Big game publishers muscle in on iPhone's upstarts

By Gabriel Madway

SAN FRANCISCO (Reuters) - As the iPhone becomes a popular mobile gaming device, large game publishers with deep pockets are going head-to-head with smaller developers who found early success on the Apple Inc phone.

With name recognition and financial resources, publishers like Electronic Arts, Gameloft and Glu Mobile have a huge advantage. But up-and-coming companies such as ngmoco, Digital Chocolate and Tapulous have proved adept so far at building their brand.

Apple's App Store is crowded with about 13,000 games -- many from tiny developers -- and gaining the attention of consumers is a challenge. Download rankings are key to success since users trawl the most-popular lists for games.

"Although the top iPhone games are made by independents today, the big publishers will strike back," said Jeremy Liew, a managing director at Lightspeed Venture Partners, a venture capital firm that has invested in social gaming companies.

"The iPhone only offers one way for games to get discovered today, and that favors the cash-rich big publishers."

The big players "have a full marketing budget ... the minute an app starts dropping in ranking they'll go ahead and start pouring money into advertising to push that ranking up," said Krishna Subramanian, co-founder of analytics company Mobclix.

In contrast, smaller publishers tend to offer more free or 99-cent games to help push up download numbers.

Since its launch a year ago, the App Store has given birth to an entire industry of software developers. Stories of entrepreneurs working out of a garage who have gotten rich with an iPhone app have added to their mystique.