hi5 Acquires Big Six To Further Transition Into A Gaming Social Network

hi5Late last week, hi5 announced that they were acquiring Austin-based Big Six games, furthering their transition into a games-focused social network. Originally started in 2003 and having gone through several transitions, San Francisco’s hi5 now bills itself as “social entertainment for the youth market worldwide”. This comes direclty as a result of their innovative thinking in early 2008, when they raced to develop an application platform similar to Facebook. The platform exploded with games, and they morphed their business to suit those developers and gamers accordingly.

Looking at hi5 today, we know that the games area of hi5 accounts for a third of the site’s traffic, and direct user payments through the game already account for 15% of hi5’s revenue. hi5 generates its revenue through the use of hi5 coins, which allow users to purchase virtual goods, send gifts or play game.s The coins are purchasable through direct payments, but also through offers, similar to other applications. This is akin to a Facebook Currency for the hi5 network, but has been in use since December 2008 and is strongly successful for them.

hi5’s goal with the acquisition of Big Six is related to their commerce and virtual goods platform. With over 50 million monthly users according to hi5.com, the rate of virtual good and currency expansion must be staggering, and hi5 wants to ‘relieve itself of the necessity of reinventing an e-commerce engine for its social gaming business’. This makes sense and allows the company to focus on the user experience rather than the technology and legal issues behind currency and monetization.

In December 2009, hi5 hired Alex St John as their CTO. Alex had previous founded WildTangent one of the first innovators in the casual gaming space. WildTangent’s strategy was to develop the casual games that would pack in with several of the larger PC manufacturers’ releases. They had pack in games with Dell, HP and others. Having a long term games veteran on board means the company is ready to weather the storms that come with casual and social game development. Specifically he can help them design their technology to maintain support of the popular games after they begin to build big audiences.