Update: Top 10 Mobile Games Publishers WW November '10

Update #1 Nov 24 2010 @ 9:45pm: Based on feedback I've added Capcom to the list & moved Digital Chocolate up in the rankings, while moving Namco down a bit. I've elected to remove Artificial Life because only about 50% of their revenue can be attributed to mobile games. Please... I encourage more feedback in the interest of making this the definitive list.

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• Note that I've added Chinese mobile powerhouse KongZhong to the list... in recent quarters mobile games have become a much more significant portion of the their overall revenue, which is about $145mil over the past 4 quarters.
• Purely from a mobile games perspective, it could be argued that both Artificial Life & Digital Chocolate don't belong on this list, but I'm keeping them here for the time being, while their primary businesses are still mobile games. If current trends persist, Digital Chocolate will quickly evolve into a company that primarily derives revenue from social online gaming (Facebook games).
• Per a previous suggestion from Jon Jordan over at PocketGamer.biz, I'm considering adding Disney/Tapulous to the Top 10... but I'd need some independent confirmation that their combined worldwide mobile games business yields at least 20 something million dollars.
• Overall I'd suggest that the Top 10 are becoming less significant in terms of their contribution to mobile gaming revenue and even in terms of real dollars I've dropped their aggregate revenue to $715mil from $720mil just 3mos ago.

Enterprise Values of 22 Public Mobile Entertainment Companies Aug 2010

Update June '10: Enterprise Values of 21 Public Mobile Entertainment Cos Including Motricity

Updated Enterprise Values of 15 Public Mobile Entertainment Companies

What a difference a week makes. I'm already updating this spreadsheet with some new data. Here are some notable changes:

• Buongiorno posted Q1 2010 earnings
• Velti filed updated earnings with the SEC as part of their bid to go public on the NASDAQ (they're currently listed on LSE)... their numbers are pretty impressive (more on that soon)
• Mandalay Media, parent of Twistbox & AMV, changed its name to NeuMedia, Inc. & announced a notice of default related to a cash balance provision from a key creditor
• ROK Entertainment's stock is down over 50% today (guessing they'll be more news to follow). Btw - did y'all know the biggest shareholder in ROK is the DeJoria family, which controls the Paul Mitchell salon product empire? Always thought the guy in the ads was Paul Mitchell... but that's actually John Paul DeJoria (Mitchell was his founding partner). Anyhoo, probably hasn't been a great investment no matter how you cut & color it

Latest Enterprise Values of 15 Public Mobile Entertainment Companies

• Data for Velti & ROK Entertainment should be taken with a grain of salt, since they haven't released financials in recent quarters
• It looks like a couple of these companies should consider giving their cash back to the investors, and calling it a day. Some of them shouldn't be public at all (and are barely going concerns)
• I think the shining stars of this lot are the mobile games publishers Gameloft, GAMEVIL & Com2uS
• I look forward to adding Motricity into the mix, once (if?) they go public
• Let me know your thoughts on this and if there are any other public mobile entertainment companies I should be tracking

Top 25 Companies In Mobile Entertainment

As always I welcome feedback and dialogue! Please let me know if I'm missing any companies or if you think that my numbers and/or rank order are incorrect. btw - revenue numbers for private companies, or divisions of companies, that haven't publicly disclosed numbers have been left blank intentionally (for now).

10 Most Read Cabana Mobile Posts of 2009

1. How Much Money Do Mobile Ad Networks Make?
2. KongZhong Got It Goin' On
3. Fish Broth: The Plot Thickens In GetFugu Investment Drama
4. If The Top 10 Generate $700mil Can Mobile Games Really Be A $5.4bil Business?
5. Palm Pre Demo From D7 Is Better Than Porn
6. Updated: Top 10 Mobile Games Publishers WW
7. MOBshop Speculation Is Red Hot
8. Update: GLUU Volume Stays High As Boards Buzz About Changyou & Other Theories
9. Will de Masi & Kranzler Finally Get Hands-On To Realize It's Potential?
10. Report: At AT&T Motricity is Jen & Amdocs is Angelina

