Gamemaker Zeebo Raises Additional Capital in Major Strategy Change

San Diego-based Zeebo, founded in 2007 to build a business around a new wireless game console, apparently is making a significant change in its strategy, and has raised additional equity funding, according to a recent regulatory filing.

Zeebo discloses in the document submitted to the SEC that it’s raising $17 million in equity financing, but the company’s investors are not identified and it’s unclear if the $17 million represents just a $3.5 million extension of the $13.5 million the company raised in mid-2010—or if Zeebo has raised an additional $17 million in new money.

Zeebo was formed as the result of a partnership between Brazilian video-game company Tectoy S.A., and Qualcomm (NASDAQ: [[ticker:QCOM]]), with the San Diego wireless chipmaker holding a minority stake, at least as of 2009.

When I called the Zeebo phone number listed on the form, I got the mobile phone of former Zeebo CEO John Rizzo, who says he left the company in February. He later joined Palo Alto, CA-based Jive Software as chief marketing officer. Qualcomm referred my query about the company’s financing to Zeebo’s new CEO, Mike Yuen, who couldn’t immediately be reached for comment.

Mike Freeman of the San Diego Union-Tribune notes in a story this morning that Zeebo’s website shows the company is changing its strategy to focus on education, “with a reduced emphasis on gaming.” Critical comments posted beneath a story about Zeebo’s latest financing on the Gamasutra website suggest that the console maker wasn’t entirely successful in penetrating the video game markets in Brazil and Mexico.

Indeed, Zeebo’s website includes this statement: “As a result of the realignment, business and studio operations in Brazil and Mexico will be discontinued, and the current Zeebo system is no longer available for purchase in retail stores. Zeebo Inc. appreciates the tremendous support by customers in Brazil and Mexico who have enjoyed the system’s content and service offering. The product warranty, call center, and repair services will continue to be available for Zeebo customers.”

Zeebo’s website says the company now sees a vast opportunity to bring interactive education to emerging markets around the world, “with near-term operations and business interests centered on India.”

Author: Bruce V. Bigelow

In Memoriam: Our dear friend Bruce V. Bigelow passed away on June 29, 2018. He was the editor of Xconomy San Diego from 2008 to 2018. Read more about his life and work here. Bruce Bigelow joined Xconomy from the business desk of the San Diego Union-Tribune. He was a member of the team of reporters who were awarded the 2006 Pulitzer Prize in National Reporting for uncovering bribes paid to San Diego Republican Rep. Randy “Duke” Cunningham in exchange for special legislation earmarks. He also shared a 2006 award for enterprise reporting from the Society of Business Editors and Writers for “In Harm’s Way,” an article about the extraordinary casualty rate among employees working in Iraq for San Diego’s Titan Corp. He has written extensively about the 2002 corporate accounting scandal at software goliath Peregrine Systems. He also was a Gerald Loeb Award finalist and National Headline Award winner for “The Toymaker,” a 14-part chronicle of a San Diego start-up company. He takes special satisfaction, though, that the series was included in the library for nonfiction narrative journalism at the Nieman Foundation for Journalism at Harvard University. Bigelow graduated from U.C. Berkeley in 1977 with a degree in English Literature and from the Columbia University Graduate School of Journalism in 1979. Before joining the Union-Tribune in 1990, he worked for the Associated Press in Los Angeles and The Kansas City Times.