GameStop Buys Kongregate

Last week we wrote about GameStop beginning to look for ways to get into the world of digital game distribution.  At the time it seemed that, or at least I thought, perhaps rentals were in their future.  Seems that GameStop was searching for something of a more direct approach.  It was announced today that they have purchased online gaming platform publisher Kongregate for what could have been upwards of 40 million doubloons.

Analytical priest and gaming psychoanalyst Michael Pachter had this to say about the deal:

"...we estimate that GameStop paid a multiple of Kongregate revenues, likely 3 – 4x trailing annual revenues. Based upon 10 million unique visitors playing 40 million game sessions per month, we estimate that Kongregate revenues were around $4 – 10 million, implying a purchase price of between $12 – 40 million. At such a price, it is likely that the transaction is immaterial to the company’s results, and that any benefits are longer-term and strategic," he said.

For that price they better be longer-term and strategic. Though Kongregate seems to rake it in they do so with a myriad of casual games and micro-transactions.   We're obviously not talking high-brow gaming here but we can't deny the fact that there certainly is a market for this type of drivel.

Honestly I think GameStop's money could possibly have been better spent on a gaming venue that might have a little more staying power but that's just me.  I've always felt that these casual games have about as much staying power as the newest social media fad, with very few of them actually holding position for very long.

GameStop Buys Social Gaming Hub Kongregate (Gamasutra)