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In this paper, we propose a dynamic game theoretic approach for choosing power optimization strategies for various components(e.g. cpu, network interface etc.) of a low-power device operating in a distributed environment. Specifically, we model the energy consumption problem as a dynamic non-cooperative game theoretic problem, where the various components of the device are modelled as the players in the game that simultaneously consume a common resource (device battery power). An analysis for the Nash and social optima of the game is presented. We then introduce an adaptive distributed power-aware middleware framework, called "Dynamo", that incorporates the game theoretic approach for determining optimal power optimization strategies. We simulate the distributed game environment for proxy-based video streaming to a mobile handheld device. Our performance results indicate that significant energy savings are achievable for the device when the energy usage of the individual components achieve a social optima than when the energy usage achieves the strategic Nash equilibria. The overall utility of the system is measured both in terms of energy gains and the quality of video playback. Our results indicate that the device lifetime was increased by almost 50%-90% when compared to the case where no power optimization strategies were used, and 30-40% over device lifetime when Nash equilibrium is achieved; the overall utility of system for both types of equilibria were similar (utilities differ by ≤ .5%), indicating that the Nash equilibrium strategies tend to overuse the battery energy consumption.