NBC Universal/News Corp. Create Network To Distribute And Monetize Online Content

In a move to wrest back control of their content, protect intellectual property, and generate ad revenue, NBC Universal and News Corp. have joined forces to create a venture focused on distributing premium online video content over a network of sites estimated to reach 96% of all U.S. Internet users.

The as-yet-unnamed venture is set to launch in spring with at least seven charter advertisers. It will come with full Web 2.0 capabilities for consumers to share and distribute the content--with advertising attached to the traveling video player. (See related Online Media Daily story.)

The venture will offer full episodes from NBC's "30 Rock" and Fox's "Prison Break," along with films from each parent company's libraries and series from various cable networks under the NBCU and News Corp. umbrellas.

The goal is to create a one-stop source for consumers and advertisers seeking premium video content. Both full-length TV shows, movies and clips will be offered. In addition, consumers will be invited to manipulate the premium content to create mashups and parodies. Non-program-related user-generated content will also be accepted, but is not the focus of the enterprise said Jeff Zucker, president and CEO of NBCU.

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"Large distribution, a good revenue share and content protection are the three key reasons anybody who wants their content disseminated as widely as possible would want to join," Zucker said. "The scale of this distribution network is so far beyond anything that's been tried, it offers an incredibly different proposition."

Both NBCU and News Corp. will continue to maintain their existing independent Web sites. The new venture will exist as a standalone destination, and will also be imbedded as a branded entity within Yahoo, Microsoft's MSN, AOL and News Corp.'s MySpace. Most content will be free and ad-supported. Anything sold for a fee on iTunes will carry that practice to the new venture.

Observers said the full impact of the new venture would depend on how many additional content creators NBCU and News Corp. can convince to join.

"There are lots of other media companies," said David Hallerman, senior analyst at eMarketer, referring to CBS, Disney and others. "It's not necessarily to their advantage to play along with this new entity."

Hallerman was also skeptical of just how comfortable the parent companies would be once consumers started to fool around with their brands. "One wonders when people actually get their hands on the content how open will they actually be," he said. "Corporations don't give up control easily."

In a joint conference call Thursday to explain the details of the new venture, News Corp. COO Peter Chernin said Eric Schmidt, CEO of You Tube-parent Google, called that morning to discuss a possible relationship. Chernin said the venture will work with anyone who honors its requirements for copyright protection.

If successful, the venture could spell trouble for YouTube, said industry observer Shelly Palmer, author of Television Disrupted: The Transition from Network to Networked TV.

"Without bootleg content," he said, "YouTube will have to evolve into something quite different to grow and prosper."

Hallerman said the announcement could propel other content companies into the arms of YouTube with new financially attractive deal arrangements.

Zucker said content will still break on television and through affiliates, but be available online quickly after airing.

George Kliavkoff, NBCU chief digital officer, will lead the operation until a permanent management team is announced.

"I think it means unity, clarity and big thinking. It is wonderful to see all of these organizations coming together to create a standardized platform for content delivery," Palmer added. "But as the saying goes, 'God is in the details.'"

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