“The large majority of subscribers are either playing a game that came with their phone, or free demos,” said Sawhney.  “So why are people not downloading and purchasing more?  The research shows the issue is price.  It’s an expensive proposition (to add $5-$7 games) when your cell phone bill is already around $60 per month.”

Mobile carriers have long been reluctant to provide free content beyond the basics that come with a phone plan.  Given the demand Sawhney indicated, we would assume carriers are reaping the benefits of customer add-ons.  But it’s just the opposite.  “What we’re seeing is that in the mobile market, almost 100% of the content you can add to your phone is premium content that you have to pay for,” said Sawhney.  “You’re paying $2 for a ringtone when you could get the full song for 99 cents on iTunes, or paying $6-$7 for a simple Pacman game when you could play it for free at Yahoo Games.”

It’s the nonsensical pricing of premium mobile content that has consumers unwilling to adopt at the rate they would like to.  Sawhney compared the potential of the mobile market to cable, pointing out that cable packages have plenty of ad-supported, free content.  But why not mobile carriers as well?  After all, as Sawhney said, “Advertisers are really interested in this medium, and really eager to subsidize the content.”

That’s doubly true when you consider Hovr’s advertising technology. “We have the capabilities in place where we can run an ad campaign that can drill down to people’s specific profiling.”  Not that targeted advertising is anything new, but, as Sawhney believes, it makes consumers even more willing to accept advertising in exchange for free content. 

“If you ask users about mobile advertising, everyone always says, ‘No, we don’t want to see any ads on our phones.’  But if we do it in an opt-in way, and we make it relevant to specific customers, and ask if they would be willing to see these ads in exchange for free mobile games, a large majority of users say, ‘Yeah, I would be interested.’”

Hovr ran a soft launch in January with an impressive response.  “We saw about 200,000 downloads from 105 different countries,” said Sawhney. 

But with a model as simple as Hovr’s, what’s to keep competitors from emerging?  Furthermore, why would someone stay with Hovr when casual games are relatively simple and easy to replicate?  To the first point, Sawhney says he welcomes competition, as it will signal the legitimacy of ad-supported mobile games, and increase the overall pool of potential Hovr customers.  As to the second point, it will be Hovr’s social networking capabilities, he says, that will keep customers coming back for more. 

“We’ve really built Hovr into a mobile social network.  Customers can add a profile, they can add their friends, they can compete against each other, and a good majority of our games have a feature where you can upload your high scores and then you can compare that to your friends.  Your friends will get an SMS saying you beat their scores, or you’ll get an SMS saying a friend beat your high score.”

Hovr officially launched on February 26th.

Scott Goldberg