Delivering free games on mobile platforms may not seem like a great business model, but Trip Hawkins, CEO of mobile gaming leader Digital Chocolate and founder of Electronic Arts, sees it as the next great growth opportunity in the gaming industry.
Currently, more than 2 percent of all Apple iPhone applications come from Digital Chocolate, Hawkins said.
"We're now the No. 1 game company on the iPhone, based on having had 20 million downloads of our games," he said.
Apple has sold about 30 million iPhones.
(Watch video at left to see what Hawkins has to say about the smartphone industry)
"Until the iPhone came along, a lot of consumers in the public at large didn't really feel like they needed to have a mobile content platform," Hawkins said. "And now they do.
"Now you have a whole industry of other companies trying to copy it and bring clones to market. And when you think about the market potential, there are already four billion people with mobile phones and that number's expected to grow to five billion.
"When you include devices like the iPod Touch, you've probably got audience demand of maybe as many as six billion devices, so that's most of the people on earth."
The customer base has changed significantly over the years — what Hawkins calls the omni-media revolution — billions of people engaged in interactive digital content of one form or another.
Hawkins believes gaming industry growth in the future is going to come from free play that spreads virally and reaches a much broader audience of billions. And there are specific ways to monetize that audience, he said.
"The real secret here is to get to a point where they're either willing to pay for premium versions — and they do that on the iPhone — or on other platforms they have them purchase virtual items to use with the game," Hawkins said. "That's really the next big stage in gaming is social gaming where it's driven by virtual items that you're buying to play the game that you're playing for free."