UPDATE 2-Nokia to close gaming service N-Gage

Fri Oct 30, 2009 2:25pm EDT

* Not to publish new N-Gage games

* To wind down N-Gage operations by the end of 2010

* To continue selling games in Ovi Store

(Adds analyst quote, background)

By Tarmo Virki, European technology correspondent

HELSINKI, Oct 30 (Reuters) - Nokia Oyj (NOK1V.HE) will close its battered gaming service N-Gage next year, acknowledging failure in its first major services offering.

Nokia is looking for new revenue from online services as its traditional handset market matures, with games and music being the first focus areas.

Yet the handset maker's mobile gaming push has encountered major challenges, with consumers first shunning its dedicated gaming phones which went on sale in October 2003, accompanied by a major global advertising campaign.

The online gaming service, which opened last year, took over the N-Gage brand and also never moved beyond a niche audience of hard-core gamers.

"We will no longer publish new games for the N-Gage platform," Nokia said on its N-Gage blog, to which a user calling himself Jon replied: "It's a sad day for N-Gage fans".

It said the games from its first major services offering could be purchased until the end of September 2010 and the community site would remain in operation throughout 2010.

"It's a sign of a more realistic approach. It's time to bury the dead and focus on the future," said Tero Kuittinen, analyst at MKM Partners, adding Nokia had great opportunities in other areas, such as location-based services, micro-financing and mobile email.

Nokia's leading position in the cellphone market had attracted all the top mobile game makers -- including Electronic Arts ERTS.O, Gameloft (GLFT.PA), Glu Mobile (GLUU.O) and Digital Chocolate -- to create special games for N-Gage.

After closing the N-Gage service, Nokia will continue to sell mobile games at its Ovi Store, a smaller rival to Apple's (AAPL.O) popular App Store.

Nokia's U.S. shares were 3.3 percent lower at $12.73 by 1750 GMT. (Editing by David Cowell and David Holmes)

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