Magmic Games co-founders John Criswick, left, and Nicholas Reichenbach. (Darren Brown, OBJ)

Mobile games maker Magmic has ambitious plans, including an IPO

There are about a billion mobile phones in use on Earth right now.

Very few have ever downloaded content, be it a game, music or wallpaper.

For Ottawa-based phone content provider Magmic, that means nearly limitless potential for growth, according to vice-president of publishing Nicholas Reichenbach.

"The cell phone market potential is huge," said the co-founder of Magmic. "We've just cracked the surface. Only three to four per cent of all cell phone users have played a game. We've got a whole, long ways to go. The devices are getting better in their computing power, so the growth (potential) is there. There's no brakes on this car."

Magmic, founded in 2002, rose to prominence on the success of another Canadian success story, Waterloo's Research in Motion and its BlackBerry series of smart phones, Magmic's niche to this day.

While most mobile game producers felt that the smart phone gaming market was too old and too small, Magmic proved them wrong, developing and licensing games suited to a specific demographic – 25 to 40 year olds with a high disposable income. It turned out there was a market for mobile games sudoku, poker and that capitalist standby, Monopoly, as well as for Atari classics BlackBerry users will recall from their childhoods, such as Frogger.

With about 70 employees between its local office and year-old Vancouver office, the ByWard Market firm expects to be at least twice as large in a year. It also plans to go public in 2009.

"We are Canada's largest mobile games publisher, and we are going for top 10 in the world," said Mr. Reichenbach. "We are growing at about 100 per cent a year in HR. We will go to 160 employees by the end of 2008."

Magmic will have to compete hard to reach the top rungs. According to U.S. research firm Telephia, some 90 publishers are vying for a share of the U.S. market. As of March, nearly 30 per cent was owned by one company, Electronic Arts (EA). Gameloft and Glu Mobile each had about 10 per cent, with a smattering of others each getting between two and six per cent.

Paul Steep, director of software and IT services research at Scotia Capital Inc., agreed that the billion-dollar mobile games market is poised for growth. He added, however, that other companies have seized onto that idea, and won't give away market share without a fight.

"It's very much like being in the movie business," he said. "How good is your catalogue? How good was your last major release? If they develop a great game, and have good visibility, there's no reason they can't succeed."

Mr. Steep pointed to EA's purchase last year of JAMDAT Mobile Inc., a publicly-traded mobile games publisher. The acquisition was a foot in the door for EA, which until that point focused primarily on games for PCs and console systems such as Sony's PlayStation.

EA is now the largest mobile game publisher in the world, capturing some 30 per cent of revenues, according to some analysts. It dedicates an entire division within its company to mobile games, a division which employs more than 400, and provides stiff competition for all other companies in the sector.

"There are competitors, and they are real, but I think that just validates the market," said Mr. Steep. "The market's been validated because major games makers like EA are investing in it."

Licensing agreements with Sony, Universal, Hasbro and sports leagues like the NFL and the NBA have allowed Magmic to not only develop its own games, but also license games from publishers like Konami and PopCap.

Magmic does not disclose revenues figures, but says it sells about 10 million games a year, on average. It claims to account for about 70 per cent of all games downloaded to BlackBerrys, directly from its website or BPlay, a site dedicated to RIM devices.

The solid relationship with RIM, said Mr. Reichenbach, has given Magmic the leverage to branch out, which will be necessary to take more market share, considering that there are only about 10 million BlackBerry devices in use.

Cell phone users, on the other hand, count nearly a billion, and the average age of a cell phone user is 16 to 35.

Magmic is on good terms with Canadian cell phone carriers Bell, Rogers and Telus, and provides content for some 1,300 different cell phones, from Nokia to Sony Ericsson to Sanyo.

"We now cater to a lot of smart phones, not just BlackBerrys," he said. "We've proven that we're an A-one, top-tier publisher that the original owners can invest in and can get their product out onto the market. We've developed a reputation."

Mr. Steep said that Vancouver, Toronto and Montreal are where most game development companies are located, mainly due to an abundance of qualified personnel. While he said being headquartered in Ottawa won't hurt Magmic, it's a good thing it opened a Vancouver office and that the Ottawa office is a short drive to Montreal.

"Logically, the biggest challenge in that whole business is getting talent and retaining it," he said. "The good part for them is that Ottawa has so many people in the telecom business. But the downside is finding game developers in Ottawa. Going somewhere where there's an established community, you have better odds of getting producers and project managers."

Company co-founder John Criswick agreed that Magmic's recent growth has led to some challenges, chief among them the hiring of qualified personnel. Besides tapping the Vancouver market, he said Magmic is planning to run a game development competition at Algonquin College, starting at the end of September till February.

"If there are challenges in Ottawa, it's that people are generally going to Montreal or Toronto to get into the gaming market," he said.