Nokia starts roll-out of gaming, networking sites

HELSINKI (Reuters) - Nokia began the roll-out of its "N-Gage" gaming service and "Share on Ovi" media sharing site on Tuesday as falling handset prices spur the world's largest cell phone maker to expand into mobile Internet services.

Nokia, which made 40 percent of all cell phones sold in the last quarter of 2007, is the first handset maker to move strongly into the content space.

Millions of users have downloaded songs, video clips, programs or documents since the company launched the Nokia music store and Mosh, a file sharing site, last year.

"These are the first steps on the long journey towards becoming a competitor in the Web 2.0 services space," said CCS Insight research director Ben Wood.

"It now faces the challenge of building awareness for these and other services with consumers who have already gravitated towards established web brands such as Google."

Nokia delayed the opening of its N-Gage gaming service twice last year due to delays in software testing.

On Tuesday it opened it to owners of its N81 multimedia phones around the world, asking them for feedback before opening the service to a wider audience.

"I'm very positive on N-Gage. This is exactly what this market needs when it's clear that some of the operators have thrown in the towel," said Ilkka Paananen, head of game development at mobile gaming firm Digital Chocolate.

The mobile gaming market suffered an unexpected slump last year, with many game developers pointing to telecom operators' lack of interest in investing in marketing games.

"One of the main problems has been that around 90 percent of purchases are made through the operator portal and operators have spent very little on marketing and promotion of new game titles," said analyst Daniel Winterbottom at research firm Informa.

"The fact that Nokia...is taking on the task of growing the market, can only be a good thing for the industry."

Informa expects revenues from mobile games to reach $7.2 billions in 2012 from $3.2 billion in 2007.

"If N-Gage is on the main menu of a Nokia phone, people will click on it and tell also their friends -- there is a large potential there," Paananen said.

Nokia's social networking site "Share on Ovi" allows people to share photos and videos and is built on technology acquired last year with the U.S. firm Twango, a spokesman for the company said, adding the firm was doing live testing of the service.

Revenues from running social networking sites such as News Corp's MySpace, Facebook and Bebo on cell phones are expected to rise sharply in coming years as so-called "user-generated content", once a niche concept, starts to win mass appeal.

Informa expects revenues from mobile social networks to grow to at least $29 billion by 2012 from $1.5 billion in 2006.

(Reporting by Tarmo Virki; additional reporting by Niclas Mika in Amsterdam; editing by Jason Neely and David Cowell)