HTC invests in online gaming, multimedia delivery

The ability to deliver optimized content, including games, to smartphones will be key in the future, according to HTC

Smartphone maker HTC has acquired multimedia delivery specialist Saffron Digital and plans to pay US$40 million for a stake in online gaming company OnLive.

OnLive delivers on-line, on-demand gaming services over broadband Internet connections to TVs, PCs and Macs, but does not yet target mobile devices.

HTC plans to buy 5.33 million shares of OnLive, the smartphone maker said in a filing to the Taiwan Stock Exchange on Tuesday. The privately held company does not indicate how many shares it has already issued. OnLive spun out of technology holding company Rearden in 2009, and has previously received investment from AT&T Media Holdings, Warner Bros and Autodesk.

The filing didn't elaborate on what HTC wants to get out of its investment in OnLive. However, it's easy to see why smartphone makers are interested in games. In January, Apple revealed a list of the all-time most popular applications for the iPhone, and the top five paid apps were all games.

Also, HTC isn't the only vendor betting on smartphone gaming. On Sunday, Sony Ericsson officially unveiled its Android-based PlayStation phone, the Xperia Play, with a TV ad screened during the Super Bowl American football game.

If HTC is to get OnLive's service to work well on smartphones, the games will have to be delivered quickly and reliably. The ability to deliver optimized content to smartphones will be key in the future, according to HTC, a view that may have prompted it to invest in multimedia delivery specialist Saffron.

HTC is paying £30 million (US$48 million) to acquire the London-based company, a Saffron spokeswoman said Tuesday. The investment will help Saffron expand into new sectors such as games and music, the company said.

Saffron's technology, which today is used for video delivery, is integrated into products and services in Europe by LG, Paramount Digital Entertainment, Sony Ericsson, T-Mobile and Nokia, and in the U.S. by Samsung. Saffron will continue to work with other companies besides HTC, it said.

HTC was the fifth-largest smartphone vendor by number of smartphones shipped in the fourth quarter, according to market research company IDC. Sales grew by about 258 percent year-on-year from 2.4 million phones to 8.6 million. Among the top five vendors, only Samsung outpaced HTC's growth, as it increased smartphone sales by approximately 439 percent.

Nokia was the top smartphone vendor, followed by Apple, Research In Motion, Samsung and HTC, according to IDC.

(Additional reporting by Dan Nystedt in Taipei.)

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Tags smartphonesbusiness issueshtcPhonesgamesconsumer electronicsPhone applicationsMergers / acquisitionsSaffron Digital

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Mikael Ricknäs

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