Nokia will close its battered gaming service N-Gage next year, acknowledging failure in its first major services offering.

Nokia (NYSE: NOK) is looking for new revenue from online services as its traditional handset market matures, with games and music being the first focus areas.

Yet the handset maker's mobile gaming push has encountered major challenges, with consumers first shunning its dedicated gaming phones which went on sale in October 2003, accompanied by a major global advertising campaign.

The online gaming service, which opened last year, took over the N-Gage brand and also never moved beyond a niche audience of hard-core gamers.

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