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Disney has made a big wager on Web video by buying Maker Studios. Time Warner has been investing in Web video properties like Maker and Machinima. Now Viacom is taking a bet on a video site as well: The cable programmer is acquiring a piece of Defy Media, a conglomerate of Web sites and Web video properties aimed at young men.

Defy Media, the result of a merger between Break Media and Alloy Digital, is best known as the home for YouTube stars Smosh — which means the two twentysomethings that make up that comedy act are now corporate cousins with SpongeBob and MTV’s Teen Moms.

The two companies aren’t disclosing financial terms but say that Viacom will end up with a minority stake in Defy. Viacom is paying for that stake by handing over three gaming sites it acquired about 10 years ago — Addicting Games, Shockwave and GameTrailers — along with some cash and an agreement to help market Defy’s properties, according to people familiar with the deal.

The size of the properties involved means that the deal is likely considerably smaller in scale than Disney’s $500 million Maker acquisition: The three sites have a collective U.S. audience of about 7 million visitors, according to comScore, which pegs Defy’s audience at 45.6 million. Addicting Games, an ad-supported casual gaming site, is the largest of the three properties, with about 5 million monthly uniques.

Addicting Games - World's Hardest Game

The deal is still significant for the digital media landscape, because it’s the first time Viacom has made a bet outside its own sites in some time. Nearly 10 years ago, Viacom tried and failed to buy Myspace. It ended up buying a slew of other sites — including the three it is handing to Defy — instead. Since then, it has more or less stayed pat.

The deal is also worth noting for Web video industry watchers, since it looks like it takes a natural acquisition target off the board. Other strategic investors, including News Corp., had circled around Defy, which is notable for building a Web video business that attracts lots of eyeballs on YouTube but isn’t dependent on YouTube for its revenue.

Defy says it draws 155 million viewers and generates more than 400 million views a month; its other investors include Lions Gate Entertainment and Zelnick Media.

Meanwhile, investors are still kicking the tires on Fullscreen, a Web video startup that boasts billions of views a month, and has hired Allen & Co. to help it weigh offers.



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