Jamdat pushes the right buttons in licensing cell phone games.

Jamdat Mobile Inc.'s acquisition of the "Tetris" license last week, coming on top of a March license signed with Major League Baseball, has helped solidify the Los Angeles-based video game developer's position in the U.S. cell phone game market.

Jamdat shares jumped more than $2 after it announced the Tetris deal and upped its first-quarter revenue estimate to $15 million from $14.1 million. Jamdat said the Tetris puzzle game--where players arrange falling electronic blocks--would add 10 cents a share to its earnings this year.

While the market for mobile games--video games that are played on cell phones--is much smaller in the U.S. than in Asia or Europe, it is finally beginning to show signs of growth. Companies are attracting funding, and Jamdat, which went public last year in a $61 million initial offering, has so far been the biggest player in the space.

Jamdat, which declined comment last week, projects 2005 revenues of between $60 million and $62 million, up from $36.5 million last year and $13.3 million in 2003.

That's a sizable chunk of the growing U.S. market for video cell phone games, which climbed to $345 million in 2004 from $91 million in 2003, according to International Data Corp. IDC projects that the market will expand to $600 million this year, as wireless carriers roll out more ancillary services for their cell phone subscribers.

"Jamdat has the dominant position in North America, and they're trying to leverage that," said Kevin Dede, wireless analyst with San Francisco-based Merriman Curhan Ford & Co. "But the market is still very new. I think as it develops, it will attract more people. "Worldwide, video cell phone games are expected to generate $4 billion in revenues this year, according to telecom consulting firm Adventis. Asia and European markets developed faster because standards among various phones are more uniform.

Platforms vary

"We're slow here, in terms of picking it up," said Randy De Lorenzo, director of wireless research for In-Stat, which researches emerging technologies. "That will always be the case when you compare the U.S. to Japan or the Scandinavian countries."

Analysts say cell phone games have been slow to catch on in the United States, mainly due to logistics, not differences in American tastes.

In the U.S. market, for instance, platforms vary so customers usually have to go to their cell phone carrier's Web site to purchase new features or services (on Verizon Communications' Web site, "Tetris" costs $6.99; some other games come pre-loaded).

In Europe, because standards are more uniform, customers can go to Web sites that are unaffiliated with their carrier. "The success of those other mobile websites is much greater there than it is here," Dede said.

A common expectation is that people will become more interested in downloading games once more are widely available.

"We've talked to a number of companies that are experiencing very strong growth in the data area," Dede said, pointing out that data--which includes categories like gaming, ring tones and photos--made up 10 percent of Sprint PCS' revenue per user last year.

In-Stat surveys show that 6.5 percent of about 155 million wireless customers polled in the U.S. are "extremely interested" or "very interested" in mobile gaming, De Lorenzo said.

Jamdat has forged agreements with carriers that include Verizon, Sprint PCS, Cingular Wireless and Vodafone PLC.

Other mobile sites are starting to break ground in the U.S. VeriSign Inc. spent $273 million last year to buy a German company and set up Jamster.com, a mobile content site where users can buy ring tones and other cell phone applications.

And traditional video game developers such as Electronic Arts Inc., Calabasas-based THQ Inc. and Santa Monica-based Activision Inc. have also dived in.

Yahoo Inc. launched a mobile games studio in March called Yahoo Games Studio, after purchasing mobile game developer Stadeon, which offers chess and poker games for the cell phone. Financial terms were not disclosed, but Yahoo announced it has already forged an agreement to develop games for Verizon Wireless.

"There is a fairly healthy game market here," said Lewis Ward, wireless and mobile communications analyst with IDC. "It's a small market, but one that is certainly growing." Ward expects the U.S. market to reach into the $900 million range by 2006.

Part of the problem in tracking mobile game sales, and the reason most forecasts are really just estimates, is that cell phone companies lump games in with "data"--basically, anything downloaded from the Web to the phone. That includes ring tones, e-mail, photos and games.