Kongzhong Corp (KONG), a leading provider of mobile Internet value-added services in China, has decided to acquire Simlife International Inc, a Chinese mobile game developer with a portfolio of more than 200 3D mobile games.

We consider this is a strategic move as Kongzhong has become the largest mobile game developer in China ahead of its competitors Hurray! Holdings (HRAY), Linktone (LTON) and Shanda Interactive Entertainment (SNDA). The company has taken a strategic decision to focus on two key areas. These are (1) Develop its mobile games business as the main growth driver and attain the largest share in this segment (2) Transform its Kong.net portal into a wireless based social gaming and community platform.

According to various industry estimates, the Chinese wireless value-added services market may generate up to $11.5 billion of revenue