Summary:

Two Seattle-based mobile game companies Reaxion and Mobliss have merged and will conduct business going forward as PressOK Entertainment. In…

Two Seattle-based mobile game companies Reaxion and Mobliss have merged and will conduct business going forward as PressOK Entertainment. In April, we reported that Mobliss had slashed most of its staff and was considering a merger with Reaxion. Today, the companies plan to officially announce the deal. The transaction consisted of a stock merger between I-Hatch, a Reaxion investor, and Japanese-based Index Corp., which owned Mobliss. No new funding was raised, and Reaxion’s CEO Colin Prior will head up the new company.

The merger is a sign of the times, with size and scale being important as margins are squeezed by brand owners, carriers and aggregators. Prior to the merger, Mobliss at its peak, had hit titles such as Family Feud and powered the American Idol text messaging system. But more recently, it spun off its messaging platform, lost the Family Feud license to Glu Mobile (NSDQ: GLUU), and its CEO Jim Merrick decided to leave. Its latest accomplishment included launching a Burger King mobile game. Prior: “There’s room for, and need for, further consolidation in the mobile games industry. There’s a lot of companies like Mobliss that could benefit from being part of a larger entity.” Together, Prior said the companies will have fewer expenses but more revenues. He’s forecasting profitability in the second half of this year. Before the merger closed, Mobliss laid off most of its employees, so the company will rely on Reaxion’s 38 employees, of which 28 are located in development offices in Moscow and Minsk, Belarus. There are seven employees in Seattle.

PressOK: This brand will represent the publishing side of the business. To consumers, it will be known as Poke. Currently, the company said about a third of its business comes from brand names, but going forward, they’ll slowly ratchet up the branded side of the business to 50 or 60 percent.

Reaxion: The Reaxion brand will also stay alive, and represent the other side of the company’s business, which focuses on offering professional services to developers and other publishers. Prior is counting on this being a high-margin. That side of the business relies heavily on a development framework that Reaxion built, and automates a lot of porting. It supports Java and Brew today, and will eventually add the iPhone, Android and Windows Mobile.

Starting over: Although the two companies have more than a decade of experience, it’s like they are starting from scratch. Prior: “No, actually we are building on our mistakes. There’s a restart feeling.” He said Reaxion made a mistake when it chose to drop its professional services business, but they weren’t successful at running it along side its own publishing business. This time, they intend to divide the two, so they don’t interfere.

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