Our take...
In Q4 2008, Capcom announced ambitious plans for expansion in the European mobile market. Since then, however, it has failed to drive its presence on operator portals with new games releases or deals with carriers. Capcom Mobile released just two new titles in Q3 2009.

The European mobile games market, with its many network operators, relatively low revenue shares and numerous players in the value chain, is one in which all but the biggest publishers find it difficult to succeed.

While Capcom Mobile did not fulfil its European promise, licensing its IP is a good move for Gameloft. The partnership will see Gameloft gain the rights to publish games based on popular titles from Capcom's catalogue of arcade and console games including the Street Fighter and Resident Evil series. The deal will also help Gameloft compete with its main rival EA Mobile, the world's number one mobile games publisher.

Both Gameloft and EA Mobile have consolidated their positions in the European mobile games market in recent months. In September 2009, Namco, another Japanese games publisher, announced that it was vacating the European network operator mobile games market, preferring instead to license its titles to EA Mobile and focus on iPhone games and its US operations. Other established mobile publishers to have reduced their output of games for network operators, or left the market altogether, include THQ Wireless and Vivendi Games Mobile.

While growth is slowing in the operator games market, particularly in Europe, the global network operator market will remain bigger than the smartphone games market in the short-to-medium term. Screen Digest expects more small and mid-range mobile games publishers to reduce their output for network operators and present EA Mobile and Gameloft with the opportunity to further consolidate their hold on the network operator mobile games market.