Yahoo to Develop More Mobile Phone Video Games

Yahoo Inc. (YHOO) said Friday it has launched a studio to develop video games for mobile telephones, marking the company's most aggressive step yet into the multibillion-dollar gaming market.

The company said Yahoo Games Studio has already developed games for Verizon Wireless (VZ) and will soon make games available for other wireless carriers.

Yahoo also said it has acquired a company called Stadeon to enable people to play games on their phones online against those playing through the World Wide Web. Compatible games include titles like Chess and Poker.

"Yahoo wants to be part of the party," said Janco Partners analyst Martin Pyykkonen.

Yahoo's strategy is to keep users on its heavily trafficked Web site by providing them with everything from e-mail and horoscopes to news and games.

Gaming will not likely soon become a huge revenue producer for the company, which gets the majority of its money from online advertising, Pyykkonen said.

"My view is it's more of an Asia opportunity," he said, referring to the ubiquity of mobile phone services and gaming in China and other parts of Asia, where Yahoo and other Web companies are targeting future growth.

Yahoo said Stadeon CEO John Cahill will run its mobile gaming business as part of a broader role as director of games operations for the company.

The Sunnyvale, Calif., company recently has been expanding its entertainment offerings, hiring a former top ABC executive and setting up a media campus in Los Angeles, where the games studio will also be based.

Industry players estimate the cell phone video game market at about $2 billion worldwide in 2005, a small part of the overall gaming market, but one of its fastest-growing segments.

Yahoo's entry into the market puts it in competition with players such as the recently public Jamdat Mobile Inc. (search) and private concerns such as Sorrent, In-Fusio and Mforma.

InfoSpace Inc. also has been investing heavily in mobile gaming.

Yahoo shares were trading up 10 cents, or 0.31 percent to $32.41 in midday trade on the Nasdaq.