Shockwave buys AtomFilms to co-star in venture

Macromedia's Shockwave has acquired AtomFilms, and the two companies will form an as-yet-unnamed entity under the terms of a stock-for-stock swap. AtomFilms will own about 30 percent of the new venture.

Ron Burgess, chairman and CEO of Macromedia and chairman of Shockwave, will be the new company's chairman. AtomFilms chief executive Mika Salmi will be its CEO.

The "merger," as both sides are calling it, is more of a content play that creates a mix of games, music, film and creativity applications, some analysts said.

Burgess predicted in a statement that the new entity will "have the potential to change the way people are entertained around the world."

Analysts say the merger involves an industry that has been struggling of late. This year saw the failure of the Digital Entertainment Network, which was supposed to be huge. And Icebox.com, which offers animated shows, had to cut its staff of writers in half last month.

AtomFilms has more than 1,500 titles for its registered visitors to view, including the wildly popular "Angry Kid," a series of short films by the same people who brought the world the full-length feature film "Chicken Run."

The deal will also join Shockwave's 30 million registered visitors with the estimated 150 million viewers in both the offline and online worlds that AtomFilms says it can access.

Shockwave has been making several content buys in the past several months--including "StainBoy" by film director Tim Burton, who created "The Nightmare Before Christmas," among other works.

But most of those deals were for single pieces of content. The merger with AtomFilms is the first time Shockwave has linked with an entire library of content, said one industry analyst.