By Rachel Chalmers
Lycos Inc has signed a definitive agreement to acquire Gamesville.com, an interactive entertainment company and direct marketer, for $207m. Gamesville is to become part of the Lycos Network. The site is designed to let thousands of registered contestants compete for prizes in poker and other card games, sports, trivia and bingo. Because all users are registered, the site knows a lot about them, including how to target marketing information to the right individuals. All content is one-to-one targeted, explained Gamesville CEO Steve Kane, who will now run the gaming vertical within Lycos.
We’ve collected very clean demographic profiles through the registration information, and it’s no trouble to get people to give that up, Kane says. We just say, ‘I can’t give you a prize if I don’t know how to get in touch with you.’ We have people notifying us of their change of address. That means Gamesville can offer very precisely targeted demographics – say, unmarried women between 18 and 35 – to its advertisers. Ad buyers apparently love the company’s e-mercials, which are shown while new games load, and which have far higher click-through rates than their web banner counterparts.
Direct marketing isn’t the only thing Gamesville can bring to its new parent. Lycos CEO Bob Davis boasts that his company’s latest acquisition is second only to eBay in terms of duration of visits. Gamesville users spend an average of 17.9 minutes on site per month. This purchase will see the overall stickiness of entire Lycos network increase by 20%, Davis said. The industry has seen some very high-profile transactions lately, and this compares extremely favorably to those.
Davis may be referring to yesterday’s deal between America Online Inc and Electronic Arts Inc. Both deals will see the formation of a new internet game content division, one within Lycos and one within EA. Both brought together a large multiplayer game provider and an online content leader. But the Lycos acquisition is valued almost three times as much as the EA-AOL partnership. Davis isn’t fazed by the Gamesville’s price tag. It is likely to affect our earnings, but only in a positive fashion, he assured investors. You’re likely to see Lycos’ earnings increase as a result of this deal.
