High-speed Internet access, or broadband, is facilitating consumption of data-intensive, rich media content, such as video games, filmed entertainment and music, because its high-speed, "always on" nature permits users to access large files quickly and conveniently. According to a June 2004 report by the Online Publishers Association / comScore Networks, broadband users spend more time online than dial-up users with similar demographic characteristics. This behavior is particularly pronounced for the 18 to 34 year-old demographic segment, where broadband users spend 52% more time online than dial-up users. According to this same report, broadband users in this age group spend nearly twice as much time per visit as dial-up users on entertainment sites with interactivity, such as multimedia and streaming capabilities. International Data Corporation, or IDC, projects that households in the United States with Internet access will grow from 68.4 million in 2004 to 98.2 million in 2009, and that the percentage of these households with broadband will increase from 44% in 2004 to 72% in 2009.

According to industry statistics, worldwide consumer spending on console games, PC games, online games and wireless games is expected to grow from approximately $25 billion in 2004 to over $50 billion by 2008, representing a growth rate significantly greater than that of the overall media and entertainment sector. The Internet has emerged as an efficient and cost-effective medium that enables advertisers to reach a highly targeted audience with customized marketing campaigns. The continued migration of audiences online at the expense of traditional media has contributed to a shift in advertising spending to the Internet. According to the US Online Marketing forecast: 2005 to 2010 Forrester Research, Inc., May 2, 2005, spending across the entire online advertising market in the United States is predicted to increase from $12 billion in 2004 to $22 billion in 2008. In particular, the disproportionately high use of the Internet by young males has caused advertisers to increase their online advertising spending significantly in order to access this demographic segment.

Through its video game-related web sites, which cover the substantial majority of the content, the Company provides its users with the following free and paid content and service offerings. The Company bundles different combinations of its paid content and service offerings into a variety of subscription packages, including IGN Insider, Founder's Club and FilePlanet. The duration of the Company’s subscription packages ranges from one month to two years.

The Company provides its advertisers with a wide range of advertising and marketing programs, including brand promotion and awareness, product introductions and research, market research, consumer targeting, lead generation and customer acquisition. The programs the Company offers include fixed placement and impression-based advertisements, sponsorships, co-marketing, consumer intelligence, content licenses and commerce partnerships.

The Company offers video game developers and publishers a suite of technology and services to aid them in the development and promotion of their products. The Company offers software that facilitates the development of online multi-player video game play through a variety of online video gaming tools and back-end services that enable player-matching, buddy lists, in-game chat, competition, statistics tracking, software patching, Internet security and piracy protection. In addition, the Company’s software enables in-game advertising and content management. The Company also offers training, specification, implementation and testing services.

To help promote publishers' video games, the Company offers file hosting of beta versions of games and web publishing and hosting of game-specific sites, including tournament and ladder competition sites. In addition, through its online digital retail store, the Company offers publishers a cost-effective digital distribution platform to sell both their new and catalog video game titles.

Subscriptions and service revenue increased 541% from $670.0 thousand in the three months ended March 31, 2004 to $4.3 million in the three months ended March 31, 2005.

Production, content and fulfillment expenses increased 57% from $2.4 million in the three months ended March 31, 2004 to $3.8 million in the three months ended March 31, 2005.

Engineering and development expenses increased 144% from $700.0 thousand in the three months ended March 31, 2004 to $1.7 million in the three months ended March 31, 2005.

Interest expense was $402.0 thousand and $1.7 million in the three months ended March 31, 2004 and 2005, respectively.

Accretion of preferred stock was $1.0 million and $1.4 million in the three months ended March 31, 2004 and 2005, respectively.