A new report from Juniper Research predicts that mobile gambling will be a $16.6 billion business by 2008. Growth, Juniper reports, will be driven by the mass market appeal of lotteries, the rise of low value-high volume sports bets and a dedicated band of casino players who, while relatively small in number, will spend quite a lot of money playing games on the mobile platform.
The report, "Mobile Games: Text to Rich-Media Games," looks in detail at what each type of gambling service (casino, lotteries and sports betting) are likely to be worth under a variety of different pricing scenarios.
Paul Skeldon, mobile entertainment senior analyst with Juniper Research and author of the report, estimates that the mobile gambling market is currently worth $315 million. It hasn't reached its full potential, he said, "because it has not yet been exploited in any meaningful way by anyone other than a few pioneers and some trials. It is also currently held back by the lack of widespread dissemination of the 2.5 and 3G technologies that can really make some of the more sophisticated services run rampant."
Geographical and cultural forces are also at work on these numbers, with the Asia-Pacific regions (driven largely by China) being very keen on gambling and expecting to see a rapid and large growth in mobile phone penetration during in the next five years.
Gambling has always been a lucrative business; the U.K. Betting Office Licensees Association (BOLA) estimates that global gambling in all its forms is worth around about $1 trillion.
According to Juniper's report, the traditional methods of gambling (going to casinos, going to betting shops and playing the lottery) are increasingly being augmented with electronic forms of gambling, most notably using the Internet, where casino services and betting services are doing a roaring trade. The next progression in this process is the mobilizing of gambling services.
In the progression from online to wireless, mobile technology brings the following dynamics to the gambling industry:
- Convenience - Bets can be set any time, anywhere.
- Ideal Target Market - How more direct can direct marketing be?
- Penetration - In 2003, the world mobile telephony market had grown to nearly 1.2 billion users and $370 billion. (Source: Idate.)
- Technology - Internet connectivity via the mobile phone will become common.
- Billing - The mobile phone has post-paid services. No credit cards are needed.
Despite the many advantages of mobile gambling, a number of hurdles and caveats are applicable to mobile entertainment as well:
- Regulation - There are many regulations surrounding gambling, many more surrounding mobile services and still more regarding paying for and delivering these services to mobile users. And these regulations are different in the different regions of the world.
- Trust - Create consumer trust is a challenge.
- Two-Way Payment - Gambling services are unique in that they involve money being paid for the service and winnings being paid back the other way (sometimes at least!), and this is potentially very difficult for established billing mechanisms. Premium Rate SMS (PRSMS) is one of the favored methods.
- Payouts - There are strict calculations that gambling businesses employ to work out the odds that will give them the right sort of payout to attract business, but also keep them profitable.
- Technology - Those who want to make money here and now with mobile gaming of any form have to design the games around the handsets; make the most of direction keys to navigate on screen displays, rather than having to input text and numbers.
Juniper Research interviewed over 60 leaders of mobile entertainment companies across the industry and analyzed input from over 300 mobile entertainment end users to formulate a unique market sizing and growth model for the sector.
Additional Findings:
- SMS-based game downloads accounted for $1.5 billion last year, with Europe taking a 68 percent share. The simplicity and immediacy of SMS as a delivery and billing mechanism is already proving to be a powerful catalyst prompting users to download new games, extra game levels and participate in multi-player games.
- Rich-media games that require more advanced handsets with color screens, polyphonic sounds and Java/BREW capabilities are also beginning to impact the paid-for games market. This sector is forecast to grow rapidly and will account for almost 65 percent of the $9.7 billion revenues forecast for 2008.