IGN/GameSpy's 800-Pound Stallion

Electronic Gaming Business, Jan 14, 2004

And then there were two? So far as the online games information space, "We considered this a three-horse market," says Mark Jung, CEO, IGN Entertainment, Inc., so his horse and the mare from GameSpy announced in early December their intention to, well, merge. Now it's a two horse contest with rival GameSpot, which Jung insists has but a third the combined revenue of the IGN/GameSpy combination. "There is a lot of power that goes to the two players when you shrink to a two horse market," he says.

As of late 2003, decisions had not been made about how the two companies would combine, but Jung hopes it will be sooner rather than later in 2004. For publishers the key consideration is how advertising and marketing deals on this new collection of sites will be sold. Jung says the companies are actively consulting clients and their agencies about the best course. "We are leaning towards combining the sales forces and having the accounts assigned to people."

This was not a merger of necessity, Jung insists. "We were both profitable before the merger in the fourth [fiscal] quarter and plan to be profitable next year." The aim is to get all the more leverage with ad agencies and start offering them online "TV-like reach" that attracts both game products and more general consumer and packaged goods campaigns.

Jung is hoping to release sometime this year "a data mining tool that allows publishers to model out and track on a daily basis activity surrounding their titles, demand forecasting, how that compares to other titles with which they compete." Jung thinks this tool will help publishers manage inventory allocation. For instance, in a multi-platform release, they should be able to gauge relative levels of interest among the ports well before the discs need to be burned.

In addition to the ad business, both IGN and GameSpy have paying subscribers, about 200,000 in all. Another revenue stream will be GameSpy's patching solution software, which it sells to publishers. Jung expects numerous new business efficiencies from this combination, although no decisions have been made about how or if the 200-person staff and respective offices across the two companies will be combined.

As with every Web merger we can recall over the past seven years, Jung insists the two editorial brands will realize new efficiencies but still maintain their brand identities. Clearly these two multi-platform preview/review sites have substantial editorial overlap, and so the obvious question is how long this merger really will maintain separate editorial staffs. Jung insists that differentiated content has been part of IGN's success, and that he hasn't tinkered with the many game vertical sites that are part of his network. He actually sees IGN and GameSpy complementing each other, with the former stronger on console coverage and the latter best known for PC games.

Contact: Mark Jung, 415.508.2000

[Copyright 2004 PBI Media, LLC. All rights reserved.]