"What I try to do is offer a more international flavour," said Andrew James Low, who runs the two-person consultancy and whose clients include mobile-phone operators CSL and SmarTone Communications.

"They're quite pleased that I'm able to supply them with high-quality images." Such product differentiation has allowed Mr Low to find business in a market where as many as 15 content providers compete to supply services to the city's six mobile-phone operators.

However, the potential audience is limited, with just 7.24 million subscribers, compared with 247.6 million in the mainland.

Furthermore, the wireless services industry is still in its infancy, with data accounting for just 7 per cent to 12 per cent of operator revenue.

Although downloads, games and other applications are expected to become increasingly important to operators - especially with the advent of third-generation (3G) services - industry players say the market cannot support so many competitors and warn a shakeout is imminent. "Not everyone is going to survive. As time progresses, there will be a lot of consolidation," Mr Low said.

Arthur Chang, founder and chief executive of game developer Green Tomato, agrees that mergers and acquisitions will hit Hong Kong, a trend already happening in the mainland.

"Either you will be big or you will be niche. I don't see a middle-style solution," Mr Chang said.

Green Tomato, which has a staff of 30 split between Hong Kong and Guangzhou, has taken the niche route with a strategy that offers games across multiple platforms, such as SMS, WAP and the internet.

Its Fish Bo Bo  title, a Tamagotchi-style game where users nurture one of 15 animated fish, can be played via SMS and monitored through the internet.

"Our edge is the whole game-concept packaging," Mr Chang said, comparing good game development with film-making.

And, like animated movies, Green Tomato is planning a move into product tie-ins.

The company hopes to distribute stuffed animals based on its fish characters through McDonald's in the mainland. "This is the real differentiation," Mr Chang said.

Part of the reason there are so many players in Hong Kong is just about anyone can participate.

"The entry barriers are quite low," said Kurt Chan Chun-fai, the 24-year-old founder of Mobile Gamer, which has a portfolio of 30 "localised games for Hong Kong people".

Helping to lower the barriers is the Hong Kong Wireless Development Centre, which has secured HK$30 million in government funding over the next three years to promote the industry. Members of the centre, at Cyberport, have access to its suite of development tools for $300 a day - eliminating the need for developers to acquire expensive software.

The centre is also connected to the servers and gateways of the six mobile network operators, allowing clients to test their applications.

Director Stephen Lai said the organisation had about 65 members. Of the content providers, "fewer than five will be a success" over the long term.

Most content providers are looking beyond Hong Kong for business. Green Tomato derives the bulk of its revenue from the mainland.

Jarno Salmivuori, chief executive of Mobilemode, said the company had established operations in 11 markets in the Asia-Pacific region. "That's the way we have seen to survive; to have a regional presence," he said.

Mobilemode has also sought survival by participating in market consolidation.

In July last year, MTel - which supplies 3G content to Hutchison - bought 60 per cent of the company for about US$100 million.

"We just realised we'd be stuck at a certain level unless we joined forces with someone bigger," Mr Salmivuori said.