By Ryan Olson and Scott Martin

The killing zone may be shrinking, but the bets sure aren’t. No. 2 mobile game publisher Glu Mobile has filed to go public amid a market lead by heavyweight Electronic Arts at battle over what is shaping up to be a future $10.5 billion business.

San Mateo, California-based Glu on Tuesday filed with the Securities and Exchange Commission for a proposed IPO, hoping to raise as much as $92 million, according to SEC documents.

The initial public offering is significant because it is further evidence that the mobile market for casual gaming is set to blast off.

Electronic Arts last year snapped up mobile games specialist Jamdat for $680 million, renaming the company EA Mobile (see EA Buys Jamdat for $680M).

The investment paid off. According to mobile research firm M:Metrics, as of October EA Mobile held about 27 percent of the market, compared with Glu’s 11 percent.

“Jamdat was the first mobile gaming company to go public,” said Tim Chang, a partner at Gabriel Venture Partners. “It was the first mobile aggregator to go public, so they’re following in their footsteps.”

Glu has cranked out plenty of hit mobile games, including Mark Ecko’s Getting Up and Deer Hunter. Mobile versions of hit casual games from the PC are also bringing in scads of customers—according to M:Metrics, Glu’s Monopoly title was the No. 3 selling game for a three-month period ending in October.

Games aside, technology is finally reaching a turning point. Mobile phones can now become a viable gaming device, thanks to faster chips and more powerful graphics processors. That will only continue as some of the chips from companies like Marvell make their way into future phones (see Marvell Three of a Kind: Chips).

Better screen sizes and resolution will make mobile games more compelling too. Only a few years ago, mobile phones—particularly in the U.S.—lacked color screens of any size or resolution. Plus, the proliferation of 3G and next-generation connections on mobile will make for a much more interactive gaming environment.

Yet part of the next battle will also be played out in carrier deals, at least in the U.S. Still the most powerful mechanism for mobile game awareness and distribution, carrier alliances can help make or break mobile game companies. Those with the best distribution arrangements stand to gain significantly.

It can’t hurt that Glu’s early founder is a gaming legend. Glu was previously known as Sorrent, or Scott Orr Entertainment, after its founder. However, its name was changed to Glu Mobile in 2005.

Mr. Orr, who currently holds nearly 6 percent of the company’s shares, was the lead designer for the first video game console versions of Madden NFL Football, the best-selling title of all time in the North American market.

He played a significant role in the formation of the company, said former Sorrent president Isaac Babbs, who also holds shares in Glu. Mr. Babbs served as president at Sorrent from 2002-2003.

But Glu has since evolved from its early roots. Company CEO Greg Ballard is responsible for much of the progress, along with the management team that has been in the place for the past few years, said Mr. Babbs.

“I think Scott was good on setting the DNA of the company, but it’s really clear that Greg has taken it where it is today,” Mr. Babbs said. “He’s got a very strong team.”

Mobile Messiah

Mr. Ballard says that with billions of wireless phones in use around the world, it’s easy to make a compelling case for mobile gaming. During a conversation in August, Mr. Ballard offered a powerful analogy. “We’ve found the gaming Trojan horse—it’s a cell phone,” he said (see Glu Mobile’s Greg Ballard).

The idea convinced investors, which Mr. Ballard said he’s had no problem attracting. Since its 2001 inception, Glu has collected nearly $60 million from backers including New Enterprise Associates, Granite Global Ventures, Globespan Capital Partners, BA Venture Partners, Sienna Ventures, and Time Warner.

Investor money has been put to good use, too—Glu games can now be found in more than 70 countries on some 1,000 different handset models.

Room to Play

Even with the world’s largest game publisher aggressively targeting the mobile space, analysts see plenty of opportunities to cash in. Juniper Research estimates the worldwide market for mobile games will balloon to $10.5 billion by 2009, up from $3.1 billion this year.

If predictions from firms like PricewaterhouseCoopers—which estimates the worldwide market for all types of video games will jump to $46 billion in 2010 from $27 billion in 2005—come true, mobile’s share of the pie could more than double by the end of the decade.

Those already in the thick of it stand to benefit, but they will have done so amid disdain. “A lot of folks in the gaming industry look at mobile as the baby brother,” said Mike Yuen, senior director of the gaming group at Qualcomm. “It’s kind of an afterthought.”

But Mr. Yuen thinks constraints like screen sizes and using a keypad as an input device force developers to think differently about how to make things like games fun and accessible. “One day the mobile side [will be] innovating in a way the others weren’t able to do or didn’t think of,” he said.