Question:
What is Summer Redstone's game
plan in acquiring a video-game company?
Answer:
In controlling
giant Viacom, Sumner Redstone controls the world’s
largest harvester of television ad revenue. He
has now bought Midway Games not for Viacom but for his
personal holding company, National Amusement. Even though
the midsize publisher of video games currently loses
a great deal of money, in scramble to buy 80-percent
of the company, Redstone has driven up Midway's share
price almost three-fold. He then made his daughter Shari
Redstone its vice chairman and installed his own board.
Clearly, he wants to be in the video-game business which
he described in Business Week as "the
hottest part of the entertainment industry.”
If Redstone is right, part of the sizzle comes
from video games' potential as platforms for paid “product
placement,” a euphemism for unlabeled advertising.
The logic goes like this: Since
Rupert Murdoch’s DirecTV, Time-Warner Cable,
and Comcast are all now equipping their subscribers
with Tivo-type digital recorders at nominal cost, it
is only a matter of time before a significant portion
of television viewers will routinely be able to Tivo-out
TV ads. At that point, advertisers will need to find
new ways to reach their audience, and product placement
in video games is one attractive possibility. Imagine,
for example, if all the players in a hip-hop video basketball
game were suddenly sporting the Nike swoosh or downing
Cokes on the bench? Video games also offer an excellent
magnet for just those “eyeballs” that advertisers
are willing to pay a premium to reach, such as teenage
boys (who, market research shows, have begun defecting
from conventional TV fare). "Unlike television,”
as Shari Redstone points out, “you know they're
glued to their screen” when they’re playing
a video game.
With Midway Games now in his personal portfolio, Sumner
Redstone is positioning himself to continue his reign
as ad-revenue king, even if the stream from television
advertising is partly, or substantially, diverted to
video games.
Corollary
Question:
Does Redstone’s
ownership of Midway Games conflict with his control
of Viacom?
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