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Thursday, August 10, 2006

What MTV's Atom deal means ... LA Times on small screen entertainment ... WSJ on cinema biz

MTV Networks, part of Viacom, is paying $200 million for San Francisco-based Atom Entertainment, which has 100 employees.

Here's the LA Times coverage... Washington Post ... NY Times

Here's why I think this is a significant deal for movie studios... perhaps even moreso than Rupert's purchase of MySpace...

With no physical `studio lot,' and just 100 employees, Atom has gotten really good at developing and scouting cool short form Internet content, cheaply. That includes animated clips, short videos, and interactive games. This is going to be a competency that every studio and media company needs to cultivate going forward -- and now Viacom has it.

Atom CEO Mika Salmi spends short money to develop fun, topical Net content, as the LA Times reported earlier this year. And he also licenses it from talented independent creators, like the Spiridellis Brothers of JibJab fame. They developed a Dick Cheney hunting game in-house earlier this year, and licensed a Zidane head-butting game from its creator, doing a revenue share. (The latter is the most common approach for Atom.)

Salmi told me a few weeks ago that getting Net content to take off, and accumulate millions of views, isn't about production values. "People are pretty tolerant when it comes to quality," he said. "Hollywood likes to mention that everything has to be the highest quality. But people are pretty tolerant, as long as the joke is good."

Atom's real value isn't the number of viewers its sites have accumulated, but its ability to create (inexpensively) and license cool, short-form content in a fast, fluid, non-bureaucratic way. (That Cheney game was only funny for a very short time...)

- The LA Times finds that about half of young adults, and 4 in 10 teens, aren't interested in watching TV shows or movies on computers, cell phones, or portable devices like the iPod. (Did they ask about short-form, Net specific content, like that supplied by Atom?) I think that number is going to change, as it becomes easier to transfer video content onto these devices, and as the experience of viewing live/streaming content improves. I (and lots of people I've spoken to in the industry this year) expect computer viewing to grow first, followed by "stored video" devices like the iPod, and then cell phones.

- This Wall Street Journal piece about the Cinemark/Century acquisition, and potential IPOs of other theater businesses (like AMC, or the National CineMedia joint venture), made me laugh, for one reason. Everyone says the holiday season looks uncertain, because there are no major sequels or franchise movies scheduled, beyond `Casino Royale.' Kate Kelly writes:

    There isn't a "Harry Potter," "Chronicles of Narnia" or "Lord of the Rings" in sight. To draw moviegoers, the theater chains will instead be banking on a handful of as-yet-unproven properties like "Happy Feet," an animated picture about dancing penguins, and a movie adaptation of the fantasy book "Eragon."

    "With maybe the exception of 'Happy Feet,' you don't have movies that probably, on paper, are headed to $200 million or more" in domestic ticket sales, says Jeffrey Logsdon, an analyst who covers media and entertainment for BMO Capital Markets Corp., a subsidiary of Canadian financial-services company BMO Financial Group.

I look at a season devoid of sequels and franchise flicks as good news for movie-goers...and, hey, even studios need to create a new franchise every once in a while.

- IMAX is in bad shape: no one wants to buy the company, which has been on the block for five months, and now there's an "informal" SEC inquiry into the company's revenue-recognition practices.


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