Wednesday, June 29, 2005

Viacom positioning for future growth

So last week we had the news that Neopets was bought by Viacom and now MTV has officially created MTV Games, jumping on the video game bandwagon. Both of these are truly bold moves by Viacom to shake up the media landscape and get out as the leader in emerging media. If you think about it, both these moves seemed tied to the Viacom vote to break into two companies, one focusing on high growth potential and the other acting as a cash cow. With the Neopets and gaming moves, you can bet you are already seeing two cornerstones of this future high growth company. The MTV Games move is particularly interesting for two little things buried in the press release. First off, they reference in-game ads. If Viacom can leverage their existing media sales force, they will be the first player to really capitalize on in-game advertising. Massive is trying to get in the game, but they aren't part of the old boy advertising network. And EA is leading from the publisher perspective, but I've read that advertising revenue is still less than 0.01% of their revenue. The second big thing is the reference to embedding music in-game. Anyone that has played Madden, SSX or any other EA Sports game knows how big music has gotten now. In fact, these games have been credited for even breaking one or two artists. Think about all the touchpoints MTV can now offer the music labels and you see the tremendous potential for that revenue stream. It will be interesting to see how this things shapes up.

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