Viacom acquires online game service for $102 million

MUMBAI: With a view to let Viacom and its MTV Networks unit connect online gamers, Viacom has acquired Xfire, a Silicon Valley company that makes free instant messenger software for computer game players.

Owner of MTV Networks, Nickelodeon and the Paramount movie studios, Viacom said it will buy Xfire for $102 million in a bid to dominate the youth market on the Internet as it has on television.

Social networking and online gaming sites are two of the hottest investment areas for top U.S. media companies as they try to hold on to younger consumers dividing their time between the Internet and traditional outlets like television.

As part of MTV Networks, Xfire will be better able to maximize its advertising revenues through more aggressive marketing, greater global penetration and comprehensive integration with the company's other digital and cable properties that address the gaming demographic.

Launched two years ago in California, Xfire has 4 million registered members who use its software. Its 1 million active users average 91 hours per month, with an average session length of over three hours. The ad-supported application supports hundreds of the latest PC games and provides social networking, instant messaging and information for online gamers.

Viacom's chief executive Tom Freston said. "It's a wonderful component of our overall digital strategy, particularly on the gaming front. Our key audiences are and probably will remain kids, teens, young adults--we want to be anywhere these audiences are. On both a strategic and an economic level, this is a terrific deal for Viacom. Xfire is far and away the leading PC gaming communications and community platform, has outstanding management, and is a perfect fit with our growing digital businesses at MTV Networks. It's a bull's eye against our young audiences."

Freston said Viacom continues to look at other Internet properties as potential acquisitions, mostly deals valued much less than $1 billion, and said further purchases were possible this year. At the same time, he said, Viacom is investing in building up entertainment channels it already owns into new formats for its audience.

MTV last year acquired, a site that allows users to invent and care for virtual pets. Rival News Corp. purchased social networking site as well as gaming company IGN Entertainment.

Xfire's services are advertising based and its features will be incorporated into MTV's online properties. The company's technology also allows users to share such entertainment as their favorite music videos, lending itself well to distribute video from MTV.

Xfire has a distinct combination of tools, including:

> Friend List for Gamers - Users can see when their gamer friends are online and what games they are playing.

> One-Click Join - Users can see what games their friends are playing and use the one-click join feature to play alongside their friends instantly.

> Xfire In-Game Messaging - Xfire users can send and receive instant messages while playing in many games without having to minimize or leave the game.

> Stats Tracking - Through automatically updated player profiles, Xfire displays what games users are playing and how many hours they have played them.

> File Downloads - Xfire's file download system delivers demos, patches, trailers, and other files to users via a closed peer-to-peer distribution system.

> Voice Chat - Allows gamers to talk to each other over a private peer-to-peer chat network.

"Online gaming is an intensely social phenomenon, with millions of young adults around the globe interacting constantly. Xfire is the leading gamer community platform, and we look forward to integrating its services and user base into our multiplatform strategy at MTV Networks, which already includes assets like Neopets, GameTrailers, iFilm and more," said MTV Networks CEO Judy McGrath.

McGrath said MTV would seek to expand Xfire's base regionally, particularly in countries with ardent gaming communities like Japan and Korea. MTV will also promote the community network, possibly with plugs on its television shows and Internet sites.

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