Electronic Arts Inc. (NASDAQ:ERTS) has closed an acquisition deal with Playfish. Playfish is a company that designs games for social networks such as Facebook. EA is spending $400 million to buy out Playfish. Of the $400 million, $300 million will be given upfront and the additional $100 million will be paid as an earn-out. Rumor has it that EA was considering buying out Playfish competitor Zynga Inc. too.

This past September about 250 million people played games on Facebook. One of Playfish’s most popular games called Pet Society has over 20 million active users. Playfish was started by Kristian Segerstrale and Sebastien de Halleux. Playfish raised venture capital from Accel Partners and Index Ventures.

As you may remember, two months ago eBay was planning to spin Skype into an independent company. The buyers who would take control of Skype from eBay included Marc Andreessen, Ben Horowitz, the Canada Pension Plan Investment Board, Index Ventures, and Silver Lake. However the founders of Skype interrupted the sale by claiming intellectual property infringement on the VoIP technology. The original founders of Skype started a company called Joltid. And Joltid said that they were suing eBay.

The lawsuit has now been settled. eBay will be selling a majority ownership of Skype to the aforementioned investors for $2 billion. Joltid will be licensing the technology to the new Skype buyers. Skype founders Niklas Zennstrom and Janus Friis will get 14% ownership in Skype as a result. Both Friis and Zennstrom will also make a “significant’ investment in Skype too. eBay will retain 30% in Skype and the rest of the investor group will get 56%.

Friis and Zennstrom also filed a lawsuit back in September against former Joost CEO Mike Volpi. Friis and Zennstrom founded Joost several years ago and sued Volpi because of breach of fiduciary duty. Volpi is currently a partner with Index Ventures which is one of the companies buying Skype. As a result, Index Ventures is no longer one of the buyers in Skype. The acquisition is expected to close by the end of this year.

At the beginning of the month, eBay announced that they would be selling Skype to several buyers. The buyers included Silver Lake, Index Ventures, Andreessen Horowitz, and the Canada Pension Plan Investment Board. That sale has been interrupted not by Kanye West, but by the founders of Joost and Skype.

The founders of Joost and Skype started another company called Joltid. Joltid is suing eBay on the basis that Skype is infringing on their technology at least $100,000 times per day. eBay denies the allegations. But Joltid co-founders Janus Friis and Niklas Zennstrom says that their company holds the intellectual property rights to VoIP applications including Skype. Joltid filed the lawsuit against eBay two weeks after the announcement was made that Skype would be sold to the aforementioned buyers.

Today another lawsuit was filed by the Joltid, Skype, and Joost co-founders. Zennstrom and Friis filed a lawsuit against former Joost CEO and Chairman Mike Volpi along with venture capital firm Index Ventures. The lawsuit states that there has been a breach of “fiduciary duty against Volpi, aiding and abetting breach of fiduciary duty against Index, interference with prospective business advantage, misappropriation of trade secrets, breach of contract against Index, breach of confidence, and civil conspiracy.” Volpi had recently quit Joost to join Index Ventures back in July.

Between Index being sued and wanting to buy Skype from eBay, that company is up the creek made out of you know what with no oar. I also think it is safe to say that Friis and and Zennström don’t want to see Index own the company that they built and sold to eBay. Who knows? Maybe the purchase of Skype might be too much of a headache and might the transaction may be aborted. But all the buyers involved have already come to far and won’t go down without a fight.

About four years after eBay acquired Skype for about $4.1 billion, $2.6 billion of which was upfront cash, the company has decided to sell a big chunk of it it off to several investors.  Skype was valuated at $2.75 billion when eBay decided to sell 65% worth of the company to investors such as Silver Lake, Index Ventures, Andreessen Horowitz, and the Canada Pension Plan Investment Board.

eBay will receive about $1.9 billion cash when the deal is complete along with a $125 million note in principal from the buyers.  eBay itself will retain 35% in Skype.  The transaction is expected to be complete by the fourt quarter of this year.

“This is a great deal, unlocking both immediate and long-term value for eBay and tremendous potential for Skype,” stated eBay President and CEO John Donahoe in a press release. “We’ve acted decisively on a deal that delivers a high valuation, gives us significant cash up-front and lets us retain a meaningful minority stake with talented partners. Skype is a strong standalone business, but it does not have synergies with our e-commerce and online payments businesses. As a separate company, we believe that Skype will have the focus required to compete effectively in online voice and video communications and accelerate its growth momentum.”

Back in April, eBay said that they were planning on spinning Skype into its own brand and preparing a separate IPO for the VoIP company.  Now it is assumed these investors that took control of Skype will work together in preparing the IPO.  This gives eBay the ability to focus all of their energy on their own company and on PayPal.

How much money does Skype make?
In 2008, Skype itself made $551 million in revenue which was a 44% increase from the year before.  eBay’s total revenues for 2008 was $8.5 billion.

How many users does Skype have?
By EOY 2008, Skype had about 405 million users which was a 47% increase from the year before.

Several investors are considering making a bid on Skype, the voice-over-IP service owned by eBay.  eBay bought out Skype for about $4.1 billion in September 2005 but failed to find a real way to integrate the service into their system.

Some of the investors considering making a bid includes Andreesen Horowitz and Index Ventures.  Index Ventures was one of the early investors in Skype.  There is also rumored to be another multi-billion dollar private equity company involved according to TechCrunch.

