Viacom Caught in the Xfire

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Viacom Inc. is acquiring Xfire Inc., a fast-growing online-gaming and social-networking platform, for $102 million in cash, officials said Monday.

The acquisition brings Viacom and its MTV Networks unit a key community that connects online gamers. Xfire and its users fit into MTVN’s multiplatform strategy of striving to build a universe of music, gaming, entertainment, news, networking and interactivity for focused audiences, according to the Viacom unit.

As part of MTVN, Xfire will be better able to maximize its advertising revenue through more aggressive marketing, greater global penetration and comprehensive integration with the programmer’s other digital and cable properties, which address the gaming demographic.

Launched in 2004, Xfire has 4 million registered members who use its software, and its 1 million active users average 91 hours per month, with an average session length of more than three hours.

The Xfire application supports hundreds of the latest PC games and provides social networking, instant messaging and information for online gamers. In addition, the Xfire application provides traffic to its popular Web site (www.xfire.com), featuring forums and gaming downloads.

“On both a strategic and an economic level, this is a terrific deal for Viacom,” Viacom CEO Tom Freston said in a prepared statement. “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."

MTVN CEO Judy McGrath added, "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. We are thrilled to welcome Mike Cassidy, Chris Kirmse, Adam Boyden and the rest of Xfire's management team to the table."

Xfire’s features include: friend list, so users can see when their gamer friends are online and what games they are playing; one-click join, so users can see what games their friends are playing and use the feature to play alongside them instantly; in-game messaging, so users can send and receive instant messages while playing in many games without having to minimize or leave the game; stats tracking; file downloads; and voice chat, which allows gamers to talk to each other over a private peer-to-peer chat network.

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