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Viacom Harnesses Atom For $200M

By: David Utter

Atom Entertainment and its four gaming and video sites join MTV Networks as Viacom continues to expand its Internet presence.

Viacom Harnesses Atom For $200MViacom (VIA.B) had been a latecomer to the wonders of the World Wide Web, but has actively pushed forward over the past year with in-house efforts like MTV Overdrive and acquisitions of websites. Their online strategy mirrors the offline focus: give the younger demographics plenty of reasons to stick around and generate page views.

$200 million represents a lot of quarters to pump into online games and short films and video. With the continued adoption of broadband in the US, the demand for rich media and interactive entertainment increases every time someone plugs in a cable modem for the first time.

Faster access creates more Internet usage. Companies want to capitalize on that usage, and need ways to bring those users to their sites. Once there, the site publisher needs to keep those users pulling up new page views, with new ad displays appearing each time.

For its $200 million, Viacom gets the video sites AtomFilms and AddictingClips, and the gaming sites and AddictingGames. The videos provide anywhere from a few seconds to several minutes of entertainment.

That's the simplicity and the brilliance of the acquisition. Short video content multiplied by the viewing of a number of clips equals more ad presentations. On a CPM basis, Viacom makes money with every page view.

Viacom CEO Tom Freston said in a statement that the Atom Entertainment acquisition is "right on the money with our digital strategy." The two gaming sites draw over 50 million casual gamers a month, playing more than 400 million games, while content from the two video sites will bolster what MTV Networks already offers with its 24 broadband channels.

If they can sustain Atom Entertainment's traffic and usage, that $200 million may look like a bargain. After-hours trading in Viacom nudged shares up by 1.11 over its 33.78 close yesterday, to 34.89 according to ECN; maybe investors think it's a bargain already.


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