The $200 million deal as big media companies compete with upstart online video leader YouTube.com.
MTV Networks (MTVN), a division of Viacom, Inc., recently announced a definitive agreement to acquire Atom Entertainment, Inc., a portfolio of four leading online destinations for casual games, short films and video, for $200 million, as big media companies move to compete with online upstarts such as video leader YouTube.com.
Acquiring Atom Entertainment advances the company’s multiplatform strategy of building an engaging universe of music, gaming, entertainment, news and interactivity for targeted audiences.
MTV Networks hopes to grow its main audience of young viewers with Atom’s portfolio of online videos created by Internet users, short independent films and casual online games, said Chairman and Chief Executive Judy McGrath.
“This acquisition is in line with our business strategy of being a leader in the digital space and connecting with consumers on every platform and device that they use,” McGrath said in an interview.
Atom Entertainment is a pioneer in online entertainment with four leading brands in both games and video: Shockwave.com and AddictingGames.com are two of the internet’s largest casual gaming sites, offering nearly 1,500 free and downloadable games. AtomFilms.com and AddictingClips.com are two premier film and video sites for short-form comedy, animation, drama and user-generated content.
The Atom deal, expected to close in the third quarter, follows on the heels of a big push at Viacom and its media rivals to plant deeper stakes in the Internet.
Adding Atom Entertainment to MTV Networks’ overall portfolio fits squarely with the company’s strategy of super-serving its targeted, global audiences with a relevant and innovative video experience online.
Their challenge is to build new properties and keep their own media brands, which grew to prominence on television, attractive to a young audience that is turning more and more to the Internet for entertainment.
Tom Freston, CEO, Viacom, said, "This acquisition is right on the money with our digital strategy. It adds great scale with users, improves our growing casual gaming position, and brings a world-class digital video library and a fantastic management team."
“Atom Entertainment is a best in class and dynamic property, with brands that have dedicated passionate followers and content that resonates with our global audience,” McGrath said.
Following MTVN’s recent purchases of XFIRE, Y2M, GameTrailers.com, IFILM and Neopets, this acquisition demonstrates the company’s continued commitment to being a premier multi-platform media company, uniquely positioned across every screen.
Atom Entertainment was formed about five years ago from the merger of Atom Films, which was known for carrying independent short films, and Shockwave.com, which offered online games.
Atom began letting viewers upload their own online films in March this year, much like the popular YouTube.com. Its videos will be available across MTV’s 24 broadband Web channels. "We want to figure out the smartest ways to plug Atom Films into our infrastructure," McGrath said.
Shockwave.com and AddictingGames.com are part of the large and rapidly growing business of online casual gaming and will complement MTVN’s roster of casual gaming communities, including Nick.com and Neopets. By including these two Atom sites, MTV Networks will be a leader in the casual gaming business, with more than 50 million casual gamers playing more than 400 million games a month. In addition, AtomFilms.com and AddictingClips.com further expands the online video available across MTVN’s 24 broadband channels and the company’s user-generated content offerings.
"MTV Networks is a global leader in entertainment, and we are thrilled to join their family of brands," said Mika Salmi, Chief Executive Officer of Atom Entertainment. "Leveraging MTVN’s platform will accelerate our growth and create new opportunities for both consumers and advertisers. We are proud of the business we have built and look forward to working together with MTVN to lead the way in the casual gaming and short-form video content business."
Once the undisputed leader in music and youth-targeted media, MTV now competes for attention with the likes of online teen hangout MySpace.com, acquired by media conglomerate News Corp. last year.
Also, MTV lately announced a landmark online video advertising partnership with Google, meant to create a new economic system to buy and sell ads for videos online.
Separately, MySpace also closed a text-search advertising deal with Google.
Atom’s Salmi told Reuters the privately held company had been pursued by several potential buyers and had posted an operating profit since 2002, without giving details.
The acquisition is subject to customary closing conditions and is expected to close in the third quarter 2006.