eParties, which said last week it laid off its entire staff of 29, was one of many start-ups spun out of eCompanies, the Internet incubator founded by former Disney executive Jake Winebaum and Earthlink founder Sky Dayton.
"eParties is in the process of being acquired," spokesman Christian Gunning said today. "Some staff will follow eParties and some staff will be re-purposed here at (eCompanies.)"
Gunning refused to name the acquiring company or divulge financial details.
The move may signal a shakeout in the Web applications area similar to the one that has hit crowded online retail markets for toys, grocers and others. Like e-tailers, companies offering Web services such as instant messaging and online calendars are starting to feel competitive pressure and are seeing leaders emerge in their areas.
The event planning market, led by Evite.com, already has several players, such as SeeUThere.com, Mambo.com and Timedance.com. None of the companies have gone public, although Evite has said it plans to do so.
Analysts say event planners are hard pressed to generate cash flow and that they face competition from Web giants who may decide to build their own planning services rather than acquire one. Yahoo has entered the market, and given its sizeable audience of users, it poses a significant challenge to the existing companies.
"There's no consistent demographic. . .that you can attach to people planning events," said Dan O'Brien, an analyst at Forrester Research.
Josh Silverman, chief executive of Evite, said his site can compete head to head with Yahoo, but said he expected other event planners to hit problems.
"No one else is going to receive funding in the market and the result is it will be us against Yahoo," Silverman said.
Just a year ago, event planners were billed as the "next big thing" in Web applications, but today many analysts question their viability.
"Where's the revenue model?" asked Emily Meehan, an analyst at the Yankee Group. "The B-to-C market is costly and difficult to differentiate yourself. In order to get ad revenues you have to have a lot of traffic. Those are difficult to achieve now."
Other major Web application companies purchases include America Online buying the parent company of Israeli instant messaging firm ICQ for almost $300 million in 1998 and Excite@Home buying online greeting card site Bluemountain.com last October for $780 million in cash and stock.