Mobile Games Gold Rush Continues

DeNA Co.’s $400 million purchase of iPhone game maker Ngmoco was just the beginning. Large corporations are spending big on mobile game developers, looking to cash in on the burgeoning app market as the Apple (NASDAQ: AAPL ) App Store, Microsoft’s (NASDAQ: MSFT ) Windows Phone 7 Zune Market, Nokia’s (NYSE: NOK ) Ovi store, and Google’s (NASDAQ: GOOG ) Android App Market bring in the dollars from an ever-growing audience millions strong. Electronic Arts (NASDAQ: ERTS ), already one of the five most profitable social and browser game publishers, has added one more mobile game developer to its growing stable. Electronic Arts purchased U.K. mobile publisher Chillingo for $20 million in cash yesterday. Chillingo is the publisher behind break out iPhone App Store hits Angry Birds and Cut the Rope , titles that have dominated the App Store charts in recent weeks. Rovio Mobile, the creators of Angry Birds , and Zepto Lab, Cut the Rope ‘s designers, remain independent following the acquisition but it’s likely that Electronic Arts will hire them to develop software based on their existing intellectual property. Electronic Arts isn’t the only company following DeNA’s lead. Shanghai-based game operater The9 (NASDAQ: NCTY ), which became a major player in the game publishing industry when it  began distributing Activision Blizzard’s (NASDAQ: ATVI ) World of Warcraft in China, has joined with Intel Capital (NASDAQ: INTC) in investing a total of $8 million in the Burlingame, Calif.-based Aurora Feint.  Aurora Feint is the creator of OpenFeint, an online gaming network not dissimilar to Microsoft’s Xbox Live or Apple’s Game Center. The service connects game players across a variety of mobile platforms, including both Apple’s iPhone and hand-held devices running Google’s Android. OpenFeint already supports more than 3400 games across the services and is partnered with major game publishers, including the Square-Enix owned Taito, Konami (NYSE: KNM ) subsidiary Hudson Soft, and Capcom. Intel Capital, Intel’s investment arm, and The9 are likely strengthening Aurora Feint’s operation in the hopes of attracting DeNA into making another high-profile buy in the mobile gaming space. While Ngmoco has developed a number of successful downloadable games for the iPhone, it is also the creator of the Ngmoco Plus+ online gaming network, a competitor of Aurora Feint.  DeNA also has a 20% stake in Aurora Feint, meaning that the two networks could be merged under a single banner. The new network would be established enough to combat both Apple and Microsoft’s gaming networks on mobile platforms. Elsewhere in the mobile game space, while major publishers are moving quickly to secure their control of the emerging mobile game space, game retailers are attempting to establish their own foothold on smartphones and other handhelds. North American retailer GameStop (NYSE: GME ), a company whose profits have wilted as consumers increasingly move away from physical game purchases toward digital and browser-based options, has released its first game on the Apple App Store.  Buck and the Coin of Destiny is both a game and a marketing tool, in that it stars the rabbit spokescreature featured in the company’s print and television advertising. Investors are advised to keep an eye out for IPOs from independent developers like Rovio Mobile and Zepto Lab. Apps and mobile games are one sector that is seeing serious growth at the end of 2010. As of this writing, Anthony Agnello did not own a position in any of the stocks named here.
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