Viacom's Casual Investment

Casual gaming is the latest hot sector in the video game world, and Viacom (NYSE: VIA  ) is making a significant investment to snare a piece of the action.

Viacom wants its MTV Networks' Nickelodeon Kids and Family Group to spend $100 million over the next two years to amass a collection of websites focused on casual gaming. As competition for die-hard gamers grows ever fiercer, important publishers such as Activision (Nasdaq: ATVI  ) and Electronic Arts (Nasdaq: ERTS  ) are increasingly looking to casual gaming to drive incremental revenue. In a nutshell, casual games don't require a huge investment of time or hassle to complete -- a five-minute game of Bejeweled or Tetris, for example, instead of the immersive 40-hour saga of a Take-Two (Nasdaq: TTWO  ) Grand Theft Auto adventure.

The industry believes that casual games will broaden video games' overall appeal in the long run, attracting many audiences who now avoid or lack interest in more conventional games. Even EA's CEO recently remarked that current titles are often too complicated, and that more should be done to appeal to non-hardcore players. While causal gaming may hold definite appeal for time-strapped older professionals seeking quick hits of entertainment, young kids are also a tempting market, given their shorter attention spans.

Viacom intends to leverage online entertainment to further the popularity of its kids' brands and broaden its online strategy in general. Its casual gaming initiative will feature the media company's Nickelodeon, Noggin, and NeoPets franchises. Nickelodeon will debut its first online subscription service, the Nick Gaming Club, while TheNGames.com will target teen girls.

Viacom is smart to commit funds toward a strong presence in online gaming. It's the latest step in the company's ongoing efforts to place its brands online in a fun environment, fostering a stronger relationship with its target demographics. If it works, we'll start seeing the fruits of this project sometime in 2008.  

The great thing about Viacom's intentions is that it can make a big splash without draining its corporate coffers. These sites should also offer healthy competition for Disney's (NYSE: DIS  ) own online offerings. The Disney Channel has enjoyed recent popular hits with its High School Musical and Hannah Montana franchises; enhancing Nickelodeon's offerings on the web can help bring kids back to Viacom's side. In addition, let's not forget that Viacom's sites can change along with the fickle tastes of the audience. Overall, this is a smart move, one that should increase the brand equity of Viacom's important Nick portfolio.

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Activision, Disney, and Electronic Arts are members of the Motley Fool Stock Advisor recommendation list. Sign up for a free 30-day trial of the service with no obligation whatsoever. The Gardner brothers can help you construct a long-term, wealth-building portfolio.

Fool contributor Steven Mallas owns shares of Activision and Disney. As of this writing, he was ranked 13,233 out of more than 60,000 total participants in the CAPS system. Don't know what CAPS is? Check it out. The Fool has a disclosure policy.


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