Tangled Up
Networks rethink role played by Web outlets
By Karen Brown
from the June 4, 2001 issue of Broadband Week
When the Internet was still a hopeful place, many cable and broadcast networks hatched expansive plans to create online meccas--sites that not only kicked up broadcast marketing but also served as a stand-alone, content-rich entertainment beacons for the Web faithful.
That was then. This is now. With promises of Internet riches punctured by rough market forces, the trend among many networks is to return to the marketing gospel.
Rick Ellis, a media analyst and CEO of television information portal allyourtv.com, says the networks are more than a little cautious about starting up ambitious online arms these days, particularly big broadband content portals.
"I think if you look at them you see they are scared to death at this point," Ellis observes. "They have gotten beaten up like a piñata. NBCi, obviously, didn't turn out that well for them."
The Peacock Network's Internet venture is indeed a case in point. NBC merged its Internet assets under the NBCi banner in 1999 and spun it out in a separate IPO, retaining a minority stake. After watching the fledgling company's stock drop into the $2 range from a 52-week high topping $28 a share as Internet advertising plummeted, NBC in April announced it had agreed to buy up the remaining shares and fold NBCi's operations back into the mother ship. That transaction is expected to close this summer. In the meantime the site has returned primarily to acting as an online program schedule information outlet.
More conservative strategies have fared better. Although it has added original programming tied directly to TV series, HBO has not changed its online focus, according to Sarah Cotsen, vice president of HBO Interactive Ventures.
"We see HBO.com as a marketing and promotional site. In terms of our evolution, we have always given our subscribers sort of the basics, which is schedule and programming information," Cotsen says. "But over the last couple of years we have added communities--created online communities around our franchises--and that has been a really great thing for us at HBO.com, because the fan communities have really embraced us."
Marketing can include original content, and this year HBO has started extending series storylines online, offering such things as the "personal diaries" of series characters and video not seen on air.
"We do it for a couple of reasons," Cotsen says. "One, it keeps our subscribers' interest between episodes and seasons, but it also gives new people--potentially new subscribers--a taste of the show with the hopes of signing them up as a subscriber."
Cotsen says that unlike at other networks there are no plans to scale back HBO.com. The online group has plans to add even more extended content from HBO series, relaunch the "Sex in the City" site this fall and add a site promotion based on the upcoming Steven Spielberg-Tom Hanks' World War II collaboration, "Band of Brothers."
"HBO has been really smart about the way they've created online content," Cotsen adds. "We don't spend a lot, and we focus on our key franchises, and we try to build our community with just mostly user-generated content, and try to leverage our programming group."
Scott Rigby, CEO of thoughtbubble productions, also has seen the shift among networks toward more conservative Web plays. His company creates interactive content for entertainment providers, including some 30 television networks.
"I think people have, and perhaps appropriately so, been taking a tentative approach to developing original content specifically on the sites and building sites into their own businesses," Rigby observes.
The networks thoughtbubble works with are focused now on the bottom line for Internet products, and Rigby acknowledges there may be some that choose a full-scale retreat.
"I think that would be just as big of a mistake in the long run as the mistake that was made to jump into it without really analyzing the model," he says. "Somebody is going to come back to this. The strong media brands will have the pole position if they take it--to figure out how you are going to be able to create content and be able to leverage the growing audience for this sort of material into a real business model with significant revenue streams."
Indeed, revenue is the source of consternation for the networks, according to allyourtv.com's Ellis. "From the network perspective they are really frustrated because they want to be able to figure out how to monetize all of that extra money they are spending," he says. "The problem with that is it is really expensive for them to do it, it is time-consuming to set up and no one's quite figured out how to make money off that."
Then there is the quality issue. Sites run by fans often are more interesting than the networks' official outlets, and that is another source of consternation. Not all the networks seem worried about that aspect though: NBCi even lists links to scores of fan sites from its home page for "ER."
"Most of the networks have made some effort," Ellis notes. "But I have seen very few things out there where I have said, 'Wow, I must see this again,' and I think part of it is everyone is scared ... you don't want to make a mistake because they are just so darned public mistakes."
For now, Ellis doesn't see much hope that networks will revive their faith in their online ventures.
"I think most people should think of a network site as essentially being a really fancy direct mail. That's really what it is--it lets you know your favorite show's coming up, it lets you maybe chat or swap messages with other fans, but that's about it," he says. "And it's really too bad ... I am a big fan of the possibilities of broadband and of the sites, but so far I think it is like in romance, a lot of people are destined to be disappointed."
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