Seeking Alpha
Profile| Send Message|
( followers)  

Echo To All submits: So, two Old Media companies, News Corp (NASDAQ:NWS) and NBC Universal (NYSE:GE), are coming together in an attempt to create a platform that will essentially be the center of distribution for their content. Sounds interesting. They are finally taking more of a controlling roll within the Internet. (I will use the name Clown Co to describe the ‘nameless entity’ because I like the name it was given by others within the blog-o-sphere.)

From what I gather, they will be creating Clown Co, which in turn will be used to upload content from users and their content libraries (so far). Clown Co will then embed ads, and distribute those ad-embedded videos to their distribution partners. Currently their distribution partners pretty much control around 45% of the online video market share space. This all sounds goods for Clown Co. Also, Clown Co’s distribution partners do not include Google (NASDAQ:GOOG) and Youtube, which controls about 50-55% of the online video market share. Clown Co said they are open to all partners, but we must wait and see.

But, what does this really mean?

It means Clown Co. will most likely control the ads embedded within the content it distributes, which means it is the same formula being used via the traditional network distribution. Which means it ignores the preference of the users in the individual sites it will be distributing to. I do not know if targeted advertising matters when video is involved, but it does tell me Old Media probably does not care enough about it to utilize it. (Or maybe the ads will be relevant as per the specific content.)

Basically the distribution aspect of Clown Co reminds me of another that already exists. It is called Veoh.com. I can only imagine Veoh.com’s goal is similar to Clown Co - to ultimately distribute high quality content all to multiple video sites, not just their site.

If this is what Clown Co decides to do, so be it. I do not really care how NBC or FOX puts their content on demand via the Net, so long as they do it. But if I were an investor of NWS and GE I would be pretty upset that they are trying to re-create the wheel. I mean are their ambitions to create “the largest ad platform on earth” realistic? Do they have the knowledge of the Web and video site users to not mess up Clown Co? Will management egos get in the way?

If Clown Co wants to do the job of embedding the ads, maintain and create the ad inventory so be it. Ultimately the money is made via the amount of times the clip is viewed. As such, Youtube should become a distribution partner, assuming terms are fair. (Of course, this assumes Old Media will actually create a forum so great.)

What if others decide to pursue a similar distribution model? Will NBC and FOX not license their content to other companies because of Clown Co? Will they sacrifice potential profit for control?

Also if other companies, such as Google, who understand internet users and advertising on the web, just want the raw content so they can utilize their own ‘Ad’ embedding system to maximize profits, will FOX and NBC provide the content?

There are still way too many questions regarding Clown Co. I just wish the Press Release was open to all reporters/bloggers so real questions were asked. The Press Release in-it-of-itself tells me the creators of Clown Co still do not understand the Net and its Users.

Source: News Corp/NBC Enter the Online Video Market: What Does this Really Mean?