MTV throws $500 million at games

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But are media companies "crazy" to even try to break into the market?

Aug 17, 2007

Reuters spoke with MTV chairman and chief executive Judy McGrath, who said, "As we take our brands narrow and deep to serve our targeted, niche audiences, we're putting well over $500 million behind building our games business across all of the brands in our portfolio."

MTV has had a string of game-related acquisitions, including but not limited to the purchase of Atom Entertainment (Shockwave.com), Xfire, GameTrailers and last but not least Harmonix, developer of Guitar Hero and Rock Band.

McGrath added, "I'd like to see more game applications on some of our current big brands across the music group."

Wedbush Morgan Securities analyst Michael Pachter said such ventures are risky for media firms.

"Media companies are crazy trying to bring videogame development in house," Pachter said, referring to the development of console games. "They act like anyone can do this. The fact is not everyone can."

However, UBS Internet analyst Ben Schachter said that in the age of Internet gaming, media companies could have a sporting chance. "The Internet is a different ball game, especially for casual games," he said.

According to the report, about 42 million unique visitors used an MTV Networks game site in June - a 20 percent increase since January.

Although the online segment may present opportunities for big media companies such as MTV to explode onto the videogame scene, the area is becoming increasingly crowded and competitive. But with purchases such as Xfire, GameTrailers and a highly synergistic partner in Harmonix, so far it would seem that MTV is on the right track.

Article supplied byNext Gen.