Viacom (NYSE:VIA) is serious about the Internet, and it wants to be a major player in cyberspace. Since cyberspace is a pretty darn big place, its latest initiative is based on the concept of strength in numbers.
Viacom's MTV Networks intends to launch more than 20 websites geared toward its vast, valuable audience (valuable because it's young, hip, and likes to spend cash, something advertisers love). MTV's brands will promote these websites -- some based on existing Viacom programs, and others original to the Web. Their goal is to bombard users with all forms of entertainment related to a given theme or show, and hope that as many of those users as possible will stick around.
Sumner Redstone apparently feels as if his company missed the boat on the whole user-generated/social-networking craze. With Google (NASDAQ:GOOG) and News Corp. (NYSE:NWS) already major players in this arena through their respective purchases of YouTube and MySpace, Viacom wants to ensure that it has a significant footprint in the marketplace as well. But Viacom won't have to shell out more than a billion bucks of precious capital to do so. Starting from scratch seems like a smarter -- and cheaper -- approach.
Can these MTV domains possibly break through the YouTube/MySpace stranglehold? I'd say it's more than possible. The Net's ever-changing nature tends to dry up competitive moats. To succeed, Viacom will have to focus heavily on user-generated concept, and figure out how to make users feel empowered by its brands, rather than exploited. Obviously, giving users a chance to see themselves or their productions on one of Viacom's cable properties could be a big help there.
Content companies such as Disney (NYSE:DIS), Time Warner (NYSE:TWX), and General Electric's (NYSE:GE) NBC Universal are increasingly betting on the broadband age, believing that video-on-demand channels will eventually dominate distribution. And in this era of reality programming and cheap desktop production tools, user-generated clips increasingly seem like an ever-more-valuable commodity.
Leveraging the MTV brand and portfolio is a smart, economical way for Viacom to ramp up its online strategy, though I'll be curious to see how many of these sites survive in the long run. Sumner Redstone has been dissatisfied with the performance of Viacom's stock since it split from CBS. We'll have to wait and see whether this new Internet strategy will eventually help its shares.
Past Foolishness on Viacom and its MTV brand:
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Fool contributor Steven Mallas owns shares of Disney and General Electric. As of this writing, he was ranked 1,662 out of 14,426 investors in Motley Fool CAPS. Don't know what CAPS is? Check it out. The Fool has a disclosure policy.
