The iPhone and App Store helped push the mobile gaming industry to become a $5.4 billion market in 2008, a 20% increase over 2007, according to a new JupiterResearch report. The report states that overall game downloads were flat in the U.S. and Western Europe, while they rose in emerging markets like China and India. Java-based games reportedly saw a steep decline in sales, but were offset by iPhone game downloads. Report author Dr. Windsor Holden said, “The combination of iPhone and the Apple App Store has galvanized the mobile games industry. Apple has provided an innovative device which enables developers to create smooth, compelling, visually attractive games for the mobile users, together with a business model offering a highly competitive revenue share for developers.” The report goes on to predict that more than half of games downloaded by 2012 will be funded by advertising.