Last year, while video game sales were down 11 per cent, US mobile game publishers took in about $US539 million in sales – up 9.3 per cent, according to research firm SNL Kagan.

Even more impressive, annual customer spending is likely in the $US1.3 billion to $US1.5 billion range, according to Kagan analyst John Fletcher. Game publishers typically get 30 per cent to 50 per cent of the dollars.

And the income is likely to continue to rise as publishers charge higher prices for more intricate games designed for the iPhone, Blackberry and Android crowd.

In fact, the typical iPhone user is about 70 per cent more likely to use it for gaming than other mobile phone users. “The iPhone has really changed the landscape,” Fletcher told TheWrap.

Meanwhile, more than 30 movie-based mobile game titles have already been produced over the past three years. (See accompanying story, “8 Movie Games for Your Phone.”)

Most recently, Disney released a mobile game for Alice in Wonderland, 10 days before the Tim Burton film’s debut last weekend. Coming up on March 23 is How to Train Your Dragon, based on the DreamWorks Animation film that opens in theatres three days later. And in July, Universal’s Steve Carell-starring “Despicable Me” will be accompanied by a mobile game.

At this point, studios are still trying to walk the fine line between pushing enough titles to help market their films – but not so many that such an investment is for either a paid application that draws little revenue or a free application that provides little marketing punch.

“The filmmakers want as much product around the film as possible,” said Stephen Saiz, director, marketing for Disney Interactive Studios. “For us, it’s always going to be about making sure we’re not crowding the marketplace with titles.”

Indeed, as of Tuesday, Fast & Furious was number 18 on iTunes’ Top 100 paid apps, and three film games – Transformers, Alice and Fast & Furious: Test Drive – made the Top 100 free list.

A mobile version of James Cameron’s Avatar was released December 14, four days before the record-setting film was released in cinemas – but its pricetag certainly has eaten into sales. At $US6.99 it’s more expensive than all but five of the Top 100 selling paid apps.

But, Fletcher points out, “It’s still in the early stages of the market.”

Nowhere is the juxtaposition between the mobile and console market clearer than it is with Electronic Arts, whose mobile titles include Harry Potter and the Half-Blood Prince, GI Joe and Kung Fu Panda.

For the month of December, EA published seven of the top 11 games for the iPhone and created at least half of the top 10 titles on Verizon, AT&T, Sprint and T-Mobile, EA Chief Financial Officer Eric Brown said on a conference call with analysts last month.

As a result, EA’S mobile division, the largest U.S. mobile-game publisher with about 20 percent of the market, boosted sales for the quarter ended Dec. 31 by 14 percent from a year earlier. By comparison, the parent company’s sales plunged 25 percent, leading EA Chief Executive Officer John Riccitiello to call 2009 “a frustrating and challenging experience for us” in terms of overall game sales.

Of course, the main reason mobile games remain just a fraction of the total games market is because so many titles are cheap – if not free.

While Disney’s Alice cost $US5, there was a free “Lite” version. Fast and Furious was only 99 US cents, as was the recent GI Joe. The popular Top Gun game was $US1.99, and Harry Potter and the Half-Blood Prince was free.

Hence, at least for now, the studios still see games-for-phones as more of a marketing tool than revenue generator.

But that likely will change. It’s estimated that 240 million North Americans will use smartphones in 2013 – up from about 60 million in 2008, according to a report last year by digital research firm Parks Associates.

Also likely to change: the quality of the studios’ games.

“The studios got a bad rap a few years ago for putting out hacked-together games,” said Kagan’s John Fletcher. “Now they’re more interested in the quality of the games going out.”

All of which supports Disney’s Saiz and his burgeoning division’s efforts.

While most of those at the studio working hard on the movie version of Alice felt the mobile game based on the film was merely there to support the theatrical debut, for Saiz, it was the other way around. His goal was to ensure that the game stand on its own merit and not merely glide on the coattails of a box-office hit or flop.

“We approached this as a full premium title,” Saiz told TheWrap.

“Working in mobile, you’re not going have the biggest budgets in the world, so to draft on the marketing campaign off a film is helpful.”

