Yahoo! to Acquire Citizen Sports
Strengthens Social Strategy by Combining the Power of the No. 1 Online Sports Destination with the Web's Most Popular Social Sports Company — As part of its ongoing commitment to be the center of people's online lives, Yahoo Inc. (NASDAQ:YHOO) …
Context & Ripple Effects
The Citizen Sports deal is Yahoo's second act of a social pivot it has been telegraphing for years: it swallowed bookmarking service Del.icio.us back in December 2005 and was still openly weighing how to buy into social networking as recently as May 2009. What changed by March 2010 is that the strategy now has concrete plumbing — Yahoo announced plans to integrate Facebook Connect across its sites and added Facebook-friend matching to Yahoo Contacts earlier this month.
The timing matters against Yahoo's own numbers: comScore showed another weak US search month in February, even as regulators in Washington and Brussels cleared the Microsoft search agreement in mid-February. Buying the web's most popular social sports company lets Yahoo deepen engagement on property it already leads — Yahoo Sports — rather than fight a declining search war.
First-order effects
- Citizen Sports' social and fantasy-sports products fold into Yahoo Sports, giving the No. 1 online sports destination community features its scale alone hadn't produced.
- For Yahoo, the acquisition converts an existing Facebook-platform developer into in-house capability just as the company rolls out Facebook Connect integration across its own network.
Second-order effects
- With the Microsoft search deal cleared and comScore showing continued US search erosion, Yahoo has cover to reallocate energy and deal-making toward owned-audience properties like Sports, Mail and News, where engagement — not queries — is the currency.
- Rival sports destinations now face a competitor bundling social identity (via the Facebook tie-up) with the largest existing sports audience, raising the bar for standalone fantasy and social-game providers who may themselves become acquisition targets.
Third-order effects
- If the Del.icio.us-to-Citizen-Sports pattern holds, Yahoo's corporate structure increasingly resembles a portfolio of acquired capabilities bolted onto leading vertical content sites — acquisition-led expansion replacing internal product development as the default growth mechanism.
- Portals of Yahoo's generation are being pushed toward social-graph dependence: partnering with Facebook for identity while acquiring social app makers for engagement signals an industry structure where the social platforms set the terms and content companies compete for the sessions.
The trend: Yahoo is responding to its search decline by buying social capability onto category-leading content properties, making small tuck-in acquisitions the engine of its social strategy.