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.

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