Sponsorship Link
U.S. video game retail giant GameStop Corp. announced its purchase of social gaming website Kongregate for an undisclosed sum to diversify its business into digital game distribution.
Grapevine, Texas-based GameStop, which operates 6,486 retail stores in 17 countries worldwide, said the acquisition strengthens its digital platform and its commitment to become the gaming aggregator of choice.
Related Articles
"Kongregate advances GameStop's digital strategy by providing a gaming platform for casual, mobile and browser games that can be promoted and played by our existing gamers,” Paul Raines, Chief Executive of GameStop, said on Tuesday.
Kongregate site serves about 10 million monthly players who spend about 23 million hours per month on the site. The site shares revenue from advertising and virtual goods directly with over 8,500 developers who have uploaded games to the site. Kongregate shares between 25 percent and 50 percent of ad revenue generated by games with their respective developers.
The free-to-play flash game portal Kongregate features a virtual currency, called kreds, which users can purchase to unlock additional features in games.
Must Read
Follow us
Wedbush Morgan analyst Michael Pachter viewed the acquisition of Kongregate as a slight positive for GameStop. He estimated that GameStop might have paid between $12 million and $40 million for Kongregate.
The transaction is expected to close on or about August 1, 2010.
Social Gaming Consolidation
Social games are free to play and generate revenue by charging users to buy virtual goods.
Just hours after the GameStop-Kongregate deal, Walt Disney said it will buy social game-startup Playdom and is all set to take a leading market share in fast-growing online social gaming space.
"FarmVille"-maker Zynga, the giant in the social gaming space, is said to be generating revenue between $500 million and $700 million a year and many analysts expect the company to pursue an initial public offering as early as next year. Zynga boasts over 200 million monthly users on Facebook.
Recently, social games company Playfish was acquired by Electronic Arts-- one of the biggest videogame-makers--for about $400 million.
Shares of GameStop, which operates GameStop.com e-commerce site and publishes video game magazine Game Informer, ended Tuesday’s session 2.9 percent lower at $20.29.
