World Wider Web: NBC, News Corp. Join Online Forces
The yet-to-be-named site, coming this summer, will offer full episodes of shows from NBC's "30 Rock" and Fox's "Prison Break," along with films from each parent companies' libraries and series from the various cable nets under the NBCU and News Corp. umbrellas.
"On launch, this will be the largest advertising platform on earth," said News Corp. COO Peter Chernin. "We'll be able to deliver premium content to more people than any other platform."
In addition to the potential ad dollars and copyright control for NBCU and News Corp., the deal has certain benefits that would not be possible if they launched solo. NBCU has access to distribution on the booming MySpace, which had 62 million unique U.S. visitors in January, according to comScore Media Metrix. News Corp. has access to a robust content library, with offerings from Universal Studios films to "Saturday Night Live"--not to mention the ballyhooed "SNL" clip "Lazy Sunday" that arguably put YouTube on the map.
A dedicated ad sales team is currently being assembled. The new co-venture will generate ad revenue for the two founders and other distributors on board--AOL, MSN, MySpace (part of News Corp.) and Yahoo--with at least five advertisers, including Cisco and General Motors, already teed up.
It's unclear what advertising real estate will be available, and whether it will go beyond well-worn pre-roll ads and banners, although online video derives premium CPMs. The founders plan to offer cross-platform deals with on-air/online mixes.
The distribution partners, the highly trafficked AOL-MSN-MySpace-Yahoo quarter, will host the same broadband player as the flagship site and offer the full content archive to all their visitors. NBCU and News Corp. said those sites give the venture an initial reach to practically all U.S. Internet users.
"We have the distribution strength of the likes of MySpace and Yahoo as partners that'll reach 96% of all Internet users," said Jeff Gaspin, president of NBCU cable and digital content during NBC's development meeting Thursday in Los Angeles.
Yet without initial brand recognition, the site will no doubt require a massive financial outlay from NBCU and News Corp. for promotion. It could be the subject of a fiercely competitive review among creative agencies on Madison Avenue. However, on-air promotion on the NBC and Fox networks, which will have mass draws come September with the NFL, could be invaluable.
Content providers such as NBCU and News Corp. have charged YouTube with allowing their copyrighted content to be posted illegally, while they've been left out of the revenue loop. In the same vein, Viacom has yanked its content from YouTube and signed a deal with another online video distributor. While the YouTube phenomenon clearly was the impetus for the new venture, executives did their best to downplay the influence. "This is obviously not a YouTube killer," said News Corp.'s Chernin.
Even with the copyright protection, the venture will offer some venues for user-generated creations, such as mashups, and personal video "hosting" on profile pages on MySpace or elsewhere. Zucker said he did not expect the new venture to take away from NBCU's growing efforts to turn its NBC.com site and its other Internet outlets into revenue generators, since those sites would take on their own distinct identity.
NBC and Fox affiliate stations will benefit from the joint venture by serving "as a great promotional platform" for the content they offer, said Chernin. Plus, the two companies will be careful about when they make shows available online, in relation to their first-run on-air distribution.
Chernin confided that Eric Schmidt, CEO of YouTube-parent Google, phoned Thursday morning to discuss some sort of joint operation. Chernin indicated that he replied with a "let's do it" retort. The new venture's goal is to offer as much content as possible and "ubiquitous distribution," Chernin added. "We are open for business with anyone and would like to be in business with everyone."
The only caveat: content providers [studios or other networks] and distributors must "meet our economic terms and copyright protection," Chernin said. NBCU CEO Jeff Zucker said copyright protection "was critically important to us as we looked at doing something like this." One piece of content that won't be offered, or at least that hasn't been cleared yet, is Fox's "American Idol." Internet rights are owned by the production entities.