Linktone Revenues & Net Q3 08 to Q3 09

Chinese value-added services (VAS) company Linktone (LTON) reported earnings after the US markets closed on Monday. You may notice that there's some discrepancy between the comparable Q2 2009 and Q3 2008 revenue numbers in their release and my numbers above, which are based on what most financial sites have on record. I'll reconcile these if I determine the financial sites are incorrect. Either way, China Wireless News summed it up nicely by calling the Q3 numbers "dismal". Indeed the company seems stuck in a bit of rut and it's clearly not yet seeing meaningful results from diversification into services beyond the SMS & IVR vending of graphics, tones and fortunes or their international expansion initiatives beyond China. Investors are definitely not impressed and have been punishing the stock all morning... it's been down over 20% for most of the early trading session. I think that in order for Linktone to get back in the market's good graces and provide meaningful competition to China's #1 mobile content player, KongZhong (KONG), they're really going to have to step it up in the mobile games space, broaden their offering of 3G oriented services (like their recently announced MLB video deal) and quickly prove that they can be a relevant player in new markets they're pursuing in South East Asia.

Cabana Mobile Entertainment Top 20 by Revenue

€/$=1.4849

? = best estimate

KongZhong Got It Goin' On

I've done a bunch of posts about Chinese mobile content kingpin KongZhong (KONG) in the past, so I'm not going to rehash what they do... but, generally you should know, I'm a big fan of this company, with the caveat that I've had lingering concerns that their success is unduly reliant on staying in the good graces of China Mobile. Based on their Q3 earnings conference call, earlier this evening, I feel confident that the company is keenly aware of this and that they're taking all the right moves to mitigate that situation. Currently, the fastest growing (246% y-o-y) sector of KongZhong's revenue mix (23.4% or $8.2mil in Q3) is coming from their catalog of 400 mobile games, which are distributed through multiple channels. Only 33% of their downloadable game revenue is billed through China Mobile, the rest comes equally from handset manufacturer and off-deck WAP channels (including their own Kong.net portal). The company is forecasting revenues of between $37-$38mil for Q4 and they believe mobile games will continue to be the revenue driver. They also mentioned that they are beginning to see real revenues from freemium (try & buy) and virtual goods billing models for games. I think these guys are firing on all cylinders, and given that they are the smartest and strongest player with the most cash ($135mil) in one of the fastest growing mobile markets in the world, I think KongZhong has the potential (within the next 3 years) to be the biggest mobile entertainment company in the world. Someone owes me a drink when that happens.

Enterprise Values of 15 Public Mobile Entertainment Companies

Enterprise Values of 12 Public Mobile Entertainment Companies

Cabana Mobile Entertainment Top 20 by Revenue

All numbers are in US$ based on annual reports or last 4 quarters.

As usual, please comment with any suggested changes.

KongZhong's Earnings Got Game

Chinese mobile content king KongZhong reported strong Q2 2009 earnings yesterday, with revenue jumping 37% from the same period last year, beating analyst expectations. Q3 guidance of between $34-$35mil was also higher than consensus. Much of the growth was attributable to the mobile games business, which the company grew 368% to $6.8mil (now 21% of their revenues). It's critical that the company continues to grow this component in the interest of realizing higher margins, diversifying beyond its traditional role as a content service provider to China Mobile and developing revenue outside of its domestic market. Two of the most intriguing components of KongZhong's mobile games business are; 1) that they are beginning to see meaningful revenue streams from the sale of in-game virtual items (a trend we're yet to see develop in mobile in US/Europe); and 2) the company is putting a lot of resources behind the development of mobile social networking games. The company believes that they will be well positioned for the launch of the iPhone in China (particularly by virtue of their recent Simlife acquisition)...but they don't think it will be a meaningful device in the short-term outside of wealthier communities in Shanghai & Beijing.

No doubt these numbers are impressive...but, my concerns about the company's exposure to government regulation and China Mobile linger.

Is KongZhong Spicy or Dicey?

