Game Developers Calling On Mobile Phones (reuters)

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By Yukari Iwatani Kane and Lisa Baertlein Fri May 20, 7:34 AM ET LOS ANGELES (Reuters) - When people think of video gaming on the go, the DS and the Sony PSP come to mind, but smaller devices are becoming bigger competitors as mobile phones tap into fast new networks.

Industry research firm, Yankee Group, estimates revenue from mobile phone gaming in the United States totaled $173 million in 2004 and will hit about $1 billion in 2008.

"I think mobile gaming is coming into its own," said Geoff Graber, general manager of Yahoo Inc. (Nasdaq: - )'s game unit, which is teaming up with Sprint to offer games that allow users to play against others connected via both mobile phones and personal computers.

"As the phones continue to improve the games get better."

Some of the industry's largest game developers including THQ Inc., Namco Ltd. and Sega demonstrated mobile phone games at the Electronic Entertainment Expo video game trade show this week.

People thronged to play "Pac-Man" update "Pacmania" and mobile game versions of "The Incredibles" and "Hello Kitty."

Mobile gaming companies like JAMDAT Mobile Inc. and France's In-Fusio as well as the world's largest mobile phone maker also showed games ranging from simple favorites like "Tetris" to arcade favorites like "Golden Tee" and action games like "Age of Empires."

"We've seen an uptick in the number of exhibitors that are in the wireless space this year," said Doug Lowenstein, president of the Entertainment Software Association, which organizes E3 every year.

LOW DEVELOPMENT COST

In Japan, where more than a third of users own high-speed phones, NTT Inc., Japan's largest mobile operator, said mobile game revenue from its own users alone totals about $186 million a year, not including the data connection fees.

While that comprises only about 15 percent of DoCoMo's total data revenue, the potential is huge considering that each game can cost more than $50 a year to play.

"It's a fallacy that Americans won't play games because they don't have any downtime," said Yoshiteru Yamaguchi, DoCoMo's executive director of content and customer relations, adding that game playing among DoCoMo users peak in the late evening when they're at home.

The most popular games in Japan are mobile phone versions of console games like "Dragon Quest," "Final Fantasy" and "Street Fighter," Yamaguchi said.

"Mobile games are a great low-cost counterpart to bigger budget console games because developers can re-use the same content and the operator takes care of most of the marketing," he said.

Amp'd Mobile, which plans to launch a new U.S. mobile service in the fall using Verizon Wireless' network, says the key to attracting users to games lies in integrating it into other content such as ring tones, wallpapers and video clips.

All of these trends make Yoichi Wada, chief executive of Final Fantasy creator Square Enix Co. Ltd., smile.

"When we announced at E3 two years ago that we were entering the U.S. mobile game market, people thought we were crazy. But then last year, JAMDAT attracted a lot of attention, so there's been progress each year," Wada said.

"I think mobile gaming will really start coming into its element between this year and next year."

(Additional reporting by Sinead Carew) RECOMMEND THIS STORY Recommend It: Not at All Somewhat Moderately Highly Very Highly

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