Motricity acquires Infospace mobile assets

Now, this is a big deal: Motricity puts $135m in cash onto the table of the under-pressure Infospace people to acquire the remains of the Infospace mobile business, including search, storefronts, portals and messaging. The deal was financed by existing investors Carl Icahn and VC Advanced Equities (see reporting from MoCoNews here and here).

The acquisition marks the end of an odyssey into mobile by Inforspace, in which it first acquired and then effectively destroyed some of the brightest stars on the mobile content sky, including game developers Atlas (bought for $6m, sold for $1.5m), Elkware (bought for some $26m and then closed) and IOMO (bought for $15m, then closed in August 2007) as well as ringtone giants Moviso. They lost people, money and ultimately the businesses (e.g. IOMO's founders have recently opened their new shop, Finblade). What a battlefield...

Motricity's, so far predominantly a platform and storefront provider, entrant into the increasingly competitive content publishing space comes at a time where more and more players try to extend their reach on the value chain: one sees platform providers expanding into master content provider relationships, one sees publishers (e.g. Player X) seizing the same position, and all are in a quest to concentrate enough revenue and margin in order to be able to run a profitable business in an environment where still the majority of players are losing money.

The challenge for Motricity will be to grow its business outside the US, and this is arguably where the risks are hiddedn. In the US, the company claims to have now grown their distribution footprint to 11 of "top 13" North American carriers (which leave another 10 that are apparently not top), which however seems OK since they add two of the biggies which they couldn't reach before, namely mighty Verizon and AT&T (I still prefer the name Cingular!). The gamble is arguably being mitigated by the presumed synergies through the search, portal and messaging business, and this is where I suspect the balance of risk lies in respect of the financial considerations: because it harnesses Motricity's existing business, the venture into the publishing side of things appears somewhat less risky. All in all, a deal that might just make sense; if the money is adequate? Who could say? What proportion of growth will come through which part of the business? Hmmm. There have been deals that, on the face of it, looked more reckless in the past (remember the seemingly atrocious $145m Jamdat paid for Blue Lava [incl. $8m non-breakup fee to Tetris, LLC])? It paid off for them as then EA bought them for a rather sweet $680m. I would not suggest that the same will happen to Motricity although, looking at the monies invested into them to date, it will just about have to be the exit its investors are looking to.

Fishlabs nets fresh catch

The wonderful people from Fishlabs from the beautiful city of Hamburg announced the close of their first round of funding by VC Neuhaus Partners. Fishlabs, who are specializing in high-end 3D mobile games want to use it to add connectivity to their games. Wonderful coincidence then that "best friends" Exit Games are also an investee of Neuhaus.

Whilst I am not sure if the words of the Neuhaus Partners Managing Partner according to which 3D games are about to become mass-market are true just yet, the addition of connectivity to the beautiful titles of the Fishlabs guys will make for a very powerful proposition. And it might not matter when the mass market sets in because the niche for these high-end gems might just about become large enough for a gifted development house. The perceived value of such games will be higher and, with Exit Games' connectivity suite, this value can be extended even further.

This seems to be confirmed by a couple of deals they have done in the past months where they extended distribution to highly evolved regions like Korea as well as with some tier-2 publishers like Player X, which has a larger reach than Fishlabs could have mustered themselves.

In any event, I wish them a good catch!

Disclaimer: yes, I have lived in Hamburg and love the city. Yes, I know the guys from Fishlabs and Exit Games and really like them. No, I do not benefit in any way.