Panasonic is headed back to the city. Jungle

The consumer electronics giant has stopped development on its handheld gaming system that was code-named Jungle “due to changes in the market and in [the company’s] strategic direction".

Revealed in October, the Jungle would have represented a return to the gaming space for Panasonic after a 10-year absence. (The company previously released the ill-fated 3DO home console in 1993.) The system was designed to give MMO fans a mobile gaming alternative, with titles including Bigpoint’s MMO "Battlestar Galactica," as well as a web show, "Online Underground" (and whispers of support for) "Runescape".

In late November, Panasonic began public testing for the Jungle, noting in an email “We know other companies out there have traditional hand-held gaming covered. We’re doing something very different."

It apparently wasn’t different enough for the company’s board, though. Reuters, which broke the news about the Jungle’s cancellation, notes that the gaming project seemed to be at odds with the company’s strategy of focusing on areas like growing fields such as environmental technology and healthcare.

The move doesn’t come as a surprise to game industry analysts, some of whom scoffed at the concept and declined to discuss it, noting it was such a long shot to make it to fruition that it wasn’t worth their time.

The Jungle’s announcement caught gamers by surprise, but that quickly evolved into skepticism when pictures of the device began to emerge and no major publishers announced plans to support it.

The Jungle even caught officials at Panasonic’s U.S. division off guard. Speaking on background at the time of its launch, one officer noted that no one at the Secaucus, NJ headquarters had been briefed on the device prior to the first stories about it in the media.

The Jungle faced a host of challenges, which may have played a part in Panasonic’s decision to cancel the project. Both Nintendo and Sony are launching new handheld devices this year, which would be formidable competition. And Apple’s growing footprint in the mobile space further increased the odds of success.

Panasonic is also already waging several other wars in other entertainment fronts. Most significantly, it’s betting heavily on the future of 3D TVs in homes and is currently pouring millions of dollars into wooing people away from Samsung and over to its Viera line of sets. The resources to effectively battle other gaming devices for an audience likely proved too overwhelming when Panasonic began crunching the numbers.

Officials may also have concluded that the Jungle would compare unfavorably to existing laptops and netbooks for gamers looking to play online games on the go.

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