I'm keeping a close eye on major Chinese mobile content service provider (SP) KongZhong (KONG) in anticipation of their Q2 2009 earnings conference call scheduled for Aug 10th. The company is ostensibly on fire, having experienced 5 consecutive quarters of solid revenue growth, with plenty of cash in the bank and a stock up 136% in the quarter (including a 52week high in the last week). Investors clearly believe that KongZhong is one of the best positioned companies to take advantage of the amazing growth potential of the Chinese mobile content market as its carriers roll out 3G. However, the ability to realize that potential has everything to do with staying in the good graces of notoriously skittish operators and regulatory authorities...as UK personalization outfit MonsterMob (now part of Zed) learned the hard way back in 2007. For that reason I was very interested to read a rumor posted on the website of Chinese telco consulting firm Marbridge (attributed to internet portal Netease) on July 17th claiming that KongZhong has been aggressively buying stored value from TD-SCDMA (Chinese 3G standard) test accounts in the interest of "self hitting"... which is, basically, buying their own products with those subsidized operator credits from China Mobile, to either arbitrage the spread with their generous 85% revenue share, or in the interest of manipulating the ranking of their content on the carrier deck. That speculation, coupled with the company's sudden announcement last week that President, CTO & Co-founder Nick Yang had resigned and Morningstar's abrupt announcement yesterday that it was going to drop coverage of KongZhong have got me super-extra-vigilant.

Updated Cabana Mobile Entertainment Top 20 by Revenue

Cabana Mobile Entertainment Top 20 by Revenue

Revenues are in US$ and are based on latest annual reports or industry estimates. The range of revenue on this list goes from a low of ~$50mil to a high of ~$550mil. Total revenue for the Top 20 is ~$4bil.

Please let me know if you think I'm missing a company or if you think I might have the order wrong.

Mo'Bullet Snacks

• Mobile Industry cognoscenti continue to discuss the catastrophic launch of Nokia's Ovi Store
• Verizon Wireless announces it will start supporting Java for smartphones on its network
• KongZhong (KONG) hits 52 week high & announces new focus on mobile games
• Twistbox/Mandalay Media (MNDL) CFO Jay Wolfe steps down abruptly & is replaced by Russell Burke
• Multiple reports about depleted inventories of the current iPhone model fan rumors/speculation that Apple will announce a new model next week
• D7 demo of the Palm Pre, the announcement of iTunes support & concerns over June 6th launch-day inventory levels further enhance the hotness factor of this device
• Mobile Streams (MOS) continues to enhance it's porn portfolio with the launch of new UK D2C site Porncasa.mobi

Are These The Top 20 Mobile Entertainment Companies By Revenue?

I think so...but I could be wrong. Who am I missing? Anyone on this list who shouldn't be there? Any issues with the order? I'll adjust and re-post based on feedback.

btw -- this list obviously includes mobile entertainment divisions of companies that are not exclusively involved in mobile or mobile entertainment. Also it does not include the mobile operators or divisions of traditional entertainment companies, such as the studios, networks & music companies.

KongZhong Rocks On

Major Beijing-based mobile content aggregator/publisher KongZhong (KONG) recently released an unaudited 2008 earnings statement.

Revs = $96.69mil a 31% increase over 2007

(Value added services = $86.91mil, mobile games = $7.74mil & mobile advertising $2.04mil)

Net Loss = $20.66mil...the company would have been profitable without hefty write down of goodwill (popular theme)

Subsequently it was reported that the company had taken a $6.8mil investment from Nokia Growth Partners. Smart move for Nokia (NOK) with a company that is becoming the dominant content player in market on the verge of a 3G roll out that has proven impossible to penetrate without a local partner.

Overall KongZhong's stock price has held up really well during the current economic meltdown (particularly compared to it's competition) and it's market cap is an impressive $179.22mil (2x Buongiorno (BNG) which has 4x the Rev).

I currently have these guys as a Top10 mobile content player worldwide, sitting between Thumbplay and Gameloft...anybody want to challenge this?