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Viacom's Aggressive Online Plan - Broadcasting & Cable

Viacom's Aggressive Online Plan

Strategy is departure from traditional content consolidation
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In an attempt to be all things to all Internet users, Viacom will launch a horde of brand-specific Websites in the hopes of building revenue. Unlike other traditional media-company strategies of launching a limited number of sites and amassing more viewers as the companies consolidate content, Viacom will tender as many as “hundreds and possibly thousands” of sites in an aggressive plan, according to CEO Philippe Dauman.

The aggregation won't come via a splashy acquisition spree. Viacom instead plans to grow online assets from within.

The strategy is in contrast to sites such as YouTube that are currently dominating the Web landscape. YouTube currently has 30 million to 40 million unique viewers per month.

Dauman sees the online world as becoming increasingly fragmented. People are going to want their MySpace and Facebook, Dauman says, but they are also going to want their special-interest sites for those brands that speak to them.

According to comScore Media Metrix, Viacom logged 44.9 million unique viewers in August, a 40% increase from August 2006. Globally the company had 92.3 million uniques in August, a 68% rise.

Dauman took the reigns of Viacom in September 2006 and quickly set the lofty goal of doubling digital revenues to $500 million in 2007. Dauman told a group of investors at this week's Goldman Sachs Communicopia Conference that the company was on track to exceed that target.

The plan to grow the company's online assets from within runs counter to recent patterns. The company lost out to News Corp. in the bid for MySpace in 2005, and looked at Facebook in early 2006 but deemed the price tag too steep.

By building up its targeted Websites, the company hopes to scoop up viewers now spending more time online and less time watching its networks, a growing trend eating into network ratings.

Leading the Web charge at Viacom is MTV Networks (MTVN), which is expanding its global Web portfolio to more than 300 sites by the end of the year and restructuring others.

Some of the sites that MTV is rolling out include an updated Daily Show site featuring the series' entire video library, pop culture site VH1Eyecandy.com, iCarly.com—which allows for user-generated video—and the stand-up site Jokes.com.

MTV Networks is also banking that international sites will drive the growth. Earlier this month MTVN announced 12 new site launches and enhancements to existing sites covering Europe, the Americas and Asia, and plans to debut games, virtual worlds and social networks in Southeast Asia in the coming months.

A QUESTIONABLE MOVE?

Not surprisingly, the Viacom plan is meeting with its share of naysayers. UBS analyst Michael Morris believes the company can drive higher traffic by pooling its resources and making content more easily accessible. In a research piece in August, Morris contended that the company was losing its target audience because it lacked the functionality of its competitors.

In fact, MTVN will actually take the pooled-resources approach in one case by grouping several of its assets into one site. The new venture, to be dubbed Spike.com, will combine the content of SpikeTV.com and iFilm, including user-generated and professionally produced video. SpikeTV.com will officially launch—and swallow up the iFilm brand—in the first quarter of next year.

Gamer sites Xfire and Game Trailers will also be a part of the new group, but these brands will retain their own separate sites.

This rolling up of SpikeTV.com and iFilm will, however, be a “one-off event” and not a trend, according to MTV Networks chief of digital innovation Mika Salmi. “If you ask me, portals are dying,” he says.

The move was made to combine several like brands with the same target audience, 18-34-year-old males, under one title, and strengthen the SpikeTV brand. “It's about the demographics,” Salmi says. “There was a ton of overlap.”

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