Yahoo Buys Mobile-Game Tech Company

Times Staff Writer

If Yahoo Inc. has its way, that beeping in your pocket could be a phone call. Or an invitation to play backgammon.

The Internet titan plans to announce today that it has acquired Stadeon Inc., whose technology lets users of Web-connected cellphones play games against opponents on other cellphones or seated at computers. The service is expected to be available through all major mobile networks this year.

It is Yahoo's latest bid to extend its reach beyond the personal computer. The Sunnyvale, Calif.-based company is trying to deliver more services to cellphones and hand-held computers as such devices become increasingly powerful and connected to the Internet by fast wireless hookups.

The acquisition also is part of Yahoo's recent effort to bolster its game business, which industry observers say hasn't taken full advantage of its position as the No. 1 game-related website. Last summer the company replaced General Manager Dan Hart with Geoff Graber, a game industry veteran whose assignment is to get both casual and serious gamers to pay for more Yahoo services, as well as to lure more advertisers.

Yahoo Games attracted 12 million U.S. Web surfers in January, ranking above the online-gaming websites of Electronic Arts Inc., Microsoft Corp. and Time Warner Inc.'s America Online Inc., according to Nielsen/NetRatings.

The challenge has been getting people to pay to play games on the Internet when there are so many free games available.

Yahoo does get money from advertising on its game website, but its previous attempts to sell games have been largely unsuccessful.

Online games "drive a lot of traffic, but they don't necessarily drive a huge amount of revenue," said Michael Goodman, an analyst with Yankee Group.

Graber is trying to change that. Tapping into the more than 160 million cellphones in the U.S. is one way he hopes to succeed.

Most Yahoo services already available on phones -- including driving directions, e-mail and instant messaging -- are free because they're simpler versions of things Yahoo users find on their computers. Graber reckons people will be willing to tack a few more dollars onto their mobile-phone bills to download games.

"The Web grew up with free content," he said. "The mobile phone grew up as paying."

But the mobile-game market is still young. Of the mobile-phone users in the U.S., fewer than 4% say they have paid for mobile games, Yankee Group's Goodman said. The biggest mobile-game company, Los Angeles-based Jamdat Mobile Inc., reported sales of $36.6 million last year, a fraction of Yahoo's $3.6 billion in sales.

Stadeon was founded in Spring Lake, N.J., by John Cahill and Lee Crawford, who built online game networks for Sega Corp. and AtomShockwave Corp.'s Shockwave.com. They have moved to Yahoo's headquarters, where Cahill will lead the mobile-game group.

Graber said he expected the service to feature parlor and card games emphasizing strategy rather than speed so that users playing on their phones wouldn't be at a disadvantage.

Users are expected to play on a computer for free but will pay to use their cellphones. Billing details have yet to be worked out.

If it works as advertised, the service will "make multiplayer gaming from your cellphone a lot more compelling than it could have been," said Schelley Olhava, an analyst with IDC.

Since replacing Hart, who moved to the online-game team at Viacom Corp.'s MTV Networks, Graber has made several moves to turn the game business into more of a moneymaker. To target serious game players, Yahoo acquired the All-Seeing Eye, a browser that launches such popular multiplayer games as "Counterstrike" and helps players find their friends.

The company also has said it plans to integrate the Yahoo instant-messaging program into the browser; that drew groans on message boards from players who worried about the service's being cluttered up.

Yahoo has also struck a deal to run news and reviews from the popular website GameSpot, a bid for more-lucrative ads aimed at teenagers and young men.

"We're excited to see Yahoo pay more attention to games," said John Welch, chief executive of PlayFirst Inc., an online game publisher, "because for a while there it didn't look like they cared so much."

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