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Out of the Game in DC

The FTC staff left games off of its map of the mobile marketplace -- here is why this is bad news for the mobile industry.

Today the Federal Trade Commission issued a staff report entitled, “Beyond Voice: Mapping the Mobile Marketplace.” It is a comprehensive 54-page report discussing a number of developments in mobile marketing and the consumer protection issues that they create.

(For those interested, you can download the FTC staff report here: http://www.ftc.gov/reports/mobilemarketplace/mobilemktgfinal.pdf)

Upon opening the report, I was excited to see what the FTC thought of the explosion of games available on mobile devices and, in particular, what at GDC was called the hottest gaming platform today, the iPhone. So what did the FTC have to say? Unfortunately, I can quote you the entire discussion of mobile games. Here it is:

“Andrew Elliott of Nokia discussed how mobile browser-based platforms also are being used to support online games on mobile devices. For example, Nokia, which sells many mobile devices around the world, has developed OVI, a mobile browser-based platform for accessing a variety of applications and services, including games. These types of capabilities greatly expand consumers’ access to content on their mobile phones.”

FTC Staff Report at 14. That’s it! There is no discussion of app stores, of the impact of the carrier deck, of other handsets as gaming platforms (and there are several good ones), of innovative games taking advantage of location capabilities of phones, or any other significant development in the mobile gaming marketplace.

There also was no discussion of the PSP, DS or DSi and the implications that wi-fi and VoIP create for established delivery methods for mobile content and telephony services. It’s too bad, for this would have been a good opportunity to paint a fuller picture of the games industry and also could have been a vehicle for addressing impediments to the further growth of the platform.

Where can this hurt the industry? Just look at two of the FTC staff’s recommendations. First, staff cited to the AT&T cramming settlement in Florida and pledged that it would monitor cost disclosures more closely and “bring law enforcement actions as appropriate.” Ad-supported games, subscription based games, and games with in-game item sales, watch out.

Second, the FTC expressed concern with privacy issues, especially regarding children. (In a 2008 report on industry enforcement of voluntary ratings systems, the FTC expressed concern that Mature rated games could be purchased on mobile devices without controls to police the sale to minors.)

Spurred by this concern, the FTC pledged to revisit its Children’s Online Privacy Protection Act (“COPPA”) rules next year, rather than in 2015. That proceeding, and the issue of privacy in general, is going to move forward and is going to affect the games industry, whether it participates or not. If you doubt that, just google the words “behavioral advertising.”

For now, the industry is just out of the game. If it loses, it will not be hard to figure out why.

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