IQ News: On the Block, Now Off, Riddler Readies Refocus

Riddler, one of the more popular gaming sites on the Web, will remain part of parent company Interactive Imaginations, according to chairman/chief executive officer Michael Paolucci. But the resolution of the site’s status comes after Riddler was almost sold due to financial difficulties within Interactive Imaginations.
The situation came to a head two weeks ago, following acquisition interest in Riddler by Berkeley Systems (via parent CUC International). CUC at one time offered nearly $10 million for the gaming site, said sources, who added that that amount was scaled back to less than $1 million once CUC investigated Interactive Imaginations’ finances. CUC officials declined comment.
Ultimately, Interactive Imaginations turned down the offer, when the company was rescued at the 11th hour by additional capital from one of its investors, sources said. That investor is believed to be Travelers Group. “We always wanted to run Riddler on our own, but we thought [selling it] was the only way to get cash,” explained Paolucci.
Sources said CUC had become disillusioned when it heard that chief operating officer Rick Lamb would leave the company. Lamb, who left two weeks ago, had led the company’s technology development, which was centered on new games for Riddler. Other departures and layoffs have reduced the company from a once-robust 70-plus employees to approximately 20.
Paolucci attributed the company’s troubles to the strain of a lawsuit filed in March by three sites that are part of Interactive Imaginations’ ad sales network, Commonwealth Network, which is composed of obscure Web sites. The suit claimed that Interactive Imaginations had gradually decreased the amount of paid ads funneled to affiliate sites, substituting them with house ads for Riddler. Two weeks ago, the suit was tossed out of court. “The lawsuit was very frivolous, but the time and money we had to spend [on it] was a big deal,” said Paolucci.
Now, he continued, the company will refocus on sales and marketing, de-emphasizing product development. It will add a new vice president of sales, Will Margiloff, from game site Jumbo, later this month. The company also hopes to beef up traffic and ad sales on Commonwealth, which currently garners 30,000 impressions per month. The 10,000 sites in the network will be regrouped into content categories, and the company will launch a new site, The Content Zone, which will act as a search engine to Commonwealth sites.