Just last week, I suggested that M&A activity will rise because of the economic slowdown.  Today we see more examples of this, with Piczo being acquired by Stardoll with a mix of cash of stock.  I’d never heard of Stardoll, but Piczo is the kind of company that probably made a lot of sense in the Web 2.0 peak, but right now, less so (UGC created by teens).

Anyway, consolidation in this space would improve the chances of a big hit, much more than staying the course and splitting up the market.  This actually reminds me a bit of when IGN merged with GameSpy, both companies were walking wounded, but together they cornered the gaming market (CNET’s GameSpot being the #2 of the space, between IGN and GameSpy).  Subsequently, IGN Entertainment then expanded its scope from gaming alone to include movies (Film), my former company AskMen (lifestyle) and then flipped to News Corp. for $650M.

I have no idea if the joined company will execute or acquire more assets, but a merger like this is smart, and a sign of more deals to come.

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