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AUGUST 22, 2005
By Steve Rosenbush IGN Entertainment: Where the Boys Are The Web outfit has drawn a huge, male-dominated following and has an IPO in the works. But will a big Net player come calling? Much has been made of what women really want. But men? Right or wrong, for better or worse, the prevailing assumption is that guys -- and young men in particular -- are pretty easy to please. The success of IGN Entertainment doesn't dispel that notion. The lifestyle portal for men aged 18 to 34 is built on a foundation of women in bikinis, sports, cars, movies, and digital games -- lots of games. IPO AHEAD. IGN's business model looks fairly solid, too. With nearly 11 million unique users each month, this Brisbane (Calif.)-based network of sites has created an audience that rivals the size of media mainstays such as usatoday.com. And the audience is growing: The number of unique visitors rose 16% from June to July, according to market researcher comScore Networks. By comparison, the total U.S. Internet audience increased a fraction of a percent, to 167.4 million. The privately held company has hired investment bank Lehman Brothers to take it public. An initial public offering is expected later this year or early in 2006 -- unless a larger media or Internet company buys it first. Meanwhile, with the once-moribund Internet sector recovering from its millennial hangover, IGN appears to be poised for strong revenue growth. It's branching out into e-commerce with a new channel called www.direct2drive.com. Only a year old, the site is selling games. It also has the ability to add other digital goods such as music and media. AGING GAMERS. The core of IGN, however, is gaming. Its games sites account for about half of its business. Dozens of channels cover topics from strategy and cheat sheets to PC games and consoles such as Microsoft's xBox (MSFT ) and Sony's PlayStation 2 (SNE ). IGN also operates the Rotten Tomatoes movie-review and game site, and AskMen.com, a free online lad mag. IGN's success has been linked to the rise of a digital-gaming culture. "Ten years ago, gaming was geared toward 13- and 14-year-old boys. But the audience has become much older as the games have increased in depth and sophistication," says Jamie Berger, general manager of consumer products for IGN. More powerful computers and faster Internet connections have also stoked creation of digital games that have an almost cinematic feel. For example, Tom Clancy's thriller, Splinter Cell, engages players with a narrative and an emotional pull, according to Berger. "This isn't Donkey Kong," he says. FOXY MOVE. Until now, IGN's main game site has functioned mostly as an information resource about games. While "casual" games, such as digital versions of poker or arcade classics, can be downloaded, high-end games for sophisticated consoles generally aren't. But that's beginning to change. Direct2drive sells about 50 games online, and the number is consistently growing. IGN would seem to be a logical partner for a larger media or Internet company. M&A activity in the Internet sector has taken off lately. News Corp.'s (NWS ) acquisition of Intermix (MIX ) for $580 million gave the sector a jolt (see BW Online, 08/16/05, "The Birth of Murdoch.com"). IGN has a sizable audience among influential young consumers with lots of disposable income. It's on obvious online-advertising play, too. As such, it could be a good acquisition for any number of companies. "We like the property," says one Internet media executive privately. STICKER SHOCK? Lehman Brothers hasn't been able to get an auction going, though, in part because of IGN's obvious attractiveness. Bankers have been arguing that the site is worth $700 million to $900 million, according to one industry executive. That's a lot of money, especially at a time when deals are being funded with cash. Everyone from Yahoo! (YHOO ) and Viacom (VIA.B ), to MSN (MSFT ), News Corp., and Time Warner (TWX ) looked at IGN, the executive said. But so far, no one has been willing to offer anything close to $700 million. That's why the company is headed toward an IPO, where it presumably has a better chance of realizing a valuation in the $1 billion range. Lehman bankers were unavailable for comment. STREET CRED. While the company is large and poised for bigger things, it's unlikely to ever challenge Yahoo -- or even a social-networking site such as MySpace, for that matter. But even if the number of serious gamers increases at a modest pace, IGN can grow in other ways. It has great credibility among its audience, providing a good basis for selling games and other goods online. Moreover, the IGN network's formula of games, movies, cars, sports, and girls isn't about to go out of style anytime soon. Maybe men are easy to please.  Rosenbush is a senior writer for BusinessWeek Online in New York
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