US wireless content firm InfoSpace has announced that it has acquired major German mobile games company Elkware, marking its third major acquisition in the rapidly consolidating mobile space so far this year.
Publisher/developer Elkware, which has distribution networks throughout continental Europe and recently began pushes into the USA and UK markets, was bought out for approximately $26 million in a cash transaction.
The purchase is the second major European acquisition for InfoSpace this month - only last week the company bought British firm IOMO, another major developer and publisher of mobile titles in the region.
InfoSpace also operates a range of other mobile content businesses, including a media business which owns around 60 per cent of the US market for wallpapers and ringtones. It began its push into the games space earlier this year with the acquisition of California-based Atlas Mobile, a specialist in mobile multiplayer titles.
"IOMO and Elkware complement each other very well," Hank Skorny, InfoSpace's VP of product development, told gi.biz today. "IOMO has extremely strong UK and Ireland distribution, and some continental distribution, while their games are more casual games, ones you might pick up and play if you had a moment on the tube, or sitting in the pub having a beer and someone is off to the washroom."
"Elkware has a lot more games like role-playing titles, much more immersive, deeper games," he continued. "They have extremely strong continental Europe distribution, and also on the technology front, they have great technology that allows for porting content across multiple platforms which we can hopefully apply across both IOMO and Atlas."
The acquisition of Elkware will add more then 90 original and branded mobile titles to InfoSpace's catalogue of games, as well as relationships with key operators such as Vodafone, O2, Orange, T-Mobile and 3 in more than ten European countries.
However, the company's new owners don't plan on changing many of the factors which have allowed Elkware to organically grow into one of the largest developers of mobile content in Europe.
"We have a good healthy headcount growth forecast across all our different studios," according to Skorny. "However, our current op strategy with game studios is to provide them with resources that being part of InfoSpace can provide - such as a significant sales staff, a significant boost in marketing staff and marketing dollars, and boosting their engineering and creative staff resources - but at the same time our plan is to leave each studio as a separate operating entity, so that they keep the sort of creative edge that they had as an independent company."
Elkware CEO Jan Andresen agrees that the acquisition will not see any major shift in how the company does business. "We're going to continue to do what we're currently doing," he assured gi.biz. "The market is growing, and we will also continue to grow."
"There are no big overlaps," he explained. "Atlas is very experienced in multiplayer gaming, IOMO has a great portfolio in the area of casual games... I don't exect a lot of restructuring from this deal. All these puzzle pieces match up to each other very well."
Andresen is enthusiastic about the potential of the deal to offer Elkware a much stronger market position. "In terms of distribution, we're really looking forward to getting a much better market entry into the USA," he said. "We had some distribution there already, but with the help of Infospace, we'll make much quicker progress."
"In terms of licenses, we're also now in a much better situation for competing for the big licenses," he continued. "Next year, if you want to be in a top ten position, you won't make it with unbranded content. That wouldn't have been possible for us before."
Factors such as these have made major consolidation necessary in the mobile space, according to Andresen. "The evolution of mobile games has been remarkably rapid.," he explained. "We've probably made it through 20 years of traditional computer game technology in three years. To develop great mobile games will get more and more costly - of course, you make more money because the market is bigger - but you have to have global distribution to be successful. Having a big company behind you makes that much easier. I know a lot of small developers want to stay independent, but I think they will face big problems."
Skorny agrees with that assessment, adding that the mobile operators are a driving force behind the consolidation in the space. "Many of the operators when they started out didn't mind dealing with 40 or 60 content providers, but over time they've learned that 20% of the people are providing 80% of the revenue," he explained. "Now theyâre saying that they only want to deal with a certain number of vendors for interactive entertainment."
InfoSpace isn't the only US firm making major acquisitions in the European mobile space at the moment; last week also saw American mobile content company Sorrent acquiring UK-based firm MacroSpace.