GameSpy to Buy Mplayer Web Site for $20 Million

GameSpy Industries Inc., an Irvine-based online gaming company, said Wednesday that it will buy a Web site from HearMe that matches online gamers, for more than $20 million.

GameSpy, formed in 1995, operates hundreds of sites catering to gamers ages 15 to 42, about 75% of whom are male. The company distributes software that lets gamers chat, play online games with one another and track of their performance.

Mplayer, launched in 1996 by what was then called Mpath Interactive, matches players for online games. It lets players chat and track scores.

GameSpy and Mplayer garner revenue from ads. GameSpy also gets revenue from syndicating its articles and selling software, said founder and Chief Executive Mark Surfas.

Privately held GameSpy has raised nearly $15 million from investors since its founding five years ago. Although the company expects to end this year with an operating loss, “we’re confident we will be profitable in 2001,” Surfas said. “We could probably look forward to going public in about 18 months.” GameSpy does not release financial results.

Executives at HearMe said they sold Mplayer to focus on transmitting voice calls via the Internet. HearMe, which lost $56.8 million on revenue of $21 million through Sept. 30, gets about half its sales from Mplayer.

Mountain View, Calif.-based HearMe will get a 10% stake in GameSpy, a multimillion-dollar cash payment and a note to be paid within six months of the transaction.

Surfas said the deal’s value is between $20 million and $30 million. The sale is expected to close next month.