Viacom Buys Video Gaming Community Service Xfire For $102 Million; Yahoo Lawsuit Settled


Updated below: This one was coming for a long time…Xfire was on the block for a while. Now Viacom has snapped it up for $102 million in cash. The online gaming community platform will become part of its MTV Networks unit. Xfire, which was founded only two years ago, has about 4 million registered members, and 1 million active users. It had been funded by Draper Fisher Jurvetson, NEA, and Granite Global Ventures (it had raised $12.5 million), and had revenue in the single-digit, million-dollar range last year, according to Viacom.
The company said the acquisition will help Xfire to maximize ad revenues through aggressive marketing, greater market penetration and integration with other Viacom digital and cable properties.
Release: Xfire’s application provides social networking, IM and information for online gamers. In addition, the Xfire application provides traffic to its popular website, featuring forums and gaming downloads.
In keeping with community aspect of the Xfire service, the company will hold an online chat session with the users at 5 PM PST, here.
Updated: Earlier this year, Xfire settled the patent lawsuit with Yahoo…Yahoo has, last year, accused Xfire of infringing on its patent..the patent Yahoo owns is related to game-specific variations of the IM, something which is at the core of Xfire.
WSJ: Like News Corp.’s recent investments, Viacom’s willingness to spend more than $100 million on Xfire has raised eyebrows. “I’m surprised at the price,” said Michael Pachter, an analyst with Wedbush Morgan in Los Angeles. “Perhaps Viacom thinks this will grow into another MySpace. If it does, this is a good deal, but I don’t think it will.” Viacom CEO Tom Freston rejected such concerns, saying Xfire had a strong return on capital and that Viacom “got a great deal.” With the total number of gamers in the world at an estimated 110 million and increasing, Freston said he expected Xfire to double its revenue during the next year.

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