Add Viacom to the companies cozying up to online video networks. The entertainment company swapped its gaming focused digital properties — casual game developers Addicting Games and Shockwave, and video unit GameTrailers – for an unspecified minority stake in Defy Media. It picks up a seat on Defy’s 10-member board which is chaired by former Nickelodeon and Oxygen Media chief Gerry Laybourne and includes reps from Lionsgate, ZelnickMedia and ABS Capital. (The network company, popular on YouTube, was formed last year when Alloy Digital and Break Media merged.) In addition to the transaction, Viacom and Defy have agreed to syndicate content and develop and distribute entertainment, although they don’t provide details. Viacom picked up Addicting Games and Shockwave in 2006 as part of its $200M acquisition of Atom Films, and bought GameTrailers in 2005.
But Viacom “was not investing materially in them,” Defy President Keith Richman tells me. That should change with the new ownership. Gaming “is core to our business,” he says. CEO Matthew Diamond adds in a statement that the properties Viacom is contributing “represent meaningful and diverse revenue opportunities we aim to expand across our existing brand portfolio.”
This is the latest instance of a traditional entertainment company strengthening bonds with an online video company. Lionsgate recently forged an alliance with RocketJump Studios. Disney committed about $1B to pick up Maker Studios. Time Warner led a fundraising round at Machinima. And last year DreamWorks Animation bought AwesomenessTV. Traditional players like the fact that online players can “create intellectual property with so little upfront investment,” Richman says. As online video grows, and TV powers seek to trim costs, “the worlds will blend.”
Law firm Hughes Hubbard & Reed repped Viacom in the deal.