Turner taps merger for gamers

Deal has been expected since the summer

Turner Broadcasting is merging its online videogame distributor GameTap with France-based Metaboli, which runs a similar business in Europe.

Such a deal has been expected since the summer, when Turner said it was exploring “strategic options.”

Time Warner-owned cable conglom will be the largest minority shareholder in the merged company, with the rest controlled by several different venture capital firms that have invested in Metaboli. No one entity will have a controlling stake.

New company is expected to keep its current brands separate in North American and Europe.

Turner will continue to run GameTap for a transition period of six months before Metaboli’s management led by CEO Pierre Gaudet takes over. It hasn’t yet been determined how many GameTap staff will stay on at that point.

Both Gametap and Metaboli distribute large libraries of classic videogames via the Internet. But while Gametap is focused on subscribers and ad-supported free games, Metaboli also has an iTunes-like pay-per-download option and provides a “white label” service for partners that want to offer videogames on their own websites. The majority of its subscribers come from such partners.

Gaudet said he intends to have GameTap sell downloads and provide white label services once the merger is complete. He also plans to combine the two companies’ game libraries.

“Both sites will get new packages and titles from a single merged source, which will make a better service for consumers on both continents,” he explained.

Though Turner has never disclosed subscriber numbers or revenue figures for GameTap, it’s believed to have been a disappointment since launching in 2005. In the second quarter, Time Warner took an $18 million writedown on the service to prepare for a sale or merger.

“The GameTap team has done a very impressive job, but the business they are in is quite different than the rest of what Turner does,” noted Gaudet. “The gaming industry requires expertise and specialization and that’s what we are doing.”