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Summary:

Trip Hawkins, the CEO of mobile gaming company Digital Chocolate and founder of Electronic Arts, said to me awhile ago that he has worked on growing Digital Chocolate slowly, looking to avoid some of the pitfalls of his past investments–remember 3DO, his game hardware idea, that […]

Trip Hawkins, the CEO of mobile gaming company Digital Chocolate and founder of Electronic Arts, said to me awhile ago that he has worked on growing Digital Chocolate slowly, looking to avoid some of the pitfalls of his past investments–remember 3DO, his game hardware idea, that rose fast and fell equally hard?

Yesterday it was reported that Digital Chocolate raised another $18.03 million in funding, bringing the company’s total to around $40 million, from investors like Bridgescale Partners, Outlook Ventures, Montagu Newhall Associates, Kleiner Perkins Caulfield & Byers, Sequoia Capital and Sutter Hill Ventures. So it looks like “D-Choc,” as the employees like to call the company, might start growing a little more quickly now.

Digital Chocolate and the company confirmed that there was some sort of funding they plan to talk about in the future, though they said that the stories in the media weren’t entirely accurate. (“18.3 million” sounds pretty specific to me, like the report was based on an SEC filing?) Since they didn’t elaborate on what wasn’t entirely accurate, we’ll have to wait for their cue.

Digital Chocolate’s strategy has been a bit different from the other mobile game companies. Hawkins is trying to create what he calls “social content” instead of traditional mobile games like Tetris on a cell phone. While a lot of the company’s current games are still more classic mobile content like card games, the company also has community-based games like The Hook Up, an avatar-based dating game, and MLSN Sports Picks, which is a fantasy-style sports league. Hopefully the funding will help the company build more of these social network games, which could end up being really viral, with the right game.

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  1. $40 million? The money would be better spent convincing carriers and handset makers to collaborate. The mobile industry is simply too green for such a large investment in mobile software development (client applications that is). Where is premium MMS in the US (for example)? Leave the research and development to students and garage entrepreneurs and concentrate on taking advantage of the lowest common denominator between mobile devices, SMS and MMS. A slew of interesting network games can be built upon these platforms (and already have been).

  2. the best thing to do is run when wireless carriers are involved. Investors, executives etc.. Run. Fast.

    This wireless industry with its walled garden severely damages innovation. And there in no particular upside. Name ONE successful wireless investment. A company that became a billion dollar company? Not a single wireless data company. Jamdat could not handle the street and got out selling to EA. Was like 1/2 a bill in mkt cap. Widerthan is public, not even worth 200M even though the power ringbacks and vcast for the top data operator in the US Verizon and also have a massive deal (through ownership structure) with SK Telecom.

    Why? Prettty simple, if you become too successful – carriers use their market power to chew up you economic rents. Markets and hedge funds know this and price accordingly.

    Om – your blog rocks. We entreprenuers are counting on your ability to spur an uprising to make the carrier go the way of ISPs. Please help.
    Best,
    An Entrepreneur who deals with carriers :)

  3. Good Blog. I think it’s just a matter of time before the money runs out. If you look at the market place at the moment I think I can safely say that there isn’t a single company that is actually making money. It’s a fact that Infospace went bust a couple of weeks ago after losing something like 65 Million USD after a few years in the business. Gameloft had to sell part of its operations for I think 18 Million Euros just to report a 1 Million profit if you do the Math they were set to make a 17 Million loss. Ubisoft is quick to shit the company and they put up their remaining share sup for sale as they know for sure next year the revenue numbers will be totally disastrous causing a huge drop in Share value and market cap. I could go on and on with examples of companies that claim that they have the biggest market share or the widest distribution but all that equated to is that they are losing money faster than their competitors. The sad thing is that the whole sector from Games to Videos to music is suffering from this phenomenon.

    If we look closely they all have one thin gin common. A carrier!!!

    The main issue is that carriers are too greedy and take a major portion of the revenue away from publishers of all kinds. The other problem is that they often don’t understand what the public wants and to be honest they are not even remotely interested in what they sell and lastly they have no clue about innovation. They are phone companies as one top executive once said to me we don’t care about games or music!!!!

    Since it is next to impossible for a publisher to get a direct contract with almost any carrier on the globe and since they really don’t present or promote what they have on their decks it is no wonder that on average only 4% of their consumers actually ever purchase anything from them.

    In a consumer driven world consumers should make their own choices and carriers should assist by presenting to us what is the cream of the crop not the next Tetris look alike or games from one particular publisher that has offered them a juicy job for the future. In any consumer society people will decide what they like. It is so simple to allow all games developers or content providers to upload their products to a carriers deck and wait for the public to download demos and vote for the products like a content youtube if you like. Products that hit 60% or more go live and sell or even if you have a 10000 views or more your product goes live automatically yet ideas such as these are alien to the carriers.

    So I have a simple recipe for success if there is a single carrier out there listening.
    1) Let the public decide what they want and open the doors for developers and publishers to bring their products easily to market.
    2) Drop the price of your content down and take less share like 10% rather than 60%-70% of the revenue as they do now. Hutchinson and Orange are some of the worst offenders
    3) Promote innovation rather than kill it before it starts
    4) Listen to your consumers and don’t just think about releasing the next film license
    5) Small companies are often leaders in innovation not the large corporate. Make sure you let them in and champion their products
    6) If all above fails everyone should stop downloading content tomorrow and perhaps they will listen then J

  4. It looks like we are about to have another casualty. Skyzone’s CEO James wee and almost every executive have left the company now. I don’t think they will be around that much longer!!

    They used to claim that they were the forth biggest games publisher in the USA however they never put many games out go figure!!

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