Essentially, Tag Networks lets users play video games on their TV without the use of a separate console. But the problem is, they need distribution. That where ActiveVideo comes in. The San Jose company claims to be available in 5 million homes. About a year and a half ago, it signed a key deal with a Time Warner Cable (NYSE: TWC) unit to distribute its video streams through the company’s set-top boxes.

As part of the acquisition, Tag Networks will move its operations from Mountain View to San Jose. Also, Sangita Verma, CEO and founder of TAG Networks, and Robert Craig, chief creative officer and founder, will serve as President of TAG Games and Chief Creative Officer of TAG Games, respectively, for ActiveVideo Networks; TAG CTO Cliff Mercer will serve as Senior Vice President, Engineering of ActiveVideo Networks.