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Emerging Markets Embrace Mobile Gaming and Social Networking Apps

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Have you heard of mig33? If you're American, the odds are good that you have not. But if you're from some other part of the globe it's likely to be as much a part of your vernacular as Facebook or Twitter. (Speaking of Facebook, mig33 has nearly 100,000 “fans” across the globe).

In its simplest form, mig33 is essentially a mobile download application that delivers a hybrid mix of all the latest gaming technology and social networking functionality. Users can share pictures, chat, and instant message right to any mobile phone that runs on Java and can connect to the Internet. When logged in, they can also use it to make VoIP phone calls. In countries like the United States, where Internet activity still reigns supreme, mig33 hasn’t taken off so quickly. But, in emerging markets like Indonesia, India, South Africa, where mobile phones are used far more often than the Internet, it’s quickly become a new way of life. Users have also warmed up to mig33’s latest offering of virtual gifts and avatars, which are quickly showing signs of huge opportunity.

What kind of gifts, you ask? A"Big Hug" and "Kiss, top the list of popular items. Individually, they come cheap, equating to about $1 in US currency. But hugs and kisses at a buck a pop add up quickly. Today mig33 reported that in 2010, it sold more than 40 million of these virtual niceties, most frequently to users in Nepal, Tanzania, Bangladesh, India, Pakistan and Iraq.

While the U.S. has been slow to catch the mig33 craze in terms of use, insiders have long been aware of this fast-expanding cash cow. It's valued at more than $2.5 billion and is backed by the usual suspects in Silicon Valley like Accel Partners, Redpoint Ventures, DCM, and GREE Inc. To help swiftly move the virtual currency program along, mig33 also has interesting merchant program that offers current users the opportunity to skim a little off the top of their friends’ gift-giving habit. In what one might call something of a technological take on a virtual pyramid scheme, mig33 sells “merchants” (current users) a minimum amount of mig33 “credits” at a discount. The merchants can in turn, sell them at full-price to family and friends, and keep the profit.

POSITION:  No positions in stocks mentioned.