GigaMedia (GIGM) has acquired FunTown, a leading Asian online casual game portal and operator of the world's largest online Mahjong game site in terms of revenue.

GigaMedia has agreed to pay total consideration of US$45 million, which represents approximately 8.9 times estimated full-year 2005 net income of FunTown. The company's management believes this is an attractive valuation given the

strategic value and expected growth of FunTown's platform.

FunTown offers 41 casual games to a base of over four million registered users.

"With FunTown, we enter the fastest growing segment of online gaming, casual gaming, with a commanding lead," explained GigaMedia CEO Arthur Wang. "The acquisition is both highly strategic and highly accretive – driving

significant earnings growth in 2006 and beyond."

FunTown operates the world's largest online Mahjong site in terms of revenue. Mahjong is a traditional Asian table game, called the poker of Asia, with an addressable market of over one billion native players.

GigaMedia will leverage FunTown's number one Mahjong position by licensing FunTown's software to operators around the world and in particular, to the international markets currently served by Giga's subsidiary Cambridge Entertainment Software.

According to the PricewaterhouseCoopers report entitled "Global Entertainment and Media Outlook: 2005-2009," the online gaming market in the Asia/Pacific region is expected grow by 45% on a compound annual rate to the year 2009, increasing from $1.1 billion in 2004 to $7 billion in 2009, as online game subscribers grow from 10 million in 2004 to an expected 75 million in 2009.