Alliance to create online video network

Rival to YouTube will include movies

March 23, 2007|By Cox News Service

NEW YORK -- An alliance of media and Internet giants led by NBC Universal and News Corp. said yesterday that it will launch an ad-supported online video network this summer, creating a new player in a market dominated by Google Inc.'s popular YouTube site.

The new, unnamed service would offer thousands of hours of free TV shows and video clips, distributed online at a new Web site and by four partners with big audiences: Time Warner Inc.'s AOL, News Corp.'s MySpace.com, Microsoft Corp.'s MSN and Yahoo Inc.

The service will also sell longer video downloads, including many movies.

The announcement comes at a topsy-turvy time for the online video world, with audiences growing rapidly, homemade videos achieving fame and an explosion in advertising spending.

As media companies scramble to master the new market's rules and discover ways to make money, legal battles are brewing over the sharing of some shows.

This month, Viacom Inc., owner of networks including MTV and Comedy Central, sued Google and YouTube, seeking more than $1 billion for what it called vast copyright infringement from uploaded programs such as The Colbert Report.

For NBC, a General Electric Co. division that owns cable channels and the Universal film studio, and News Corp., which owns the Fox media properties, the venture means more online control over their shows. It also provides a new vehicle for attracting advertisers.

Initially, the videos offered will include TV shows such as Heroes, 24 and The Simpsons, and movies such as Borat and Little Miss Sunshine.

While the new site will accept videos created by users, executives played down any competition with YouTube.

"This is obviously not a YouTube killer," Peter Chernin, News Corp.'s president and chief operating officer, said in a conference call with reporters. If it were, he said, it would be a stand-alone site without distribution partners.

Chernin said he would not rule out working with YouTube and Google, and said he had spoken with Google chief executive Eric Schmidt yesterday.

"They are considering this," Chernin said. "We are, in fact, willing to sit down and talk to anybody who wants to distribute this provided that they meet our economic terms and, obviously, our copyright-protection terms."

After the announcement, YouTube spokeswoman Julie Supan said: "We value our relationships with NBC and Fox as they continue to upload content to promote their signature programming and look forward to working with them in the future."

YouTube was the most popular video site in February, with more than 34.4 million unique visitors, according to comScore Media Metrix. Yahoo's video site followed with 19.8 million, and AOL had 16.6 million.

YouTube also accounted for nearly 1 billion of the more than 7 billion videos streamed online in January, comScore said.

"Part of the charm of YouTube is the mixture of professional content and consumer-created comment and commentary and linking," said David Card, a senior analyst with Jupiter Research, adding that the new alliance has something else in mind.

"They're trying to build something that looks like a TV network but is online," Card said

Executives announcing the new service sought to emphasize its differences.

"For the first time, consumers will get what they want - professionally produced video - delivered on the sites where they live," Chernin said. "This is a game-changer for Internet video."

Kevin Johnson, president of Microsoft's platform and services division, said the alliance "proves that you can deliver quality online video entertainment and protect intellectual property and copyright at the same time."

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