Finances

The United States virtual goods market was worth $500 million in 2008 according InsideFacebook.com. This year it is expected to double to $1 billion and in 2010 virtual goods sales are expected to reach $1.6 billion. The huge growth in the market is due to the popularity of social networking and with more video games adding virtual goods to their online components.

With growth like this expected in the next few years, virtual gifts will be on par with the online dating industry which in 2008 was the third highest revenue grossing industry.

These are predictions from knowledgeable experts but they may not live up to expectations. In a recent Date.com press release about virtual gifts (see Story) their leading analysts estimated the revenue for the industry at $1.5 billion in 2008. This is a $1 billion difference between experts, I wonder which one is closer to the truth?

For more on this story, read Online Media Daily.

FriendFinder Networks said on Tuesday that they plan to complete the IPO process by 2010 and intends to list its common stock on the New York Stock Exchange under the symbol “FFN.”.

FriendFinder Networks Inc. intends to use the net proceeds of the public offering to redeem a portion of its outstanding senior secured indebtedness and to pay waiver fees to certain debtholders.

The company owes $442.1 million in debt in connection with its acquisition of Various and about $81 million in debt at the parent level. Here are some interesting facts from the FriendFinder Networks filing which was made public on Tuesday (most points deal with data from the six months which ended on June 30, 2009):

During a conference call about the IAC/InterActive Q1 2009 Earnings report, the owner of Match.com and CEO of IAC, Barry Diller, mentioned they had been talking to Yahoo about the possibility of purchasing their dating site, Yahoo! Personals (see Story).

With this latest news article from Bloomberg it looks like Mr. Diller is not planning to make any new purchases anytime soon.

Diller said in an interview yesterday that he has no plans to make any major acquisitions ... Diller said he would rather invest in IAC’s businesses than acquire large media companies, which he sees as overvalued.

Diller also mentioned at the Goldman Sachs Group Inc. Communacopia conference in New York, that IAC has too much cash at the moment but he doesn't see a better return than investing in their own businesses. At the beginning of July 2009, IAC had $1.61 billion in cash and $95.8 million in long-term debt. The New York based company had also repurchased $300 million in stock since August 2008. Since the beginning of this year IAC stock has risen 31 percent to close above $20.

In my opinion these statements by Diller while not mentioning Yahoo Personals directly, makes it clear he has no plans to buy the dating site. By purchasing Yahoo Personals he would be investing in the dating industry, but not directly into one of his existing businesses which is what Barry Diller says he plans to do.

For more information on the dating sites mentioned, read our Match.com review and our Yahoo Personals review.

The company which owns the Australian dating site RSVP, didn't perform very well last year. Fairfax Media's revenue for the year which ended in June, fell 27 percent to $605 million AUD when compared to the previous year. The online division of Fairfax which includes RSVP, TradeMe (auctions) and Stayz (accommodation) suffered a 8 percent fall in earnings for the last half of the year. In the several year before 2007 the online division had experienced double digit growth.

The loss of income from online job ads was the cause listed for the earnings drop in Fairfax's online division. It is not mentioned how the dating site RSVP actually performed but from reading between the lines it appears to experienced a marginal decrease in revenue as well.

For more on this news, read The Australian Business and to find out more about the most popular dating site in Australia, check out our RSVP review.

Unfortunately Spark Networks has continued their downward trend. Revenue for Q2, 2009 was $11.2 million, which is a 25 percent decrease when compared to $15 million from Q2, 2008. This is also a 7 percent decrease in revenue from Q1, 2009. Revenue dropped due to continued declines in subscriber numbers from JDate and the General Markets dating sites. Average paying subscribers for Spark Networks as a whole in quarter 2, 2009 is 163,217. This is a 3 percent decrease when compared to the last quarter and a 14 percent decrease when compared to the same quarter last year.

JDate saw revenue drop 18% to $7,1 million when compared to the same quarter in 2008. This is the result of subscribers falling 10 percent to 82,769. The Other Affinity Networks had revenues which totalled $3.3 million and 65,409 subscribers. Compared to the same quarter last year, revenue fell 3 percent while subscriber numbers increased 3 percent. General Market Networks saw the worse of it. Revenues dropped 68% to $701,000 and subscribers fell 58% to 14,022 when compared to quarter 2, 2008.

The planned decrease in revenue for General Market Networks is largely attributable to an 85% decrease in the marketing spend for this segment in the second quarter of 2009 compared to the same period in 2008.

For the full 2009 Q2 release visit Spark Networks News Room.

Related Story: Spark Networks First Quarter 2009 Financials

American Capital Ltd. announced on Thursday that it has completed the sale of People Media to IAC (Match.com's parent company). American Capital received $57 million in cash proceeds and will receive an additional $15 million in the third quarter, to complete the deal. This makes the total sale worth $72 million USD. This is $8 million less than was stated when IAC announced the agreement earlier this month (see Story).

For the full story, read NW32.com.