A small Irvine-based maker of software that is used by developers to make video games for mobile phones is wrestling with a phenomenon industry insiders call the “iPhone effect.”
Javaground USA Inc. makes software that helps others take a game developed for one mobile device and adapt it for play on others, a process called “porting.”
“One thing that has changed the mobile gaming market dramatically is the iPhone,” said Alexandre Kral, chief executive and cofounder of Javaground.
The Apple Inc. do-all gadget, which has sold more than 17 million units, has captured a good part of the market of people who play games on their mobile phones.
The quick dominance occurred because iPhone allows virtually anyone to become a game developer.
Apple sells a $100 software development kit that enables any user to develop iPhone applications, including games.
“It’s a great open marketplace where everyone can create their own games and sell them,” Kral said. “Apple has established a beautiful free market.”
The down side: a lot of the demand for porting services to other (non-iPhone) de-vices has dried up.
“The iPhone has affected us in a somewhat negative way,” Kral said. “There is a lot less porting needed in our industry. A lot of players tend to flock to the iPhone so there is less emphasis on other phones for gaming.”
Business Lines
Javaground has two main lines of business.
Roughly 80% of its sales come from porting services.
Its customers are big video game publishers, including Japan’s Namco Bandai Hold-ings Inc., Konami Corp. and Sony Corp. The company tests the games on some 1,500 different cell phones and smart phones.
The publishers, in turn, sell the properly formatted games to wireless carriers around the world.
Mobile video games, like music, are big profit drivers for wireless carriers.
The carriers charge cell phone users a fee to download each game to their phones. If it’s an online game, some carriers charge for data usage, as well.
Javaground also is taking a hit as customers cut back on buying games for their phones.
Kral estimates that sales of video games for cell phones are down about 7% since the start of the year.
“Mobile gaming isn’t selling as well as last year and our customers on the carrier side are putting pressure on us to lower costs because they themselves are hurting,” he said.
Javaground’s other business is licensing its porting software to game developers, including Mumbai’s Indiagames Ltd. and Hudson Entertainment, a unit of San Mateo-based Hudsonsoft Inc.
The company’s sales are expected to be roughly flat or down this year from last year’s $4 million in revenue.
“It’s the first year we are likely to be down in terms of sales,” Kral said.
Javaground recently did a round of layoffs and expects to break even this year, he said.
During the downturn, the company has trained its sights on catering to the iPhone.
Within the past nine months, Javaground has developed 10 different game titles for
the iPhone for Sony Pictures Digital Entertainment.
Some titles include “Wheel of Fortune,” “Jeopardy” and “Angels and Demons,” which is based on the Ron Howard movie.
A few months ago it released its own iPhone title “UniWar,” which is known as a “turn-by-turn” game.
It’s a strategy game where multiple players take turns making a move,all of it is done on the iPhone’s touch screen.
A week after its release, “UniWar” landed among the top 10 games for the iPhone, according to Kral.
Belgian Background
Kral, a 36-year-old native of Belgium, started Javaground in 2001 with Xavier Kral, his brother.
Alex handles the day-to-day business operations and Xavier heads development and engineering.
Alex’s first job after earning an master’s in engineering from the University of California, Los Angeles, was designing set-top box chips at Irvine-based Broadcom Corp. from 1998 to 2001.
He started another local chip company with two other Broadcom engineers in 2001. The Newport Beach-based startup, called Silicon Focus Inc., set out to make GPS chips. The company failed to get off the ground after one of the initial founders backed out.
After Silicon Focus, Kral joined another chip startup, Irvine’s Axiom Microdevices Inc., which pioneered a cheaper way to makes chips that help cell phones get better reception.
Kral, along with a dozen of Axiom’s original workers, left after the company’s venture capital investors pushed for executive changes at the top.
Axiom was bought last month by Woburn, Mass.-based Skyworks Solutions Inc. for undisclosed terms.
In 2005, Javaground got a small angel investment from a Canadian tech veteran who was involved in Axiom’s earliest days.
A year later, it landed a second small investment from Myriad Group AG, Europe’s biggest mobile phone software company, which is publicly traded in Switzerland.
The company is mostly bootstrapped,it’s raised less than $1 million to date.
Javaground has 40 local workers and half a dozen in Italy.
