Qualcomm Likely Zeebo Lender

While startup Zeebo Inc., the downloadable game console that launched earlier this year in Brazil, may be the butt of jokes among video game blogs weary of failed promises to break the triumvirate that dominates the industry, the San Diego company has received $6 million in debt and options, according to an SEC filing.

While the investor is not named in the filing, the firm had earlier raised an undisclosed amount from Qualcomm Inc. (NASDAQ:QCOM), and the filing lists Qualcomm Ventures' chief Nagraj Kashyap as a director of Zeebo. Additionally, the new funds follow Qualcomm vet Mike Yuen's arrival last week as Zeebo's new senior vice president of worldwide content and services. In addition to the capital, Qualcomm is providing technical support since Zeebo games run on Qualcomm's BREW wireless platform.

Zeebo is not challenging industry giants Microsoft Corp. (NASDAQ:MSFT), Nintendo Co. Ltd. or Sony Corp. (NYSE:SNE) in their primary markets of the U.S., Europe and Japan, but instead it is carving out a niche in emerging markets -- especially BRIC nations. To address the piracy concerns that make the triumvirate and their publishing partners skittish about entering these markets, Zeebo games are distributed via cellular phone networks and stored locally on each console. The model has attracted game publishers such as industry giants Activision Blizzard Inc. (NASDAQ:ATVI) and Electronic Arts Inc. (NASDAQ:ERTS), among others, which have already ported 20 of their console and mobile titles to Zeebo.

While already available in Brazil, fellow BRIC nations India and China are expected to see Zeebo launches in 2010. Meanwhile, in the near term Zeebo is staying closer to home, and launching in Mexico ahead of the holidays.

While venture investments in the video game industry are not very common, Zeebo is not the only startup toiling in the shadow of the trio of console manufacturers. Earlier this year, OnLive Inc. announced it raised over $16.5 million from Maverick Capital and Warner Brothers to develop technology to stream high-definition video games via servers over high-speed Internet connections. - Matthew Wurtzel