News Corp. (NWS-A) and NBC Universal (GE) have finally taken the step and are about to officially create an alternative site to YouTube and partner with some of their chief competitors to give a legitimate battle over the video space.
One of the keys behind their strategy is that they believe that people are tiring of user-generated content and are ready for a higher quality online video to watch. This is something that has needed to happen as nothing has really been proven yet on either side of the fence on whether their assertion that people want higher-quality online video or prefer user-generated video. Now we'll begin to see what consumers decide when the alternatives are offered to them.
This is good for the industry to me, because when several traditional media companies announced this months ago, they typically couldn't come to agreement so the initiative fell by the wayside, making them look weak, uncooperative and unsure of themselves.
Knowing that a larger portion of marketing dollars will continue to grow online for years, the companies want to get a much larger piece of the pie than is currently possible with Google. At this time Google is expected to receive almost one-third of all online advertising revenue for the year, says eMarketer.
Another issue the companies are dealing with is that they don't want to be in the position of relying on one distribution company online, which for the most part, YouTube and Google represent at this time.
So they're also forming parterships with online portals Yahoo Inc. (YHOO), Microsoft Corp. (MSFT), Time Warner Inc.'s AOL (TWX) and News Corp.'s (NWS-A) MySpace to distribute their videos through their sites as well; not an insignificant move as they represent hundreds of millions of viewers combined.
One media analyst rightly noted that "The biggest challenge will be to see how the parents of conglomerates work together in decision-making. Is this going to be a great press release, or will it actually function as a business?"
He's right. This can't simply be a marketing ploy. One of the weaknesses of the media industry is that they haven't been able to come together against the growing Google threat because they have been used to having their way for decades, with only each other as opponents. Now their entire industry is threatened and the traditional industry continues to be balkanized and unable to work together.
This is a good test to see if at least these two can make a go of it. But it does need to be a real business, not another typical Hollywood ploy. If it works for them, you'll see the other major media companies get on board in a very short time.
Comment Preview