Just to clarify some things for those of you thinking of getting into this business, a net revenue deal with a publisher (e.g. 40% net revenue) usually means that the developer gets 40% of what the publisher gets for game sales after distributors and retailer take their big cut. Also some deals might have publishers giving 40% after expenses (e.g. marketing costs) but try to avoid these deals.
What the publisher gets depends on how the publisher distributes the game. The publisher usually sells the games to retailers such as ringtones companies (who advertise in magazines), operators, or other distributors using web portals. In most cases the publisher is then lucky to get from 5% to 25% of the selling price of the game. For instance a game could sell for 4.50 (GBP), the publisher could get 0.60 (GBP), leaving the developer with 0.24 (GBP). The publisher could also sell to other publishers leaving a diminishing amount left to the developer as more and more middlemen take their cut. This example is for UK prices where game prices are quite high, if the game is sold in other parts of the world where prices are lower (rest of europe, US) or much lower (far east) then the return to the developer is even less.
Whilst 40% sounds like a good percentage, it isn't so great in terms of percentage of the money that the public pay for the game. There's a lot of middlemen taking their chunks of the money, perhaps some taking more than they really deserve. It might provide a viable income but your exclusive publisher is really got to put a lot of effort into exploiting your game on a worldwide basis. Other options are to seek publishers and distributors yourself on non-exclusive deals.
And then there's the marketing and branding issues. Unfortunately it looks like the way the market is going is for branded content, that's mainly what the operators are interested in putting in front of their customers and that's what the ringtone companies are more confident in investing in advertising for. Branded games usually put the publisher in a stronger position to negotiate a slightly better deal (share) with operators/retailers too. So unbranded games developed by developers have got their competition cut out, which is why some developers take the wise option and work with publishers on branded games (upfront money is better, but less revenue share if any, no IP - intellectual property - and no branding gained).
So why don't developers make a deal direct with a film company and create a branded game for the next blockbuster film? Because its too expensive. It can cost from 75000 to 150000 (USD) and upwards in an upfront payment to the licensor and you still have to revenue share with the licensor. Gameloft are in the fortunate position of having brands already available to them from their parent company UBISoft in the form of console titles (e.g. Splinter Cell), plus they have the money to invest in IP licensing, which is one reason why they're doing so well, and one reason why more and more big publishers are getting into mobile to exploit their licenses.
Then there's market saturation to think about, how often is a potential buyer going to see your game if they're looking at games from a retailer who has 100 or more games for their phone (especially if they have to browser from one web page to another, no search, using web or WAP browser).
Sorry to put a downer on this hype but the market isn't as great as its made out to be by some people - that's certainly my experience. If it is a lucrative market then as usual it is the big players (e.g. operators, brand owners, etc) that will get the best share of that money, not the small players. Also consider that some companies that announce that the next new market is worth so many billion in such and such a year are usually either trying to sell you a report (which people/companies looking for get rich quick reports will buy), or trying to get you to attend/exhibit at an expensive conference, or trying to get you to support their new market.
Bottom line IMHO, is that it is possible to make some money in this market but if you want to make your own games, then unless you're very clever you'll just be making pocket money. My company obviously hasn't been very clever since we're only making pocket out of our games so far! If you plan for making pocket money with your own mobile games, and supplement this income with better income from other work (e.g. working on branded games for your publisher) then your company has a better chance of surviving and perhaps working on your own more lucrative games in the future.
Here's a link which provides another non-rosy view of the market:
wireless game review article
