Yahoo! (Nasdaq: YHOO ) is not necessarily an innovator these days. But it is usually good at catching up fast, especially with acquisitions. After all, it was the acquisitions of Overture and Inktomi that made Yahoo! competitive with Google (Nasdaq: GOOG ) .
One very hot sector is mobile gaming. Companies like Infospace (Nasdaq: INSP ) and Jamdat (Nasdaq: JMDT ) have done quite well in the space -- so well, in fact, that Yahoo! jumped into the race last week.
Yahoo!'s purchase was of privately held Stadeon (terms of the deal were not disclosed), which was founded a mere 18 months ago. The founders have deep roots in the gaming business, having worked at Sega and Shockwave.com.
Stadeon focuses on multiplayer gaming, with technology that allows users with different systems to play the same game.
Furthermore, Yahoo! announced its new mobile games studio, based in the heart of entertainment, Los Angeles. Details are sketchy, but the co-founders of Stadeon will lead the division. Moreover, Yahoo! already has already built six games for Verizon (NYSE: VZ ) and other projects are in the works with major carriers.
Yahoo! is actually no slouch in terms of gaming. In fact, the company has the most gaming traffic (12 million U.S. users in January) of any website, including stalwarts like Microsoft (Nasdaq: MSFT ) and Electronic Arts (Nasdaq: ERTS ) . Unfortunately, the difficulty is monetizing the traffic. However, with mobile gaming, users are accustomed to paying for premium content, which is billed automatically.
Clearly, the next Internet frontier is devices. Yahoo! has the resources, brand, and expertise to capitalize on this market. As in the past, Yahoo! has waited long enough for the market to get some traction.
Yahoo! is focusing on simple games, such as checkers and mah-jongg. These applications are easy to translate onto devices and will likely mean quick money for Yahoo! because of its huge user base. Still, Yahoo!'s move is not a big threat to Jamdat and Infospace -- at least not yet.
Fool contributor Tom Taulli does not own shares mentioned in this article.
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