[TheWrap is a unique primary news source focused on the business of entertainment and media. Offering its readers original reporting, exclusive contributions from industry readers and curated news from around the globe, The Wrap is led by award-winning journalist and author, Sharon Waxman, with a team of veteran entertainment writers and editors including Josef Adalian, Lew Harris, Josh Dickey and Dylan Stableford. TheWrap news organisation is backed by Maveron, a venture capital firm based in Seattle, Washington and co-founded by Starbucks CEO Howard Schultz and Dan Levitan. ]

Here, for your viewing pleasure, are a selection of videos showing off how you can stream videos on via Netflix, read comics, keep up on live sports and, yes, play games.

Comics

This video shows off how Graphic.ly will work on Windows Phone 7 phones. Some of the neat features include extreme zoom and the ability to drop community comments into a comic you’re reading linked to specific panels.

Netflix

You can stream Netflix videos directly onto your phone. Why isn’t this on the iPhone yet?

Sports

Windows Phone 7 has this neat little app for tracking and watching live sports games.

Games

And of course there is gaming on the platform. We already saw a bit of Harvest, but Larry “Major Nelson” Hyrb took to the stage today to talk the game up a bit more as well as show us a bit of Goo Splat and Battle Punks.

The MIX10 conference kicked off today in Las Vegas. Most of the stuff they’ll be talking about puts me to sleep instantly, but Microsoft let us know to expect some Windows Phone 7 news to hit as well.

The first taste of gaming we saw at the show was this sexy video of an Xbox Live game being played on a Windows Phone 7 platform. Yes, we even catch a glimpse of unlocking Xbox 360 achievements.

EA, according to the digital marketing site ClickZ, will end its partnerships with IGA Worldwide and Massive Inc., after their deals with the two in-game ad companies expire in August. That, of course, is when Madden NFL 11 ships, so EA’s internal operation will debut with what appears to be an attractive ad property.

Of course, in-game ads are much more than whatever appears on the billboards in the arenas of a sports game. Madden last year ramped up its broadcast presentation, bringing along sponsorships from Snickers, Burger King and a rotation of pop-ups that some found annoying. And it’s more than console games, as well. Earlier this week at EA’s first “upfront” event, where the publisher pitched its products to advertisers, EA gave emphasis to Apple formats, such as its growing line of mobile sports games, and the iPad. Social networking such as Facebook will also be a focus.

EA to Ditch Massive and IGA, Will Sell In-Game Ads Direct [ClickZ via GamesIndustry.biz]

My time spent playing the game on the iPhone yesterday gave me a chance to check out some of the things that have so far set Conviction apart from previous iterations of the series.

There were moments when my goal appeared as giant white text hovering over the scenery, though the effect wasn’t nearly as powerful as what I’ve seen in the console version of the game.

The other gameplay elements brought over to the iPhone, though, were much more impressive.

The third-person stealth action game had me to trying and stay out of sight of enemies, with the help of an eye icon in the top left corner of the screen, by taking cover behind containers and shooting out lights.

The controls are pretty straight forward: A virtual thumbstick located in the bottom left of the screen allows me to move around, while touching anywhere else on the screen with my right hand allowed me to look around and aim. One icon in the bottom right of the screen allow me to fire my weapon or execute stealth takedowns. The other icon changed depending on the context, allowing me to interact with my environment. I used this virtual button to open doors, flick switches, take cover and move behind hiding spots.

Icons in the top of the screen controlled weapon and gadget selection. The gadgets I played around with gave me night vision and temporarily disabled electronics.

Other familiar gameplay elements in the iPhone game included showing me my last known position by enemies with a transparent silhouette and the ability to tag multiple enemies with a market and then pop up and shoot them in quick succession automatically with my gun.

While the console version of the game requires you to execute a few stealth takedowns to activate this ability, the iPhone’s version gives you the option anytime you set yourself up in the right conditions of lighting, stealth and proximity.

The game’s story will loosely mirror the console version of the game and include ten levels which will take four to five hours to complete, I was told.

Playing around with the early build of the game for about 30 minutes, I was impressed with how smoothly the concepts of Conviction translated to the iPhone. The only miss I saw were those in-scenery messages which looked a little too low-res for my liking.

