Next-generation cell phones were supposed to be huge for enterprise applications, with their quasi-PC functionality. Well, it looks like the wireless gurus were wrong. The killer app for wireless is gaming, at least on a global basis.
In a way, wireless gaming looks like the world of the PCs during the early 1980s -- a world of simple, yet addictive, programs. But despite the limitation of the form factor, wireless gaming is becoming increasingly sophisticated.
And the real action is not in the U.S., but in Europe and Asia, where large portions of the population have sophisticated cell phones.
VeriSign (Nasdaq: VRSN) realized this early this year and shelled out $273 million for Jamba!, a leading wireless gaming company in Europe. So far, it appears to be a stellar deal, with VeriSign recently having reported better than expected growth from its wireless endeavor.
Not wanting to be left out, InfoSpace (Nasdaq: INSP) has been aggressively pursuing the wireless gaming market in Europe as well. In early December, InfoSpace spent $15 million for IOMO Ltd., which is based in the U.K. The company has traction with the majors such as Vodafone, Nokia (NYSE: NOK), and Motorola (NYSE: MOT). Titles include Tomb Raider and Tiger Woods PGA Tour Golf.
Then this week, InfoSpace purchasedElkware GmbH, a German mobile games company, for about $26 million. The deal will add a variety of role-playing and strategy games.
True, both of these smaller deals are at high multiples -- each company had roughly $1 million in revenues -- but InfoSpace has extensive distribution to monetize the assets.
Just as Yahoo! (Nasdaq: YHOO) made expensive purchases of search assets several years ago, InfoSpace is taking the same tack for the wireless marketplace. And international markets are definitely the sweet spots for now.
So other wireless companies, such as Jamdat (Nasdaq: JMDT), should rev up their acquisition engines soon -- before the market is locked up.
Fool contributor Tom Taulli does not own shares mentioned in this article.
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