Mobile games are the wireless Internet's killer application and 3G handsets with color displays are its killer devices. That is one of the conclusions of the new 150-page report Winning Business Strategies for Mobile Games, released today by Datacomm Research Company and Phoenician Ventures.

"Consumers' unquenchable thirst for entertainment will take wireless to the next level of market growth," said Leslie Mitts, partner with Phoenician Ventures and primary author of the report. "A new generation of color handsets empowered by partnerships between game developers, media companies, aggregators, and operators is redefining the wireless value chain," she concluded.

"Colorful mobile games, polyphonic ring tones, and applications/content for over-the-air download will spread like wildfire as 2.5 and 3G services roll out," said Ira Brodsky, President of Datacomm Research. "Leading consumer brands will pounce on mobile entertainment as a new advertising medium. This report assists vendors in navigating the essential partnerships and markets," he concluded.

Winning Business Strategies for Mobile Games includes an Executive Summary identifying the key challenges and strategies for the mobile games industry. The New Market section discusses the types of mobile games and related content, as well as regional and demographic market segments. The Competitive Strategies section analyzes each link in the new value chain, the race between J2ME and BREW, and opportunities for content owners such as movie studios. The Vendor Profiles section identifies and critiques more than 80 vendors.

Phoenician Ventures is a venture capital fund investing in early-stage information technology companies. . Datacomm Research Company tracks, analyzes, and forecasts emerging high tech markets.

Additional conclusions found in Winning Business Strategies for Mobile Games:

1. Though designed for devices with small displays and limited controls, mobile games have advantages over PC and video games. Mobile games can be persistent (played in short bursts over long periods), massively multiplayer, and can exploit information about players' locations and proximity to each other.

2. Mobile operators must be involved in the development and promotion of mobile games. Content aggregators will assist them in selecting and licensing the best mobile games and related content. Billing clearinghouses will help ensure mobile games are affordable and available.

3. Mobile games, ring tones, and screen savers are powerful tools for promoting consumer brands. They enable advertisements that are mobile, two-way, and contain built-in user endorsements. They enable customers and fans to create communities around favorite brands.

4. There is no clear winner yet in the competition between J2ME and BREW. Both permit downloading games over-the-air. While J2ME offers a more open environment, BREW is more secure and enjoys a modest time-to- market lead.

5. There are opportunities for game-centric mobile devices. The success of GameBoy and the first mobile phone games suggest there is large market for handheld games that are "always on" and can be played out on the street.