If you’re one of the mobile games industry’s many curious onlookers, your head must be spinning these days. M:Metrics and Telephia, two respected mobile content analysis firms, recently issued high-profile reports on the overall health of the business, and the conclusions they draw from their respective sets of data are diametrically opposed. One set of number-crunchers seems to think that the proverbial glass has gone bone-dry, while the other guys make it sound like we’re looking at a vast underground aquifer that’s started to issue geysers of money (PDF link).

Yes, these reports make use of different methodologies, but the fact remains that they examine at the same industry over the same three-month time period...and yet, the impressions these reports offer of the industry couldn’t be reconciled by anything less than a flaming vision in the sky.

Disaster Vs. Delight - Who's Right?

It’s hard to come by that kind of P.R. these days, so the only way to stop the merry-go-round is to sort the mess out logically. Obviously, both of these companies can’t have correct interpretations of mobile games sales behavior, so which one is in the right: M:Metrics’ stark portrait, or Telephia’s exuberant clarion call? The answer depends partially on which indicators one values highly, of course, but a knowledgeable source from within the industry suggests that neither company hit the bullseye this time around.

The first task is to understand why these reports are so important in the first place. Keep in mind that these documents aren’t forecasts; they’re retrospectives talking about Q1 sales. Those numbers shouldn’t be controversial, right? Wrong. In a more perfect world, like the console game business, accurate retail numbers are readily available from a number of sources, including research outfits like NPD Group, games stores, and the publishers themselves.

Unfortunately, exactly none of this is the case in the mobile games business, which is about as transparent as the Berlin Wall. Basically, the only entities that have access to big-picture sales numbers are the mobile carriers, and they keep the data under lock and key; they have no interest in divulging any information that could reveal their strategies on the mobile data front.

The same goes for the mobile publishers. The privately-owned companies that make up the bulk of the industry hardly ever admit how well their games are actually selling, for fear of losing the battle of perceptions to their competitors. On the publically-traded side of the fence, companies like Electronic Arts, THQ, Namco Bandai and Gameloft are obliged to provide revenue numbers, but are usually silent when it comes to unit sales and subscribership. The lack of reliable information is so complete that any interested party, including M:Metrics and Telephia, must resort to controlled surveys and complex statistical magicks to figure out what consumers are actually doing.

Indeed, Wireless Gaming Review and GameSpot actually developed a now-defunct data service (deemed “Dex”) that attempted to track game movement within carrier download decks themselves; the idea was that this information could provide some second-order insight into sales performance, much like Kremlinologists reading significance into the positioning of various functionaries during Soviet military parades. Dex had more than a few customers in its heyday.

Probing The Black Box

It sounds like a joke, but the stakes here are high. There’s little question that the information vacuum has interfered with the mobile games industry’s growth, because the lack of reliable, granular sales numbers that can precisely identify leading companies, techniques, and trends inhibits the flow of investment money and has frequently led to its misallocation. On a broader scale, it’s tough for the media or anyone else to take any industry with ambiguous, nebulous or absent sales numbers as anything more than a fad. This is a particular concern for mobile publishers, who are desperately trying to carve out space in mobile users’ perceptions and entertainment budgets. Who wants to invest in an industry that is currently growing by nearly 50% OR close to 0% a quarter, depending on who you listen to? Who wants to play games developed by an industry that nobody invests in?

I’ve exaggerated the consequences of the situation to make my point, but this is pretty much what we’re dealing with at the moment: M:Metrics says the industry is stagnating, and Telephia thinks that it’s going critical. Many arguments could be made about the validity and relative merits of the statistical methods used--M:Metrics’ study relies on user surveys from three different countries, while Telephia examined tens of thousands of cell phone bills to dig up numbers--but the fact is that most industry readers will simply side with the results they want to hear. For example, those who desire immediate reforms in mobile commerce are likely to agree with M:Metrics’ viewpoint, while those that are looking to start a new mobile games outfit (or to expand an existing one) will favor Telephia’s report.

Averaging The Two Extremes

As is usually the case in these types of scenarios, the truth probably lies somewhere between the two extremes. Glu Mobile CEO Greg Ballard seconded this opinion in a recent e-mail interview. “Based on our own data, from talking to the carriers, and from seeing what our publically-traded competition is doing, we believe both reports have significant flaws. We estimate that the market grew at about 15-20% in Q1, which is neither stagnant nor growing at 53%...the market is growing, it’s growing steadily and quickly, and there is a lot of money to be made,” remarked Ballard.

This third viewpoint squares much more readily with observations of recent market activity, as well as with common sense. Does it seem likely that EA would have paid a large premium to buy Jamdat outright, if they had any inkling that the mobile games market was totally stagnant? What about Vivendi Universal Games’ recent move to shore up their mobile strategy by hiring Paul Maglione away from the much smaller I-Play--does that make any sense without some expectation of growth? On the other hand, do you see legions of mobile gamers taking over malls and parks to play quick games of Tetris? Are mobile games popping up in TV commercials, on sitcoms, and in popular culture in general? The answers are no, no, no, and absolutely not (yet). In an industry where information is hard to come by, the answers are often more intuitive than you’d think.

Going Up, Destination Unknown!

There has certainly been growth in the mobile games business, there’s growth right now, and there will be additional growth in the future. The industry should leave the wrangling over specific numbers alone and focus on more important questions: to what degree is whatever growth there may be tied to the global growth of cellular services, and what must be done to turn this “expansion by diffusion” into directed consumer behavior? Also, how can research methods be refined to produce more useful (and widely applicable) data in the future? Now, those are some answers everyone in the mobile realm would enjoy dissecting.

[Steve Palley is the Founder and Lead Analyst of Foci Mobile, a mobile games consulting firm. He was previously Chief Editor for Mobile Games at GameSpot and Wireless Gaming Review.]