Buying Sites with a Built-in Audience

Time Warner's (TWX) AOL wanted to expand its reach from casual video game players to the rapidly growing hardcore gaming market. But instead of creating a sub-channel from scratch, on Aug. 16 AOL's Games division purchased GameDaily, a site that claims to reach around 4.5 million hardcore gamers a month and whose 13 employees put out a newsletter that reaches an estimated 15,000 industry professionals. (GameDaily is a content partner of BusinessWeek.com's Innovation and Design channel.)

It was the company's fourth acquisition of 2006 and marked a major push into a new market. "Building a brand takes a long, long time," says Ralph Rivera, vice-president and general manager of AOL Games. "You could hire people and crank out the same content, but even with AOL's distribution infrastructure, it wouldn't necessarily distinguish itself in the marketplace. That's why we looked outside to acquire content, brand, and audience," he says.