Do the games use TCP/IP? ========================= Wireless Firms Hope Video Games Drive Phone Use By Yukari Iwatani CHICAGO (Reuters) - Now that everyone from high-powered executives to junior high school students has a cell phone, wireless companies are vying to cash in by offering games on the phones to keep customers on line. The growing U.S. computer game industry is already worth at least $11 billion, and wireless firms see tapping into gaming popularity via cell phones as a way to expand revenues at a time when getting new phone subscribers is growing harder. They say putting games on phones is a perfect way for customers waiting in doctor's offices or on lines to amuse themselves by wielding swords, beating opponents to death, or playing Hangman. ``People who have cell phones hate to be without it,'' said Scott Lahman, president of game developer Jamdat Mobile, creator of the highly popular fighting game Gladiator. ``When you are bored, when you are on the line at that bank, when you're on the bus or on the subway, this is a very viable and vibrant medium where people are very thankful to have it,'' he said. Simple games like Snake, which challenges users to make a snake grow longer by directing it to food, have been available on mobile phones for some time. But wireless companies are betting that action-packed, colorful multi-player games will attract even more players. Companies including Verizon Wireless, AT&T Wireless Services Inc. (NYSE:AWE - news) and Sprint PCS Group (NYSE:PCS - news) are hoping that games and other features like instant messaging will get customers to use their phones more often and stay on longer. That would mean more money for wireless operators, which so far have relied simply on getting more subscribers to boost their revenues. But now that more than 40 percent of the U.S. population has mobile phones, new subscribers are getting harder to find, making it more important to keep people on the phone. The potential payback could be significant. According to a study by the Yankee Group, a tech industry counsultancy, the market for video games in the United States, including arcades, PC, console and online gaming, is currently worth about $11 billion. Other research estimates run as high as $20 billion. 850 MILLION GAME USERS BY 2006 With 850 million mobile game users worldwide expected by 2006, as estimated by the research firm ARC Group, all the potential players want to claim a piece of the pie. But those players, including mobile phone makers, wireless telephone operators and game developers, still must work out mutually acceptable business arrangements that enable all of them to realize their respective business dreams. ``We feel that this is a space that's going to be very important for us as an extension of brand strategy and personalization and an opportunity to develop positive revenue streams,'' said Chris Folmar, Nokia (news - web sites) Corp.'s (NOK1V.HE)(NYSE:NOK - news), digital services manager for games in the Americas. The Finnish company has already seen a glimpse of the potential of the games. Snake, one of the first games available on its mobile phones, has been played by about 130 million people since 1997 when it was first introduced, Nokia said. Los Angeles-based Jamdat's Gladiator game, a simple multi-player fighting game, has also been played by 800,000 users for 10 million minutes since October 2000. Gladiator's popularity is only the tip of the iceberg, according to industry executives. They believe consumers will play more games more often once wireless operators install next-generation networks that promise always-on Internet connectivity with high quality video and audio. The upgraded networks would allow consumers to play fast-paced, exciting multi-player games against other mobile phone owners around the world. ``The community experience as well as the fun is what is going to make this thing a significant proposition,'' Juan Montes, vice president of technology and solutions for Motorola Inc. (NYSE:MOT - news) said. NOT JUST YOUR NORMAL GAMER Wireless operators such as Verizon Wireless and Sprint PCS Group say they expect the games to attract more than the typical hard-core gamer: men in their teens and 20s. Verizon Wireless, the nation's largest wireless operator, said its current games are already luring younger and older players of both sexes. ``We're seeing a pretty broad appeal,'' Peter Grubb director of Internet development for Verizon Wireless said. ``We're excited about the usage we're deriving.'' The potential of games on mobile phones is evident, but both wireless companies and analysts admit that the industry still has to work out a few issues, including how all the companies involved will make money off of the games. Sprint PCS said it is considering selling the game outright, offering packs of ammunition or extra lives to play the games, or charging monthly subscriptions. Other possibilities include one in which customers would pay a fee to play advanced levels or access different worlds. Whatever wireless operators choose, they will at least still profit from the air time that customers will be using to download the game or play the game. Game developers are in the toughest position because they need wireless operators to decide first on how they plan to make money and how they plan to divvy up the profits. ``That's part of why the game developers are in hot water. They don't know which way the revenue stream is going to be or what network operators will pay them,'' Rich Luhr, director of technology strategy for wireless consulting firm Shosteck Group, said. Nevertheless, consumers can expect to see more games offered on their phones. ``It seems strange that we're looking to fill every waking moment with doing something, but that's how our society is going and our service (games) is just part of that,'' Tom Trineer, vice president of multimedia strategy at AT&T Wireless said.