Yahoo is becoming an infrastructure company

Most of the headlines this morning on the Yahoo M&A beat concerned its bid for Hulu, reportedly in the range of $600 to $800 million. But the more important news — or at least more meaningful in terms of Yahoo’s actual strategy — was its actual (and no doubt far-smaller) acquisition this morning of game publishing and analytics platform PlayerScale.

PlayerScale is a four-year old startup that provides a suite of tools that independent game social and mobile game developers and aggregators can use to deliver a consistent gaming experience to users across all platforms, including Windows, iOS and Android, along with an array of analytics tools. It also gives players the ability to save and exit a game on one device and resume from the same point on another, regardless of OS.

According to a statement issued by Yahoo, PlayerScale is currently used by 2,600 developers, and more than 150 million users worldwide currently play PlayerScale-enabled games.

It is, in effect, a self-publishing platform for game developers with a very large user base that skews young. That puts the PlayerScale deal right in line with the acquisition of Tumblr, which as I noted last week is at its core a self-publishing platform and content management system. Together, the two deals point toward a long-term strategy of getting users to engage not just with Yahoo content but with Yahoo-owned tools to create content, which can then be incorporated into other Yahoo properties.

As Kyle Spencer noted in a post on Seeking Alpha, the new Yahoo terms of service for PlayerScale are explicit on the point:

Yahoo does not claim ownership of the Developer Content you submit to and/or store on the Services, however, by submitting Developer Content to the Services, you grant Yahoo and its designees a world-wide, non-exclusive, unlimited users, unlimited sites, royalty-free license to prepare, compile, install, make, use, execute, access, reproduce, modify, adapt, publish, publicly perform and/or publicly display any and all Developer Content for the purpose of providing the Services to you.

Yahoo, in effect, is becoming an infrastructure company, providing tools and publishing platforms for other content creators to build their businesses on while Yahoo claims a share of the value created.

The Hulu deal, in contrast, should it happen at all, strikes me as a near-term cash-flow and balance sheet play. Yahoo probably needs a video streaming play (it previously tried to acquire Daily Motion) to round its its advertising business and Yahoo is well-positioned to grow Hulu’s advertising and subscription businesses if it comes with the necessary content rights. But it feels more like a holding action than a strategic move.