MAY 4, 2011 • Digital distributor Direct2Drive launched a fully localized portal in Germany. On May 26, Direct2Drive itself was acquired from IGN by video game rental service GameFly. Terms were not disclosed. IGN gains a minority equity stake in GameFly without actively participating in GameFly’s operations. Additionally, News Corp. gains an observer seat on GameFly’s board.

Impact: Competing against Steamworks isn’t easy. The original idea was that IGN would drive its many readers to purchase from Direct2Drive. Many of those gamers did, but as IGN is being groomed to become an independent web publishing operation, holding onto Direct2Drive would have put pressure on the bottom line at a critical time. Neither does News Corp. appear enamored with managing its online holdings, especially after the MySpace acquisition did not meet expectations. But a joining of Direct2Drive with GameFly makes very good sense. GameFly has a strong customer base to feed Direct2Drive, and the game rentailer has a very real need to branch out into digital distribution along with the rest of the industry.