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Phones, VOD, Broadband Get Attention

By Katy Bachman and Mike Shields mediaweek.com February 28, 2005

The conglomerates that currently control so much content across the media landscape are embracing new, cutting-edge technologies more actively, in a bid to expand audience and revenue streams. Though the desire is more apparent, need is also driving giants like News Corp., Viacom and others to find new ways to reach consumers, as traditional media outlets from cable and satellite to TV and radio present less and less growth potential.

In the past year, several media companies have begun experimenting with alternative delivery systems ranging from broadband to cell phone technology to distribute their content and brands. But last week, Viacom, which owns some of the most powerful younger-skewing brands, may have set the tone for the industry. During the company’s fiscal year-end conference call, Viacom chairman/CEO Sumner Redstone declared 2005 would be the year “of the reinvention of Viacom,†not just through traditional platforms but through “an accelerated expansion into new and emerging platforms.â€

When the big media companies with piles of cash and a huge stake in traditional media begin talking about embracing alternate distribution channels as a core strategy for growth, it’s clear the future is closer than we think. “All of the [media] conglomerates have a lot of really smart people trying to find new ways to monetize their content,†said Brian Wiesner, an analyst for Magna Global who authored a recent report on 3G, the latest upgrade in cell phone networks that allows video to be streamed on demand.

Although the market is small and lacks the critical mass to attract major advertisers, technology moves fast. In a report last week, eMarketer predicted that by 2008 there will be nearly 70 million broadband households in the U.S. “Broadband telephony should be commonplace by the end of the decade,†predicted Wiesner, who believes that companies are choosing to experiment now and benefit later. “It’s a landgrab. It matters that you were there first.â€

No longer is the technology in the gee-whiz theoretical stage. “It won’t be 10 years down the road, it’s right around the corner,†said Nancy Tellem, president of Viacom’s CBS Paramount TV Entertainment Group. “If people are interested in a brand, they want to find it everywhere in their lives.â€

Not only does Viacom own young-skewing brands in its MTV Networks portfolio that are ideally suited for early adopters, it also has a strong broadcast brand in CBS. Although the company didn’t spell out the details of its new media strategy, executives confirmed there are several new projects in the works in each one of the company’s divisions. Some have already begun. In January, MTV Networks jumped into the wireless world. Through an agreement with Verizon, the company will offer made-for-mobile programming associated with MTV, VH1, CMT, Nickelodeon and Comedy Central. Some of the abbreviated program brands that will be available include VH1’s Best Week Ever, Comedy Central’s The Daily Show and the Joke of the Day, and Nick’s Dora the Explorer.

“After some years of swinging toward distribution, it’s clear the balance of power is moving back toward content,†said Tom Freston, co-president and co-COO of Viacom during last week’s earnings call. “Technology will play a big role in creating significant new opportunities for content as we connect with our audience in new and expanding ways, be it in broadband, wireless and through other consumer electronics devices. We expect to be big participants.â€

For example, on March 7, Viacom’s Showtime, through a deal with Yahoo!, will webcast the premiere of Fat Actress starring Kirstie Alley at 10 p.m., the same time the series will debut on the pay-cable net. AOL staged a similar premiere event with the WB for the premiere of Jack & Bobby. In radio, Infinity Broadcasting last year embraced an Internet strategy through a deal with America Online to stream five of its biggest name-brand radio stations in New York, Chicago and Los Angeles. It recently launched online WHFS-FM, the leading Rock brand in the nation’s capital, and in the next few weeks, it will stream its major-market News/Talk stations.

There are even new high-tech delivery technologies Viacom is exploring for its outdoor division that allow advertisers to append their static outdoor signs by delivering messages directly to phones and PDAs, something with which Frito Lay is experimenting for its Doritos brand in New York.

Viacom isn’t alone in mining emerging technologies. Through an agreement with Verizon Wireless, Fox Entertainment Group earlier this month launched original “mobisodes,†one-minute, bite-sized episodes designed to be consumed on tiny screens. One mobisode, 24: Conspiracy, is based on Fox’s prime-time drama, 24. The other two, Love and Hate and The Sunset Hotel, are original concepts.

During last summer’s Olympics, NBC’s deal with AT&T Wireless delivered a host of content to phones including video highlights from a dedicated Web site, results, trivia and a sweepstakes. NBC expanded that strategy last fall for new shows such as Las Vegas and Joey. And Disney’s ABC delivers its news content to cell phones through a deal with Sprint and has been actively testing various formats including ESPN Mobile and disposable DVDs.

With the regulatory environment in Washington effectively stalling consolidation and blocking the easy avenues of growth in broadcasting, big multimedia companies almost have no choice if they want to grow, even though the new technologies remain unproven. “The old media companies are trying to figure out whether consumers will receive content in some sort of ad-supported format, or whether consumers will pay for it,†said Rob Arena, general manager of the interactive division at Carton Donofrio Partners. “They haven’t figured that out yet.â€
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