Venture Capital Finance Floods into the Mobile Games Industry

According to new research by Screen Digest, the mobile games market has attracted US$420 million worth of funding since September 1999, 56% of which was raised during 2004. A significant part of this investment has been driven by private equity houses as the mobile games market begins to realise its potential.

Between 2002 and 2004 mobile game company fund-raising increased from US$29 million to US$236 million, as investors have scrambled to secure an interest in the market. UK companies attracting investment included Digital Bridges, and Atatio, whilst in the US Jamdat and MFORMA lead the way.

In 2003 worldwide spending on mobile games downloading was US$488 million, by 2004 this figure had increased to US$1 billion as the mobile games industry started to realise some of its potential as the hottest games investment market.

Merger and acquisition activity has shown a dramatic increase over the past 12 months. Screen Digest's research highlights this trend - indicating 19 mobile game developer transactions were made in 2004 - compared to just four in 2003 and two in 2002.

According to Screen Digest's Chief Analyst, Ben Keen, "Once the top developers have been acquired, there is likely to be a trend towards consolidation at the publishing/aggregation level to achieve greater 'scale' in the marketplace. We believe that once again it will be the private equity houses that will emerge as the driving force behind any sector 'roll-ups'"

Evidence of the mobile games market's strength is not only highlighted by the activity in the financial community, but also by the increased involvement of the traditional games publishers. The recent development of a dedicated mobile publishing division by a number of computer and video games companies, most notably Electronic Arts, is evidence that the mobile games market has finally come of age."

Posted to the site on 3rd May 2005