Mobile Entertainment

Simultaneous to this it operated behind the scenes, running portals for the likes of Virgin UK and offering white-label search services for operators worldwide.

As of this week, Infospace Mobile is no more. After a year of retreat in which it sold or closed its games studios (Atlas, Iomo, Elkware) and flogged off its ringtone arm (Moviso, which it bought from Vivendi Universal in 2003) to FunMobility, all that was left was the services division comprising search, storefronts, portals and messaging services. On Monday, this was sold to Motricity for approximately $135 million.

Although the news wasn’t entirely surprising (a purchase had been rumoured for months), it still represents a dramatic turnaround. Basically, Infospace was undone by its reliance on third party IP – and by bad timing. It entered the D2C market just when consumers were losing faith in it, and when the big brands were taking back their own IP.

I spoke to Infospace’s Steve Elfman earlier this year and he told me: “It’s hard to be a content aggregator when the market is dominated by ringtones and four labels dominate the supply. And when the labels start to go direct, it’s pretty much impossible.” He also mentioned the struggle to get any kind of visibility on operator decks offering 400 games.

So Infospace backed out of content sales, focusing instead on B2B services. But the damage was done. Almost exactly a year ago, Infospace lost a major content aggregation deal with Cingular, then EMI filed a lawsuit against it for more than $100 million. Shareholders mauled the company’s mobile strategy.

They weren’t happy times.

This week’s buy-out is good for Motricity though, giving the US company relationships with what it describes as 11 of the top 13 carriers. Key among them are AT&T and Verizon, each Infospace customers. The deal also extends Motricity’s service offering beyond powering portals into search and advertising.

Important, with giants like Google and Yahoo! waiting in the wings.

There’s one interesting coda to this story. Earlier this year, Spanish D2C giant Zed was rumoured to be interested in buying Infospace. Obviously, it didn’t. But Zed’s recent results show what Infospace could have been. In September alone Zed’s sales were $100 million. Astonishing. And only possible because the company switched its focus away from personalisation products into community services – and because 85 per cent of its output is internally developed.

Expect to hear a lot more from these guys – starting in this month’s ME magazine...