Mobile game sales are "flatlining" across North America and Western Europe despite increased interest from consumers, according to a report from Juniper Research.

It says that unless more operators adopt an Apple-like approach to rewarding games publishers, they will be driven away from the sector – and the number and variety of games available will decline.

The report highlights the "universally positive" response with which mobile games publishers and developers greeted the arrival of the iPhone, but adds that the volume of paid-for mobile game downloads has nonetheless levelled off across North America and Western Europe.

It found that although the retail value of the global mobile games market is expected to rise from USD $5.4bn in 2008 to more than $10bn in 2013, the potential for growth in many key markets is being dampened.

This is attributed to a combination of limited on-portal revenue share for publishers – meaning that some are exiting the mobile games industry – and poor games marketing.

According to report author Dr Windsor Holden, the revenue share offered by Apple to games publishers is incredibly attractive.

"The danger is that if operators do not respond with a similar business model, publishers faced with low margins may simply exit Java completely, thereby reducing consumer choice in the longer term," he said.

The report also found that while ad-funded downloads have increased markedly in popularity, the revenues accrued from advertising are unlikely to be sufficient to provide developers or operators with a primary revenue stream.

It argued that, with cost per mille (CPM) rates likely to fall in the face of pressures on advertising budgets, advertising would be largely employed by most publishers as a means of monetising older content.

On a more positive note, the Juniper study remained optimistic about prospects for growth in regions such as the Indian Sub Continent, Africa/Middle East and South America.

It reports that in those regions, the combination of increased mobile adoption and low levels of penetration of both games consoles and fixed Internet means that the mobile handset has already become the de facto gaming device.

Other findings from the Juniper report include:

  • China and the Far East will remain the largest regional market for mobile games throughout the period covered by the report.
  • Global revenues from in-game advertising will rise significantly from 2008 to 2013.
  • Operators need to reduce data charges further for out of bundle customers to encourage casual mobile Internet usage and thereby stimulate the mobile entertainment market

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