It was a blast to tap-stealth my way through a level, deciding from a surprisingly broad selection of options, which way I wanted to tackle a problem. One security room, for instance, had two doors, a window and a sky light, all of which could have been used to enter the room and take out the people inside with varying degrees of stealth.

My biggest concern for the not-yet priced game is that after playing through the five hours or so of the campaign, you’re finished. I know that’s true of plenty of console titles, but I still don’t like the idea of such a short, essentially disposable experience.

This will all come thanks to an update to XNA Game Studio 4.0 being unveiled at the Game Developers Conference today, Microsoft’s Michael Klucher writes on his blog.

The lead program manager at microsoft, Klucher said he will be in San Francisco this week to talk about the things that the latest build of XNA can do for developers and their games.

And that includes quite a bit of cross-Xbox 360 support.

“The other key component of XNA Game Studio 4.0 that we’ve enabled exclusively for Xbox partners is Xbox LIVE and a premium gaming experience on Windows Phone 7 Series,’” he writes. “Through the Gamer Services API’s you can pull in a user’s Gamertag and 2D Avatar as part of the game experience, unlock achievements on the platform, and leverage notifications for asynchronous turn based gaming.”

That’s the good news. The bad news?

It sounds like Microsoft still doesn’t have a whole lot of interest in pushing the Zune as a gaming platform. In the same blog post, Klucher urges developers to “migrate” their Zune games over the to Windows Phone 7 Series platform. He doesn’t, urge anyone to continue making games for the Zune, though.

Check back later today to read about our meeting with the Windows Phone 7 Series folks and what else we learned about the new mobile gaming platform.

Achievement Unlocked: XNA Game Studio 4.0 for Windows Phone [Klucher.com]

Microsoft’s “Live Anywhere” concept, whereby Xbox Live can be shared across multiple platforms, isn’t quite yet with us. But when it is, it may look something like this.

Speaking at TechEd Middle East, Microsoft’s Eric Rudder has shown off this demo of a platformer that is able to be played across a mobile phone, Xbox 360 and PC. Not only is the game mostly comprised of the same code (only around 10% has to be specifically reserved for multiplatform stuff), but as Rudder shows, you can play on your phone, pause, then resume playing on a 360 at the exact point you stopped on the phone.

Pretty great.

[via Engadget]

What is, however, a little tendentious and mildly exploitive is the fact the two protagonists are both lesbians – a bit of a safer demographic, I suppose, and one heterosexual men find appealing if not titillating. The characters, Ren and Akira, are anime characters kicked out of an all-girls Catholic school where the dress code is anything but conservative. A nun catches them kissing (“Again …” in the words of Ren’s father) and, following their expulsion, their wealthy parents put them to work parking cars at properties they own.

Despite the caricature of their sexuality, it’s the last part that intrigues me. You could invent any number of backstories that justify the characters’ arrival at this purpose, but the creators specifically chose the lesbian angle. And as they advance through the game, players of both orientations learn more about the characters’ lives. While I have just downloaded the game and not played it that far, I assume this is, on some level, an entry into humanizing a community that some gamers otherwise wouldn’t bother to understand.

Factory Games, the developer, is donating a portion of the proceeds from Valet Hustle’s sales to the Human Rights Campaign, committed to the cause of equal rights for lesbian, gay, bisexual and transgendered persons. The game costs 99 cents and – interestingly – despite the same-sex kiss in its opening and Apple’s explosive capacity for prudery of late, it’s still up.

Valet Hustle Raises Gay/Lesbian Rights Awareness On iPhone [Game Set Watch]

TechCrunch has been following these developments since Thursday, when the creator of “Wobble iBoobs” got at notice that his app – which grossed $US30,000 last year – was being unilaterally removed due to user complaints about sexual content. The developer, Jon Atherton, went looking for answers from Apple on what it’s new policy was toward sexual content – as Apple hadn’t published one to developers. He says he was told the following. If accurate, it’s more than prudish. Per Atherton (to TechCrunch):

1. No images of women in bikinis (Ice skating tights are not OK either)

2. No images of men in bikinis! (I didn’t ask about Ice Skating tights for men)

3. No skin (he seriously said this) (I asked if a Burqa was OK, and the Apple guy got angry)

4. No silhouettes that indicate that Wobble can be used for wobbling boobs (yes – I am serious, we have to remove the silhouette in this pic)

5. No sexual connotations or innuendo: boobs, babes, booty, sex – all banned

6. Nothing that can be sexually arousing!! (I doubt many people could get aroused with the pic above but those puritanical guys at Apple must get off on pretty mundane things to find Wobble “overtly sexual!)

