Deal Radar 2008: Gaia Interactive

This story was written by Sramana Mitra.
Gaia Interactive is an online hangout where over 6 million visitors come every month to chat, meet new people, play games, and watch movies in Gaia's virtual theater.Members can create customized online avatars and transform themselves into any kind of persona they want to be classy, innocent, sexy, or scary, among others.An online store stocks merchandise like clothes, accessories, plush toys, and stationery.The social network targetsteenagers and young adults and has close to 400,000 users logging onto it every day.Hitwise also reports thatGaia had the highest average visit time among social networking websites.

Based in San Jose, California, the site was developed in 2003 by comic art firm Studio XD.It was founded by a group of comic book fans Derek Liu, Long Vo, and Josh Gainsbrugh.

Gaia's funding stands at $31.93 million so far: an $8.93 million Series A from Benchmark Capital and Redpoint Ventures in June 2006; a $12 million Series B from Duff Ackerman and Goodrich Ventures and their previous investors in March 2007; and an $11 million Series Cfrom Institutional Venture Partners in July 2008.

In December 2007, Gaia partnered with Sony Pictures Television to get access to the studio's top movie and TV titles forits online cinema.With this agreement, Gaia's members have access to pay-per-view and ad-supported free programming with movie titles like Spiderman and Gattaca and TV programs from channels like AXN and Funnybones.The agreement also provides licensing to sell virtual products so members can use them in their avatars.Gaia also received an undisclosed investment from Sony.

In June 2007, Gaiaentered into a partnership with Scion, part of Toyota Motor Sales, to allow members to buy and customize virtual Scion cars, thereby introducing the Scion range to the site's 6 million monthly visitors.Gaia has also worked with companies like Paramount Pictures, MTV, Sony, Warner Bros., Xbox and Nike, and provided them with several branding opportunities with their wide reach in the teenage and young adult market.In June of this year, Gaia was listed as Time.com's 50 Best Websites of 2008.

eMarketer predicts that the number of teen users who visit virtual worlds will jump from 8.2 million last year to 20 million in 2011.The company boasts some impressive statistics with over 100,000 transactionsmade on Gaia every day.About the same number of auction transactions aremade per day, and over a billion posts have been made on their forum.A recent post on VentureBeatdiscusses how Google is also entering the casual game market with their product Lively, which is expected to be very similar to Gaia's 2D avatar chat rooms.

Gaia looks like a plum acquisition candidate for Disney or Viacom.

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Casual Games Everyone Can Play
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By Sramana Mitra
  • CBSNews

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