The merger is viewed by both companies as the right step forward in pushing the growing Philippine online gaming market towards the tipping point of mainstream culture.

NetGames and Level Up! will continue to operate independently through 2006, while preparations for the merger are being undertaken.

When the merger is completed by the first quarter of 2007, ePLDT will be the dominant online gaming company in the Philippines, with over 90 percent market share in the young but high-growth online gaming market.

Level Up! International Holdings (LUIH) will continue to be responsible for day to day operations of Level Up!, and will provide international assistance and industry expertise to ePLDT.

LUIH is the holding company which established Level Up!, and through its subsidiary companies, is also the pioneer and leading online game publishers in Brazil and India.

Level Up! is the pioneer in the local online gaming industry, publishing the first local online game, OZ World, in 2002.

In 2003, Level Up! introduced Ragnarok, an internationally popular massively multi-player online role-playing game (MMORPG) by Korean developer Gravity Co., Ltd. ("Gravity").

To-date, Ragnarok continues to be the top online game in the country, with still over 50 percent market share.

On the heels of Ragnarok’s success, Level Up! last year launched two more MMORPG’s ­ ROSE Online, a full 3D role-playing game from Gravity; and RF Online, a 3-way race vs. race game in a scifi/fantasy setting, by another Korean developer, CCR, Inc.

It also recently introduced two casual games ­ Hyper Relay, a free-to-play arcade-style gaming suite licensed from Singaporean publisher Teckwah Online Pte. Ltd., and the now hugely popular Free Style Online, a hip-hop-influenced street basketball game from JC Entertainment Co., Ltd., another Korean developer.

All together, these games account for Level Up!’s dominant 80 percent share of the online gaming market.

"Both content and alternative channels of connectivity and distribution, as well as media, are growing and helping to expand the market. As a member of the PLDT group, Level Up! will be able to take advantage of the many synergies with PLDT’s leadership in this sector," LUIH said.

ePLDT’s netGames is a relatively younger contender in the online gaming business, but its strong and well-differentiated portfolio of games and the backing of the PLDT group mean that it is likewise a force to be reckoned with.

Its first entry to online gaming was Khan Online by Mirinae Entertainment of Korea, the Philippines’ first full-3D online game. Introduced in late 2004, Khan Online quickly gained popularity amongst the mature gamer generation, and still maintains a strong following to date.

This was followed by the launch of Fly For Fun Online (Flyff), developed by Korea’s AeonSoft, in late 2005. Flyff is the world’s first flying MMORPG and the first in the Philippines to adapt the free-to-play business model.

Seeing the huge potential in the casual gaming segment, it recently launched PangYa, Asia’s hottest online fantasy casual game by Hanbitsoft Korea.

Given PangYa’s current dominance in Asia and increasing market share, it touted as the next big thing to hit the Philippine online gaming industry. This range of games gives ePLDT about a 10 percent share of the online gaming market.

"The acquisition of Level Up! is consistent with the PLDT Group’s strategy to bring rich and compelling content to its Internet subscribers and users and eventually its mobile subscribers as well.

The acquisition will also enhance the position of ePLDT as one of the leading content aggregators in the country. As ePLDT brings richer and more compelling content to the market, it is anticipated that demand for wired and wireless broadband services will further increase," Ray C. Espinosa, President & CEO of ePLDT, said.

Both companies are optimistic that with the right content and operational efficiencies from collaborative efforts, and the unparalleled seamlessness of the PLDT group’s convergent technologies, the merger will produce a robust and dynamic online gaming industry that benefits the player community as well as associated industries like Internet cafes, distribution systems, hardware and software suppliers, and all telcos and ISPs.