The game is played the same way as Battleship. If you're not familiar with the rules of Battleship, you have five boats in your personal fleet:
The patrol boat takes up 2 spaces (XX)
The destroyer takes up 3 spaces (XXX)
The submarine takes up 3 spaces (XXX)
The battleship takes up 4 spaces (XXXX)
The carrier takes up 5 spaces (XXXXX)
You play in teams of two. Each of you has a 10x10 grid that represents your ocean. You can place your five ships anywhere in your ocean, as long as they go horizontally or vertically. You're not supposed to let your partner see your ocean.
When you're finished, you end up with a grid that looks something like this:
1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | |
A | X | X | ||||||||
B | ||||||||||
C | X | |||||||||
D | X | |||||||||
E | X | |||||||||
F | X | X | X | X | ||||||
G | X | |||||||||
H | X | |||||||||
I | X | |||||||||
J | X | X | X | X | X |
Your partner then tries to guess where your ships are by calling out the letter and number of a square in the grid. If your partner called out A1, you would say "patrol boat, hit." If your partner called out B1, you would say "miss." Then you would get a turn to hunt for one of your partner's ships. You take turns guessing one at a time whether either of you gets a hit or not. When your partner has guessed all the spaces for a given ship, you say, for example, "You sank my patrol boat." The object of the game is for one person to be the first to sink all five ships in the other person's fleet.
The way that I make this a phonetics game is by replacing the letters A-J with phonetic symbols for consonants and the numbers 1-10 with phonetic symbols for vowels. Instead of calling out "A1," players have to pronounce the syllable that would be made by that consonant and vowel symbol together. So, if instead of A I have [h] and instead of 1 I have [u], players have to pronounce [hu] in order to guess that their opponent's ship is hidden in square A1.
I make up several different versions of the game cards so that people in the class don't just listen to what groups around them are doing to get the answer, and so that people can play again if they finish early. In order to make the cards, you need to start with an 11x11 table; once you have filled in whatever symbols you want across the top and along the side, copy-paste that table a second time so that you will have two identical game cards for a pair of students to play with. (You should be able to fit two tables on one sheet of paper, which is a convenient way to make sure you've got a match for every game card before you photocopy multiples; then you can just cut the sheets in half). Give students a few minutes to draw their ships into their ocean, and then circulate around the room to help make sure they're pronouncing the unusual symbols correctly!