@ GDC: The End Of Carrier Control In Mobile Gaming May Be Near

In back-to back sessions at GDC Mobile today, industry executives challenged the notion that carriers will continue to control the distribution of mobile games in the next few years. Panelists said the status quo will change as economics shift, off-deck providers become stronger, and to a lesser extent, ad-supported games emerge.

Kristian Segerstrale, who recently left Glu Mobile (NSDQ: GLUU) to start a company called Playfish, said if you look at the broad market trends, the carriers will not continue as the only way for consumers to buy games, and accordingly, game developers should shift their approach to market. "Looking at the market, it does suggest things are about to change, and now it is time to shift gears," he said. "It's time to go from defining the product based on the carriers' desires to doing something completely new."

As a former economist, Segerstrale said there's two main factors driving this: phones increasingly have Web browsers, allowing people to access endless amounts of content, and although they are not popular today, there's new billing models, such as mobile versions of PayPal and Google (NSDQ: GOOG) Check-out. He said if developers and publishers gain some control of the retail experience, they can stop building products based on a carrier's requirements and be more creative. "Who says you have to support 1,000 handsets from the start? How about 10 and see what the uptake is? Suddenly, you have all the options that weren't available previously. I think the structure is changing and this will become possible moving forward," he said.

In a separate panel on alternative distribution methods, the off-deck model was highlighted. All of the panelists stressed being able to have larger catalogs of games, and the ability to suggest recommendations based on a returning customer's preference. The one unforgettable problem in off-deck, however, is that carriers control some of the business there, too. The panelists said in some cases, the carrier is demands up to 50 percent of the transaction cost, before it even makes money on the data charges.

They also said that may change, as they focus on what they do best. "The carriers live off voice and data plans, they do not live for selling games. We do, and we do it good and strive to innovate which the carriers do not," said Jamba's Thomas Richter. Mitch Rotter of Thumbplay said carriers are like Wal-Mart (NYSE: WMT). Wal-Mart can offer a few of the latest music releases, but it can't support a very big selection. PlayPhone's Bell said a carrier's expertise stops at impulse buys: "They happen to buy what's at the top of the deck. On off-deck, they can dive into a broader catalog. We can put a top selling game at the top of the page, or bury it, but people will find it and seek it out."