Viv U sells game unit Flipside to Vendare

Co. merger will raise workforce to about 125 workers

Vivendi Universal has sold off its online casual-game unit, ending a once-ambitious venture by sending Flipside Inc. to Sherman Oaks-based Vendare Group for an undisclosed amount of cash.

The deal, which closed Friday, merges two of the nation’s biggest game and sweepstakes operations, creating a series of sites that should attract a big online audience for Vendare advertisers. In all, about 40 employees will join Vendare’s New York and Los Angeles offices, bringing the total workforce to about 125 and estimated annual revenues to about $40 million, said Vendare prexy-CEO Keith Cohn.

“We’re gaining a lot of consumers, a lot of content,” said Cohn, whose company specializes in advertising promotions airect marketing. Vendare is one of the few surviving, and profitable, spinoffs from the Idealab company incubator.

Virtual Uproar

The Flipside group of sites includes iWin.com, Uproar.com and Virtual Vegas, which together attract about 8.5 million unique visitors a month, making it the biggest online site targeting casual game players, according to Media Metrix.

Vendare’s Jackpot.com, Bigprizes.com and Blink.com draw another 10.5 million visitors a month, taking part in sweepstakes giveaways much like those offered by Virtual Vegas. Overall, Vendare and Flipside each have a database of about 24 million customers.

Deal does not include another small Flipside unit, TPM, that sells popup online ads. Also, after the sale, Vendare sent iWin assets to Next Game Inc., which runs skill-based, pay-to-play tournaments much like iWin and will use iWin as its flagship operation.

Cohn said all the remaining sites will continue to operate separately under Vendare with consolidated back-office and sales operations.

Big ad revs

Flipside had grown quickly by rolling up a series of large competitors. All were somewhat similar, generally offering a range of cheap-to-create, familiar card, board and other classic games. Most of the games were available for free and paid for themselves with advertising revenues from hundreds of companies.

Flipside now offers premium and subscription content, including games based on licenses from gameshows “To Tell the Truth,” “Match Game” and “Family Feud.” Those titles will now become available on Vendare’s sites.

During the tech boom heyday, Flipside was a public company valued at $1.3 billion, but its value flagged significantly by the time Vivendi acquired it. That transaction was reported to be worth around $140 million. Cohn said the price Vendare paid for the assets “was considerably less than that.”

Announcement comes as investor interest in online companies has perked up amid stronger ad revenues and other income opportunities. Yahoo!, which also runs a huge casual-game site, has seen its stock price more than double since the start of the year. It reported Wednesday that its quarterly net profit had more than doubled.

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