Report: Tagged Acquires Hi5

Small-but-profitable social network Tagged has acquired ailing social network Hi5, according to a Wall Street Journal report. Tagged CEO Greg Tseng tells the paper that this will double Tagged’s active users from 10 million to 20 million and bring total registered users up to 300 million.

Founded in 2003, Hi5 was touted by comScore as the third most popular social networking behind MySpace and Facebook in 2008. As the market matured over the next three years, both MySpace and Hi5 fell on hard times with developers migrating away from the platforms. Tagged, meanwhile, successfully shifted its business away from directly competing with Facebook — instead, focusing on more intimate social connections between members and “social discovery,” which is something Facebook has recently been trying to improve on its own platform. Tagged also beefed up its social games platform, turning to in-house development to support growth and revenue with virtual goods sales.

With Hi5, Tagged gains both user numbers and more access to audiences in Southeast Asia, South America, and other countries where Hi5 was more popular than Tagged. Tseng didn’t disclose the terms of the acquisition to the Journal, but he did say some Hi5 employees may join the Tagged team. He also says that Tagged is on track for 2011 revenue between $43 million to $45 million — down from the ambitious $50 million he told us earlier this year.