August 19, 2003 4:49 PM PDT

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Nokia on Tuesday extended its bet on mobile video games, agreeing to acquire multiplayer technology from Sega for its upcoming N-Gage game deck.

Terms of the deal were not disclosed.

The Finnish cell phone maker said it will acquire Sega.com and use Sega's Network Application Package in its mobile phone and online games products. Nokia has said its N-Gage combination cell phone and game deck will be available in stores Oct. 7, priced at $299.

"Online multiplayer games and mobility are seen as the hottest developments in the games industry today," Ilkka Raiskinen, senior vice president of Nokia's entertainment and media business unit, said in a statement. "This acquisition is a logical step in bringing online elements to mobile games."

Nokia announced the N-Gage late last year, launching an ambitious attempt to develop mobile games. The N-Gage, which also functions as a cell phone, will have a high-resolution screen, Bluetooth local networking connectivity, and an MP3 player built in. It will run on the Nokia Series 60 platform and the Symbian operating system.

Nokia is one of several companies hoping to take on the reigning champ in mobile video games, Nintendo's Game Boy Advance.

Sony earlier this year announced plans for a portable version of its market-leading PlayStation home console. The PlayStation Portable will have an advanced screen, stereo sound, and a new high-capacity optical media format.

Tapwave, a start-up based in Mountain View, Calif., plans to introduce a similarly advanced gaming device, called Zodiak, based on the Palm operating system.

Nokia plans not only to sell and produce the N-Gage device, but also to act as its games publisher. The games will be packaged onto memory cards that can be plugged into the phone-console combo, which will come preloaded with five games. N-Gage gamers will use minutes from their calling plans to play.

Wireless gaming is expected to generate $8 billion a year by 2007, according to figures provided by Sega, which had previously announced it would create games for N-Gage. But so far, wireless gaming hasn't taken off even in Europe, where cell phones outnumber computers by nearly 5-to-1, according to analysts.

Hampering adoption is the current speed of wireless networks. The fastest networks maintained by leading carriers Sprint PCS and Verizon Wireless carry data at about the speed of a dial-up modem, which some analysts consider too slow for multiplayer gaming.

Sega has eyed mobile gaming as a key growth area since the Japanese game maker left the hardware business several years ago amid mounting losses for its Dreamcast home console. The company has been marked as a takeover target by several rivals.

 

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