At one point eBay was considering having Skype have their own IPO.  It is unclear whether the current Skype CEO Josh Silverman will still be involved if an acquisition does take place.  While Silverman was running Skype, the company grew to $551 million in revenue this year.  By 2011, eBay expects Skype to hit about $1 billion in revenues.

Niklas Zennström and Janus Friis both started Skype together shortly after KaZaa.  If Skype gets acquired, then the private equity companies and investors would probably work towards an IPO.

Late last month, Mike Volpi was replaced as CEO of Joost, but remains as Chairman.  Another position that Volpi will be taking since his CEO duties have been relieved is partner at Index Ventures as AllThingsD revealed in an interview.  Index Ventures invested $45 million in Joost several years ago and Joost brought in Volpi, a former Cisco exec as the CEO.

Index Ventures participated in a $45 million round in Joost a couple of years ago.  Volpi will be working out of the London office at Index.  “In a market downturn, it is a good time to invest,” stated Volpi. “There are a lot of great opportunities out there now.”

Joost was started by Niklas Zennström and Janus Friis back in October 2006.  The company raised about $45 million in funding shortly after starting up.  Investors included Sequoia Capital, Index Ventures, Viacom, CBS and Li Ka-shing.  Joost killed off their desktop application and became purely a web service in September 2008.

Joost announced that they have replaced former CEO Mike Volpi.  Joost SVP of Engineering Matt Zelesko will be replacing Volpi.  However Volpi will remain as Chairman of the board.

As a result of Joost’s lack of growth compared to YouTube, Hulu, and other video services Joost has decided to focus on providing video platforms for bigger companies.  There will also be major layoffs.  Joost employs about 100 people in New York and London.

[via Reuters]

Earlier this week, I read an interesting piece from GigaOM about my favorite homepage Netvibes.com.  I depend heavily on Netvibes so I personally hope that this company succeeds.

The company has about $16 million in funding from Index Ventures, Accel Partners, Neil Rimer, Marc Andreessen, Pierre Chappaz, and Martin Varsavsky.

Last week Netvibes unleashed a new feature that allows users to build their own custom start pages.  Netvibes is able to make money by offering white-label and corporate versions of their service.

“We are on our way to being breakeven this year,” stated Netvibes CEO Freddy Mini. “We are focused on profitability this year.” That’s not bad, considering he is up against Google’s iGoogle platform.”  Netvibes receives about 3 million active visitors per month.

The company has made about a couple of million dollars in revenue this year.  The company plans on tripling sales by signing up several large customers.  The reason I found GigaOM’s post so interesting is because I did not know much about Netvibes’ revenue until now.  Based on these figures, if you depend on Netvibes as much as I do, you can remain confident that this service will be here in the long run.

[via GigaOM]

WooMe is a video dating social network that allows users to communicate on webcams. One of the features that makes WooMe popular is Woo Sessions. Woo Sessions are basically webcam video chatrooms. WooMe calls themselves an “introduction platform” according to VentureBeat’s Chris Morrison.

WooMe raised a second round of funding at $12.5 million led by Index Ventures, Atomico, and Mangrove Capital Partners. This brings WooMe’s total funding to $16.9 and now they are valuated at $41 million.

In terms of users, the company say that they have roughly 350,000 users and has 15,000 sessions per day. WooMe hopes to raise about another $500,000 in this round from “strategic angels.” WooMe started in December 2006.

Joanne Bradford, Chief Media Officer of MSN is leaving Microsoft to join Spot Runner.  The MSN network receives 465 million unique users per month.  Before Chief Media Officer, Bradford was corporate VP of Global Sales and Marketing.  She was also the Chief Media Revenue Officer and in 2001, Bradford was VP and Director of BusinessWeek’s advertising sales divison. 

In the meantime, Greg Nelson, a 12 year team member of Microsoft will lead the MSN team.  Nelson was a GM of MSN.com International beforehand.  As of a month ago, Bradford reported to Steve Berkowitz.  Berkowitz will be leaving later this year as well.

Spot Runner was founded by Nick Group and David Waxman.  These two created Firefly Network Inc, a company that Microsoft acquired in 1998.  Firefly had the technology that was used as the foundation for Microsoft Passport. 

Spot Runner is a company to buy 30 second TV ads online.  Investors include Battery Ventures, Index Ventures, WPP, Interpublic Group, and CBS.

[Image credit: Microsoft PressPass]

Joost has been a viral hit thus far and many investors want in. Given that YouTube’s model gives a lot of power to users, the company is struggling to conform to the demands made by television networks. Viacom announced recently that they would be suing YouTube for $1 billion because of this.

However, it is in the television networks’ interest to partner with companies that have growing user bases and can host video content for them. This is why it does not shock me that Sequoia Capital, Index Ventures, CBS Corporation, Viacom Inc., and Li Ka-Shing (the 9th richest man in the world – $23 billion) have invested a total of $45 million in Joost. Sequoia Capital is also an early investor in Google and YouTube.
“This funding represents a tremendous vote of confidence in Joost’s platform,” stated Janus Friis and Niklas Zennström, co-founders of Joost. “We’ve carefully selected these investors from a variety of interested parties” because they can help Joost “accelerate growth and development of the company.”
[Information Source: WSJ]

The same founders of Joost also created Skype and Kazaa. Skype was acquired by eBay Inc. for a few billion dollars and Kazaa faced legal battles with the RIAA over music download abilities. Joost also has a dark side: spyware support.

I still have hundreds of invites so if anyone wants them, comment on this post.