Cell phone companies, carriers and software developers are betting big on the future of mobile gaming, wagering that consumers will drop big bucks to play videogames on their cell phones. But new research indicates that the market may need a power-up.

The good news is that the number of wireless gamers is increasing. According to a survey by the NPD Group, 27 per cent of all US wireless subscribers play games on their cell phones, compared to 20 per cent last year. And young consumers (aged 13 to 17) are three times more likely to play mobile games; in fact 60 per cent of kids who have phones use them to play games.

But further growth prospects seem weak. Only 6 per cent of wireless subscribers who aren't already gaming say they're interested in starting over the next year. And even those people who are already playing don't spend much time doing it: The average gaming session is just 11 minutes.

Even worse, they aren't spending money. According to the survey, two-thirds of all mobile gamers play only the free games that come with their phone. Only about a third of them paid to download more sophisticated games.

"They're having a digital snack," says NPD analyst Clint Wheelock. "When they've got ten minutes to kill they're pulling out the phone and playing a game."

Despite the efforts of phone companies, handset makers and game developers want to exploit the horsepower of new mobile handsets and make better games available, consumers don't seem to be interested in much more than a simple, momentary diversion, he says. "There's been a feeling that it's going to evolve from casual games, but I'm not sure that's what people are expecting from their cell phones."

One thing that might be keeping consumers away is the relatively high price of mobile games. The average purchase price of a mobile game today is $5.31, but mobile gamers say their optimum price point is about half that, or $2.75. And those consumers who aren't playing yet, but intend to, are even more price sensitive, willing to spend just $2.25.

"This tells me that the industry has a real challenge ahead," says Wheelock. "[Consumers] are saying, 'I'm not going to pay five to ten dollars for a game on my cell phone, all I want to do is play Tetris.'"

Consumers may not be taking to mobile gaming the way some businesses had hoped, but there's still good potential for the market, says Wheelock. Videogame developers such as Electronics Arts and Take Two Interactive are working hard to create mobile versions of popular, complex games like the Sims and Madden Football, but they may need to rethink that strategy. "They have to focus their inventory on the things that appeal to consumers," he says. " There's a large percentage of people that are interested in a good card game or a really addictive puzzle game."

And even if mobile carriers such as Sprint and Cingular--a joint venture of SBC Communications and Bell South--are having trouble getting subscribers to buy a $5 game, they still stand to benefit in other areas. Once they convince subscribers to play even free games, they may become more profitable customers.

According to the report, mobile gamers tend to spend 57 per cent more on new handsets, and use their phones more for regular calls, using 48 per cent more wireless minutes than non-gamers. Their monthly wireless bills are also 22 per cent higher than the average subscriber.

"Most [mobile game] developers and publishers who are in the market today won't be around in a few years," says Wheelock. Many of the startups that make only mobile gaming software are likely to get acquired, he says.

Out of those companies, Jamdat Mobile is a standout, though it's not clear yet whether they'll acquire other, smaller mobile gaming firms, becoming a pure-play powerhouse, or if they'll get gobbled up by a major gamemaker. "If you think about casual games you have to think about Tetris and Bejeweled, and [Jamdat] has both," says Wheelock. "They're likely the most valuable property in the market."

Even if companies such as Jamdat look attractive, it's hard to judge the value of a market when so few of the potential customers seem willing to pay for the product.