Game Developers Get VC
By Eric Lin, Wed Aug 11 02:00:00 GMT 2004

Investors have finally caught on to the fact that mobile entertainment is hot growth sector. Now they're climbing over each other to throw money at mobile game developers.

New handsets are finally a mature gaming platform, both users and game developers have started to take notice. The high number Java or BREW capable handsets available helped total up over a billion dollars in mobile game sales for 2003. Despite the size of the market, American investors have been slow to take notice, but that's about to change.

Most of the well known venture capital firms in Silicon Valley are jumping on the mobile game bandwagon this summer. Last year a total of $50 million was invested in gaming, in the first half of this year that figure is already $86 million.

Trip Hawkins' new venture Digital Chocolate has received an injection from big name investors Sequoia Capital and Kleiner Perkins Caufield & Byers. They have started a land grab, as the biggest names in VC try to grab a piece of the current and upcoming leaders in mobile gaming. More have followed investing in Mforma, Sorrent and others.

Mobile games may be a young industry but the leading players are acting like mature companies already. Instead of waiting for the market to be filled with small companies ripe for acquisition, more power mobile entertainment providers are already fishing around for smaller companies to swallow up. Whether to fund buyouts or just more development one company, Jamdat, is heading towards an IPO.

These companies may be acting mature, but they have nothing on long standing game powerhouses like EA, Eidos, Square Enix and others. As mobile devices continue to evolve into more capable gaming platforms, these game houses won't sit idly by while newcomers make all the money. There's a good chance that today's mobile stars will get acquired by companies higher up on the game food chain the same way they are gobbling up the game guppies today.