RealTime IT News

MTV Buys a Bigger Online Presence

UPDATED: Just days after making a deal with Google to syndicate video content, MTV Networks announced its $200 million acquisition of content company Atom Entertainment.

Atom, known for its popular gaming and user-created video sites, expands MTV's network of online properties.

The four Atom Entertainment properties include gaming sites Shockwave.com and AddictingGames.com, along with short films from AtomFilms.com and user-generated video site AddictingClips.com.

More than 9 million people visited the sites last month, up 54 percent over the same time last year, according to Commscore Media Metrix.

Tom Freston, CEO of MTV's parent company Viacom, in a statement called the acquisition "right on the money with our digital strategy."

The company's digital strategy must be to target the young.

"Atom has an established audience," said David Card, media analyst with JupiterKagan. If you are Coke or Pepsi, you want to sell ads to young people, he said.

Mike Salmi, CEO of Atom, said in a statement that the acquisition creates new opportunities for advertisers and consumers.

The company, with 100 employees, has seen its advertising sales skyrocket, Salmi told internetnews.com.

Atom has benefited from YouTube's popularity. Because YouTube doesn't include ads, Salmi said his sites are viewed as an alternative.

Advertisers go where the eyeballs go, said Adi Kishore of Yankee Group. Just as more of MTV's young demographic is migrating to the Internet, so are advertisers, he said.

Increasingly, that migration is to broadband video, where MTV is scrambling to catch up with sites such as YouTube.com and competitor News Corp. , said Kishore.

Along with video, in-game advertising is making a lot of sense to more people, according to the analyst.

In-game ads, expected to be worth $700 million by 2010, caught the attention of Microsoft earlier this year. The software giant plans to insert ads for autos and soft drinks in its XBox platform.

Card believes the current drumbeat of online media acquisitions won't allow MTV or other traditional media companies to dominate the space.

While Atom may allow MTV to sell more ads across its online network, search engines, such as Google, Yahoo, MSN and AOL, have the best chance of controlling the market.

Along with Atom, MTV recently purchased online gaming site XFIRE, college newspaper network Y2M, online video companies GameTrailers.com and IFILM, as well as virtual pet site Neopets.

And late last year, MTV announced a video-distribution agreement with AOL.

While MTV is aggressively entering the Internet market, "TV is still paying the bills," Kishore said.