game providers around the world.

Tarifica’s Take

The mobile gaming market is sizable. According to our research, it is currently approaching $20 billion annually and will likely surpass that mark in the not-too-distant future. Mobile operators get about one third of the revenue that is generated from the downloading of these games. So it is understandable that China Mobile would want to offer as many titles as possible. However, we need to sound a note of caution. There are a lot of bad titles out there, and gamers are a demanding and selective bunch. We suspect that a good percentage of the titles in China Mobile’s massive library are not exactly high-grade. While gaming is a great revenue opportunity, we’re concerned that if the games themselves are not good, there could be a backlash, with loss of consumer goodwill. Gaming growth could stall or even contract, and there could be negative implications for the operator’s reputation.

So what’s the solution? First, finding good titles, and second, promoting them properly. Operators that are interested in aggressively pursuing this opportunity should have the equivalent of a “chief gaming officer” who would work with a small team of capable people to vet the games by sifting and testing the plethora of offerings. The operator should then aggressively promote the better titles to likely targets via the following four channels: text message, e-mail, website, and in-store marketing. In particular, it should offer discounts and special deals on higher quality games to further boost demand and revenue. These are relatively low cost initiatives which should generate an attractive ROI. Moreover, we believe that the actual costs associated with such marketing initiatives could by partially or entirely borne by the game manufacturers themselves. In summary, done properly, gaming is an extremely low-cost way for operators to boost revenue and customer satisfaction.