Viacom’s (NYSE:VIA) MTV Games is dead, long live MTV Games.
The global media company shut down its MTV Games division in February following the sale of Harmonix, the creator of Rock Band and Dance Central. Although the division’s partnership with publisher Electronic Arts (NASDAQ:ERTS) had proven profitable, the implosion of the rock-star simulator software segment in 2010 had started to take its toll.
But Viacom isn’t stupid — video games are still big business and the company is playing smart by opening 345 Games to develop software based on MTV’s properties.
The move makes sense, and it should help improve Viacom’s already impressive performance over the past eight months. The stock has grown 37% since last August, and even though it’s hovering at its 52-week-high of $54, it could climb even higher in the coming weeks.
The key will be leveraging the company’s popular licenses across its many television networks. 345 Games is already preparing games based on Comedy Central and Spike TV brands Ugly Americans and Deadliest Warrior: The Game. While those titles may be able to carve a niche in major home console and PC game sales, it’s far more likely that Viacom will be leveraging 345 Games to increase its interest in the emerging mobile and social-game markets.
It’s in those sectors that Viacom has the most to gain. Forrester Research believes the mobile app market alone, a segment dominated by games, will generate $38 billion annually by 2015. While Viacom’s Media Networks division, which included the now defunct version MTV Games, generated $2 billion a quarter on average in 2010, it was hardly taking advantage of the opportunities in the social and mobile markets.
That the company is focusing on its licenses for 345 Games’ output should also maximize its potential. Existing programming on MTV like The Jersey Shore, and upcoming fare like Teen Wolf, make up brands that would make little to no impact at the retail level in the video game world.
But with an internal development studio focused on downloadable and social games based on these properties, the company stands to share in the overall growth in those spaces.
While it’s unlikely that 345 Games’ output will generate another phenomenon like MTV Games and Harmonix’s Rock Band series, it will at least allow Viacom to tap into one more strong source of revenue.
As of this writing, Anthony John Agnello did not own a position in any of the stocks named here. Follow him on Twitter at @ajohnagnello and become a fan of InvestorPlace on Facebook.
