@ GDC: Gameloft CEO Says Christmas Didn't Come To Mobile Games Market In 2007

In GDC Mobile's opening day keynote, Michel Guillemot, Gameloft's CEO and President, said he wasn't there to talk about the fun bells and whistles about the gaming industry, but to address how the industry is in the middle of a huge change, which is limiting growth. Last year, he said: "was a very special year and everything was fine, and then everything was not fine. Christmas didn't come, especially in the U.S."

He said the mobile game business is similar to the console video game industry???right before a new console is released, growth slows. Last year there was a number of reasons in mobile for this slowdown, he said. For instance, the iPhone came out, and for more than half the year, those heavy-data users were unable to download and play a mobile game, taking away the number of potential audience members. Soon Apple (NSDQ: AAPL) will allow people to download applications to the phone, likely over iTunes, and also, a number of new platforms are on the horizon, such as Nokia's Ovi.

"When a console comes out every five to six years, there's a little slowdown in demand and then people purchase a new console, and then there's growth," he said. "We are witnessing a similar thing. Innovators are waiting for new consoles and games to come to market. They are going to arrive in 2008, especially the second half. Yes, we are following the console model. We have had a good ride up, and now we are going through a transition in which we are going to reach the second growth period."

Guillemot also talked about a couple major concerns in the market:

-- On fragmentation: He said Gameloft (EPA: GFT) releases about five games a month for 1,000 handsets in 10 different languages. That ends up being 50,000 different SKUs, or versions. "Eventually it's not that easy to do, especially if you want the SKUs to be as nice as possible," he said.

-- On the distribution model: Currently in the U.S., Gameloft spend a lot of time sending each one of the SKUs to the carrier, which uploads it to its deck. Some carriers have outsourced the operation, which is also cumbersome, he said. In Japan, he believes the best model exists, where the operators manage the deck, and the publishers manage the back-end system. "In this model, the carriers know how to do the front end, and then the back-end is something publishers know how to do really well. In this model, everyone is doing something that they are adept at doing. The result is in the uptake, from about three to four percent of people to up to 15 percent."

-- Unknown costs: "It's the only retail business where you don't know what you are going to pay," he said. The game might cost $5, but then, the consumer might have to pay the operator another $15 in data fees. "You do that to a teenager, and we are very good at losing customers as soon as we got one."