Midway Games (NYSE:MWY) issued a couple of press releases the other day touting a deal it signed for a license to make games based on animated properties featured on Time Warner's (NYSE:TWX) Cartoon Network. One release talks about the deal made for shows such as Dexter's Laboratory and The Grim Adventures Of Billy & Mandy, while the other release gives details about games to be made from the company's Adult Swim brand of shows, such as Aqua Teen Hunger Force and Sealab2021. The agreement covers the major platforms -- console, handheld, and the PC market.
This is a pretty good license opportunity, for two important reasons. First, I believe that the shows create a useful collection of source material that will lead to some interesting games. Second, I like how the two releases define two sets of target audiences; indeed, fare such as Dexter's Laboratory will most certainly hit the very young gaming demos, while the Adult Swim titles will reach an older, sophisticated group of video jockeys. This strategy should lead to an efficient maximization of the license since there are many age tiers to be exploited. Licensing mechanisms are the lifeblood of all video game companies such as Electronic Arts (NASDAQ:ERTS), Activision (NASDAQ:ATVI), and THQ (NASDAQ:THQI).
THQ, of course, possesses the Nickelodeon license -- Nick is a competing cable colleague of Cartoon Network. Here's the thing I find ironic about this deal between Midway and Time Warner's cable channel -- Sumner Redstone owns a controlling stake in Midway (according to a previous Fool article on Redstone's video game interests back in December, the stake at that time was approximately three-fourths of the common stock). Redstone is CEO (and major stockholder) of Viacom (NYSE:VIA), the media conglomerate that owns Nickelodeon. It strikes me funny to see that Redstone's beloved Midway will be publishing video games that promote the Cartoon Network, which obviously vies for the same viewers Nick does.
Business is business, of course. Since the Nick license is already tied up (and at one time it was up in the air as to whether THQ would retain that in light of Redstone's financial interest in a different video game company), going for the Time Warner characters does make sense -- after all, Midway must still try to find value for itself. In fact, even with the Redstone stake, a good analogy for this might be TV broadcasting. Networks like CBS and Fox don't exclusively purchase programming developed by production entities they control -- those companies can and will go to competing studios to obtain the best shows in the marketplace. Synergy is certainly still important, but perhaps not at the expense of an appropriate arrangement.
Still, I find this entertaining. Imagine if the games produced by Midway as a result of this event led to a huge, dominating upswing in the ratings for Cartoon Network and SpongeBob SquarePants was suddenly cast aside by the culture at large in favor of that floating french-fry thing. No, I agree, won't happen. But it'd make a crazy episode on a crazy cartoon.
More articles on Midway Games and other video game companies:
- Redstone Likes to Play (Video) Games
- Midway to Profitability
- EA's Cool Holiday Quarter
- ATVI's High Holiday Score
- Sony Grows Up, Gets Smarter
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Fool contributor Steven Mallas owns none of the companies mentioned. He'd like to create a crazy cartoon series one day, mostly because there's a lot of money in those things.
