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Online game developer K2 Network has announced the closing of a $16m Series B round of venture financing.  The round was led by Intel Capital and also included monies from Greycroft Partners, Khosla Ventures, Novel TMT Ventures, BV Capital and MVP Capital.

The online gaming industry is estimated to reach $10 to 13b in revenue by 2011.  K2 Network, which was founded in 2001, and has a presence in the United States, Korea and India, is focused on so called Massively Multiplayer Online Games (MMOG’s). The company has between  8m to 10m registered users 1 (their website and press releases have slightly different numbers) and a range of titles in its catalog.  The company provides both free to play games and premium subscription services.

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In a move largely anticipated since John Riccitiello’s return to Electronic Arts with a promise to bring change, the world’s largest game publisher (by sales) has announced plans to reorganize itself to streamline operation operations and speed to market.

The company, which previously ran game development through a large number of semi-autonomous studio units, will be divided into four distinct publishing labels; each of which will be tasked with focusing on one particular genre of gaming.   The gaming labels will be:

• EA Games – which will be home to a broad assembly of multi-platform games.  It will be led Frank Gribeau.  Its titles include Medal of Honor, the Simpson’s and others.
• EA Sports – arguably the flagship, Sports will be home to EA’s leading interactive franchises from Madden NFL Football to Tiger Woods Golf to FIFA Soccer. The group will initially be led by current EVP Joel Linzer who will act as interim group president until a permanent head is chosen.

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The NPD Group released its monthly hardware sales data for May late this past week. Sales for both consoles and software were strong. As has been regularly the case for the past few months, Nintendo dominated both full–size and portable hardware categories. Overall, hardware sales accounted for $319m in revenue for the month.

Home consoles accounted for $221m, an increase of 79% over the same period last year. The Nintendo Wii led with 338k units sold. The Sony Playstation 2 and Microsoft’s Xbox 360 finished second and third with 188k and 155k units respectively. The PlayStation 3 continued to struggle relative to the competition with only 82k units sold.

In the Portables category, revenue was up 45% over the same month for last year with approximately $98m in sales. The Nintendo DS sold an impressive 423k units following a strong showing in April when they sold 471k units. 221k units of Sony’s PlayStation Portable were sold.

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Electronic Arts (EA) Tuesday announced the creation of a new division which will focus on creating “casual gaming” titles for PC’s, Consoles and mobile devices. The division will be called EA Casual Entertainment and headed by former Activision Publishing president Kathy Vrabeck. No titles have been announced yet.

Within the gaming industry Casual Games are defined as games with a mass market audience. They typically have simple rules and intuitive gameplay to allow a player to begin playing with little to no learning curve (in stark contrast to many of the games sold for popular gaming consoles). Click to Read More

As far back as the middle of 2004, video game publisher Electronic Arts (NASDAQ:ERTS) was making moves to establish itself in China (and across Asia).  It’s since developed a substantial presence with a regional headquarters in Hong Kong and studios in Shanghai, Japan, Singapore and Australia.

Yesterday, EA announced it was buying a 15% stake in Chinese video game company The9 Limited.  The announcement is noteworthy, even if largely overshadowed by the more widely reported we’re-going-to-China news from private equity firm the Blackstone Group (which announced China’s national investment agency was making a $3b investment with them to buy a 10% non voting stake).

In the Electronic Arts deal, EA is paying $167m to gain its 15% share of The9 (Nasdaq: NCTY).  EA will also give exclusive licensing rights to The9 for the distribution of EA’s multiplayer FIFA Online game in China.  It’s a deal similar to one EA struck in South Korea with Neowiz in March (EA bought 19% for approximately $105m.)

China is a difficult market to understand and break into if you are aiming to sell products or services to Chinese consumers. (EBay, Yahoo and other companies have learned that the hard way). Not only are customer behaviors different (in gaming, for example, the market tends to favor multi–player online games -so called Massively Multiplayer Online Role-Playing Games (MMORPG) – much more than in the West), but there are also the Governmental and Regulatory bureaucracies to navigate.  Simultaneously trying to learn and manage marketing, sales and political considerations is not an easy task.

The EA deal seems to mark a new type of strategy for wishful corporate suitors. Rather than trying to break in like an adventure traveler with a backpack, a visa and a sense of adventure, Western companies are increasingly trying a more measured “Tour-Guided” approach.   They’re looking for partners who know the landscape and will guide them to the best places to visit.  For EA, the FIFA Online license deal is likely the first of many steps on that walking tour.  If it’s successful, I’d expect to see EA offer similar deals, or partnerships, on the release of other titles as well.

As far as the numbers go, China unquestionably presents a lucrative market opportunity.  IDC has estimated there were 31m online gamers in China in 2006 and Click to Read More

The NPD Group released its monthly hardware sales data for April late last week. Strong sales for Nintendo’s Wii and DS consoles again helped Nintendo dominate the month, outselling all competitors.

The Nintendo DS was the best-selling system in April with approximately 471,000 units sold.. The Wii, which is still in limited supply and difficult to get, was best-selling console (as opposed to portable) for the month with more than 360,000 units, nearly double the nearest competitor. The Sony PlayStation 2 finished second. Microsoft’s Xbox 360 and Sony’s PlayStation 3 both fell short of estimated sales for the month. Nintendo also won the award for top selling software publisher of the month with the top 2 best-selling games for the portables and console.

The numbers for April:

Hardware

• Nintendo DS: 471,000
• Wii: 360,000
• PlayStation 2: 194,000
• PlayStation Portable: 183,000
• Xbox 360: 174,000
• GameBoy Advance: 84,000
• PlayStation 3: 82,000
• GameCube: 13,000

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Five or six years ago, one of the hot topics in academic and enterprise computing technology was something called Grid Computing. The concept, which had been in development for years in the academic and research community, was (explained in an over-simplified way) to have the resources of many computers and networks available in a similar fashion to electricity, or water – they’d be distributed, widely available; and available in varying quantities as needed.  The idea was assembling and selling computing power and resources (storage etc.) on demand.

If NASA needed to build a complicated weather model to plan for Space Shuttle launches, or if Pfizer needed to simulate thousands of chemical reactions in the search for a cancer drug, or if a hedge fund wanted to build a complex mathematical model of some esoteric market to manage risk– they’d all be able to buy the resources on a Grid, rather than having to buy and network tens, or hundreds of computers.   By design, computational Grids could allow scientists and companies to process incredibly large amounts of data, or run extremely complex calculations, more quickly and without the expense of a Super Computer. 

At the time, doing consulting work, I was fortunate enough to work a bit with some of the founding developers of Grid technology, and others who were working on Grid projects at the National Center for Supercomputing. I got to speak with them about commercial application of their work.  I learned a lot from them but I’m virtually certain none of them would have foreseen what’s happened in the past year with the Stanford Folding@home project – specifically, its expansion of Grid technologies to video game platforms.

The project (which is sometimes referred to as FAH or F@H) is a grid based project from Stanford designed to build simulations of protein folding, a biologic process that, when gone wrong, is theorized to contribute to Alzheimer’s disease, some cancers and other maladies.  FAH has been active since 2000 and as of March 30th, 49 research papers have been published using the projects work.

What’s remarkable is that a good part of the FAH computational power comes from Video games and not idle desktop computers. Click to Read More