News Corp., NBCU Form Video Distribution Partnership
Thursday morning, executives from the parent companies of NBC and Fox announced they have reached agreement on a deal to create a single Web site for the distribution of what they're calling "premium content," implying that non-advertising supplemented programs may carry a streaming fee. NBC Universal and News Corp. will form a joint entity with its own management team, supplied by NBCU during a transitional period before permanent managers are selected.
There are several surprises in this deal, the first of which is that the Fox Interactive Media division of News Corp. does not appear to be a direct part of the partnership. Instead, to stave off attempts by individuals who may try to "share" clips of Fox or NBC content on their own initiative, the new company - as yet unnamed - has already struck redistribution agreements with MySpace, placing FIM in a subsidiary role, along with AOL, Yahoo, and MSN.
In other words, this isn't a MySpace/NBC deal; News Corp.'s participation in the project goes much higher up the chain, and the deal could conceivably have been initiated anyway had MySpace not been purchased by News Corp.
FIM president Peter Levinsohn did make an extraordinarily revealing comment in his prepared statement this morning: "By delivering the new site's content to our more than 65 million users, we can build on MySpace's position as a leading destination for online video, and enable content creators to tap into the power of social networking. The ability to embed video clips within over 160 million profile pages will empower members of the MySpace community to view, share and truly interact with some of the entertainment world's most popular content."
Let's review that for a moment: Levinsohn is anticipating that content creators on MySpace will be interested in embedding selected clips from NBC, Universal, and Fox's network and motion picture studios in their pages, rather than just linking to it or talking about it. He's hoping everyone - all 160 million - will join in, sharing priceless moments from yesterday's "Prison Break" or "Friday Night Lights."
Many of those clips will be ad-supported, and the new company has already struck deals with principal advertisers, including Intel and General Motors. So the advertising will come along with the sharing, one would conclude. As for the sharing of other "premium content," especially the non-ad-supported variety, it isn't clear at present who foots the bill for the viewing - the person who embeds the video in her profile, the user who clicks to view the video, or a little of both.
Yahoo CEO Terry Semel's comments this morning speak to that issue to some extent: "We believe that this relationship underscores Yahoo's respect for content owners and copyrights, and positions us as one of the premier distribution sites on the Web for entertainment programming."
How so? This morning's statement refers to the creation of "an embedded player customized with a look and feel consistent with each site, making the offering organic to each destination." It does not say whether this is a Flash or WMV player or a new format, or whether the new company has made a decision on that matter yet.
These aren't the only head-scratching issues to emerge from this morning's joint statement. Microsoft's participation in the deal is being attributed to MSN - the brand that Microsoft executives had earlier stated was in transition, toward what was supposed to be the Windows Live platform. Top managers working with Windows Live have left Microsoft in recent weeks; and Microsoft division president Kevin Johnson, in the joint statement, referred to MSN by that name.
Johnson also referred to the alliance as though Microsoft were a member, though other parts of the statement made it clear NBCU and News Corp. were fronting the monetary investment. "Our alliance proves that you can deliver quality online video entertainment and protect intellectual property and copyright at the same time," reads Johnson's contribution. "We look forward to working together to explore additional opportunities to distribute this content across other Microsoft services and devices."
That's revealing in several respects as well: It looks as though no decision has been reached about making the new company's content available through PlaysForSure, Zune, Windows Media, or other Microsoft-managed DRM channels - only through the new dedicated player for now, which could conceivably bear the MSN butterfly but otherwise be no more Microsoft-specific than the version that will bear Yahoo's and AOL's skin.
The statement says the new company will consider licensing content from other providers, which means it's open to becoming a broader entertainment industry platform. This could be the biggest stretch of all possible speculations, but such a platform - if the rest of the content industry were to support it - could become the alternative to the delivery platform that high-definition Blu-ray and HD DVD players were supposed to introduce to households, but never managed to bring forth. Of course, the "if" in that speculative sentence above is huge: If the studios were likely to come together and support any platform, by now, it would already have been done.
The new company's site and distribution platform are expected to launch this summer.
12:15 pm March 22, 2007 - In a statement to BetaNews this afternoon, AOL spokesperson Anne Bentley shed further light on the partnership arrangement, all without invoking the name "AOL Video" - the company's exclusive site that was recently given an overhaul in its own competition with YouTube. Instead, Bentley referred to areas where the new NBCU/NC joint venture's content may be dropped inline here and there.
"Users will be able to easily play videos from this site without having to open an additional window or leave AOL's site," Bentley wrote to BetaNews. "For example, you might be able to read a story about Keifer Sutherland in AOL's celebrity news area and, with one click, watch the latest episode of '24'.
"And, as a distribution partner," Bentley continued, "AOL will receive a portion of the advertising revenues generated by the viewing of this new site's video content on AOL's sites."
She reminded us that Google has a 5% stake in AOL, but noted that Google was essentially one AOL partner and the new company would be another. However, it's not expected that the new company will purchase a stake in AOL.
Elsewhere, in a separate statement from Microsoft's Kevin Johnson released in the early afternoon, he continues painting the picture of his company playing a pivotal role in the formation of this new entity.
"We were thrilled to be a part of these discussions from the start," Johnson writes, "and share with our colleagues in the content industry our vision for delivering easy access to great content for consumers while accommodating critical copyright and intellectual property protections. This partnership proves we can do both and serves as a great foundation for future collaboration."