GameFly acquires Direct2Drive PC digital distribution service

GameFly announces acquisition of Direct2Drive PC game digital distribution service from IGN.

Mail-order game disc renter GameFly Inc. has announced that it will acquire Direct2Drive, the PC game digital distributor service owned by News Corp. subsidiary IGN Entertainment. The announcement, first reported by Gamefly-owned gaming news site Shacknews, confirms rumors about the acquisition that surfaced earlier in the week.

The two companies seem like a reasonable fit. GameFly is essentially the Netflix of video games, renting out discs for game consoles through the mail. Direct2Drive is a competitor to Valve Software's market-dominating Steam PC gaming download service. Market data on digital distribution services is scarce since the companies don't share customer data with the public. An April 2010 estimate from the site estimated that Direct2Drive was the No. 2 player at the time, with 17 percent of the market, behind Steam's 70 percent share. The Gamefly acquisition also follows game retailer GameStop's recent purchase of Impulse, the digital distribution service formerly owned by Stardock Corp., which Deals4downloads estimated had 1 percent of the market.

Also, neither Gamefly nor Direct2Drive offers game-streaming services, like those of cloud-gaming companies OnLive and Gaikai, so for the moment the Netflix analogy only goes so far. Providing some rationale for the deal, GameFly CEO Dave Hodess told ShackNews, "We know that consumers are interested in PC game rentals, so we will investigate this idea thoroughly."

The terms of the deal have not been disclosed. A GameFly press release (PDF) indicated that IGN will retain a minority equity stake in GameFly, and News Corp. will take an observer seat on GameFly's board of directors.

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