7. No apps will be approved that in any way imply sexual content (not sure how Playboy is still in the store, but …)

TechCrunch notes that Apple removed an app “that featured a popular fitness model in her workout clothe.” It also asked if the ban would affect Sports Illustrated’s swimsuit application. “The Apple employee wouldn’t give a clear answer, but it was implied that the SI app would probably be removed as well,” TechCrunch notes.

“Wobble iBoobs” might be a bit crude, but fundamentally, it’s a joke application that some might say is no more offensive than “iFart” or “iPeePee” (both of which are on my phone.) It’s also seems like an overreaction given that iPhones and iPods contain parental controls, and adult apps are listed with an “objectionable material” warning in the iTunes store.

It’s Apple’s store and device, so, the free-speech argument here doesn’t apply. Apple can do as it pleases with the offerings sold under its name. If it wants to crack down on porn and paddle behinds and treat everyone like giggling kindergarteners, that’s its right. If it wants to clean out useless or spammy apps that lure buyers with the promise of titillation, it can do that without harming developers who are a little more thoughtful or clever about mature subjects. It just takes more work. And a transparent policy. If this is accurate, Apple isn’t serious about either.

The New App Store Rules: No Swimsuits, No Skin, And No Innuendo [TechCrunch]

While Microsoft’s WM7 interface looks amazing, the way it’s making use of Xbox Live is wasteful. Counter-productive. Same goes for Sony; while it’s admirable the company wants to allow PS3 and PSP users to access the PlayStation Network from Sony Ericsson phones, the execution is lacking.

Why? Because both companies, crippled by an inflexible corporate structure, are hung up on the word “exclusive”.

How mobile access to your console accounts should work is via a universal app. A common program you can install on an iPhone, an Android phone, a Nexus One, a Windows phone, a Sony Ericsson phone. Because that’s the variety of phones we, as console owners, possess. While every 360 owner has a 360, they don’t all own the same phone, nor can they be reasonably expected to. The phone market is a larger, more complex one than the one for home video game consoles.

It’s a philosophy certain sections of these giant companies are in tune with. Microsoft, for example, has an application for competitor Apple’s iPhone, for its Bing search engine. It also releases Office software for the Mac, despite Apple’s computer being, in many respects, a rival to Microsoft’s own ambitions in the personal computing space.

Microsoft does this because, to the people working on Bing and Office, it makes business sense. It’s catering to a market, and in doing so, making money. The problem is, not all sections of these companies employ such common sense. They’re cut off, operating in isolation (and in some cases even competition), so what may seem a logical idea to one area seems like heresy to another.

Clinging to outdated notions of “exclusivity”, then, both Microsoft’s Xbox Live Mobile and Sony’s PlayStation Network will be available only to people owning phones sold by those companies. Own a 360 and an Android phone? You’re shit out of luck, you can’t use the new Xbox Live features (or play its games). Own a PS3 and an iPhone? Same deal.

It’s just so… disappointing. Here, years after the release of these consoles and the dawn of the smartphone era, and the first officially-sanctioned services to bring consoles and smartphones together are dead on arrival, rendered useless by the fact that the world’s most popular phones – a list that does not include anything running Windows Mobile or anything made by Sony Ericsson – are cut out of the action.

Sure, there are home-made options – 360Live on the iPhone is particularly good – but in 2010 we shouldn’t be relying on fan-made projects. I should be able to pick up my iPhone, and while way from home, be able to check my friends list, my Gamerscore and my PSN trophies on something supported by the console manufacturer. Hell, that’s just for starters. I can do that stuff with Twitter and Facebook already. In a perfect world, we’d be able to send messages (both text and voice) to other users and queue up our downloads as well.

But we can’t. And probably never will. Instead, one day in the future, we may actually meet a person that was able to take advantage of all these neat new services. And they’ll say how neat they were. And how it was such a shame he was the only person he knew that ever used them, since all his friends already owned iPhones or Androids….