Japanese mobile phone firms are using games to cling on to fickle customers as competition intensifies, market watchers have reported.
Unlike most service providers in Europe and the US, Japan's mobile operators are looking beyond short-term profits by offering low-cost games and flat-rate data fees to hook customers for the long term, according to a recent report from the Wireless World Forum.
More than 90 million people in Japan, over 70 per cent of the country's population, already have a mobile phone.
As a result, mobile phone companies are increasingly finding that the only way to get new customers is to lure them from competitors with low prices and special offers. But this is a costly way to expand the business.
New regulations that make mobile phone numbers portable between operators will make it even easier to switch, according to the Tokyo-based MM Research Institute, but 'sticky' services like games can help protect providers against this.
Games are often viewed as a way to increase average revenue per user, but this is only the tip of the iceberg. By reducing churn, games could save an operator $500 per customer per year, said report author Jan Kuczynski, a Wireless World Forum analyst.
Over 70 per cent of i-Mode users said that they played a mobile game more than once a week, and 38.4 per cent play almost every day. By comparison, only 16 per cent of UK mobile phone owners say they play mobile games regularly.
To encourage game developers to produce lots of games, Japanese mobile firms only charge a relatively small slice of revenue, around 10 to 20 per cent, to distribute the games.
In addition, they make development tools and advice easily available to all. As a result, there are a wide variety of free games available for download. These attract users, and help keep commercial games prices low.
In much the same way that flat-rate internet access helped to make multiplayer games like Everquest and World of Warcraft possible, flat-rate mobile data is fostering the growth of multiplayer mobile games in Japan.
Users who pay a flat rate for access are twice as likely to play networked, or multiplayer, games.
Network games and gaming communities add a social dimension to mobile gaming which gives consumers an incentive to become repeat consumers, said Kuczynski.
However, despite the availability of more sophisticated networked games, simple puzzle and quiz games are still the most popular, played by some 60 per cent of mobile gamers.
Many Japanese gamers are using their mobiles to play 'pen-and-paper' games like Sudoku.
Recent trends in this genre have seen the increase in popularity of IQ games inspired by the popularity of Nintendo's Brain Training titles for the DS which was the third best selling game on any platform in Japan in 2005, said Kuczynski.
The revenue generated in Japan by mobile games will climb rapidly to reach $400m in 2007, the Wireless World Forum estimates.