Lycos Bets $270M On Gamesville.com

Internet portal Lycos, Inc. announced today that it will spend $270 million (US$) in stock to acquire Boston, Massachusetts-based gaming site Gamesville.com.

Gamesville.com has increased traffic to its site by 300 percent in the last year, the companies said, and has approximately 2.2 million registered users. According to Media Metrix, the site has the second longest user retention -- 17.9 minutes -- on the Web, behind only eBay.

Gamesville.com features dozens of interactive games and also offers Lycos a valuable direct marketing tool in its detailed, permission-based registration database. The company has extensive profiles of its users and also gives advertisers a chance to roll out streaming commercials at 10-minute intervals during the waiting period between games.

Virgin Atlantic, Bell Atlantic, Intel (Nasdaq: INTC) , Rolling Stone and J.C. Penney are some of the major advertisers on the site.

Gaming Makeover

The addition of Gamesville is a key component in the revamping of Lycos' online game site. The company also announced today that it has added a number of new interactive games in addition to those involved in the Gamesville.com acquisition.

"The addition of Gamesville to the Lycos Network adds to our revenues, grows our average daily usage minutes by nearly 20 percent and adds depth to our marketing efforts," said Lycos CEO Bob Davis. "We were particularly attracted to Gamesville because of the exceptional quality of registration information, which considerably expands our marketing infrastructure."

On a Growth Spurt

Lycos said that it experienced a "dramatic jump" in audience reach from September to October, growing from 43.6 to 45.8 percent. The integration of Gamesville into its network will boost its reach to 47 percent, the company said.

Lycos calls itself the world's largest online community and says that its network -- which includes Tripod, HotBot, Angelfire and MailCity -- has been used by nearly half of all Internet users.

Online interactive game sites are fast becoming the Internet's most popular stopovers. In fact, just yesterday, America Online announced a five-year alliance with interactive game provider Electronic Arts.

Under the terms of the deal , Electronic Arts will be the exclusive provider of online games across all AOL properties. AOL is guaranteed to receive $81 million over the course of the agreement.