Viacom is a formidable force in the youth entertainment segment, especially in music and gaming, particularly focused on teens and young adults. Its kids focused offerings are also significant, although perhaps not quite at the level of Disney.
Viacom has entered in an agreement with Yahoo! for a multi-year sponsored search and contextual ads deal to all of Viacom’s 33 broadband sites, including MTV.com, VH1.com, Nickelodeon.com, Comedycentral.com and BET.com. The Company is expected to receive 70% to 80% of the revenues from Yahoo ads that will be served on Viacom sites. The Company is also looking at other partnerships like one with Joost, an Internet television service, to increase users and revenues.
The Company has identified online gaming as a key focus area and plans to invest over $500 million over the next two years to develop its online gaming business. It’s gaming sites Shockwave.com, AddictingGames.com and Gametrailers.com have already caught the imagination of the casual gamers. MTVN is focused on developing three primary gaming experiences, including online and mobile casual games that appeal to kids, young adults and women.
While gaming is a stated area of acquisition focus, Viacom should not ignore its long-standing stronghold in music. Web 2.0 startup activity is rampant in the social music segment, and many of these micro-cap ventures would be looking to exit over the next 9-19 months.
Viacom has been rapidly growing its online properties and have been adding gaming, community and e-commerce features to its site. The Company is on course to exceed its 2007 revenue forecast of $500 million in digital revenues. The execution of the Company’s digital strategy is moving forward at a rapid pace. With its powerful brands, Viacom is uniquely positioned to build a powerful digital presence. In doing so, it would need to address the Community, Content, Commerce, Search and Personalization aspects for each brand, in Context. It already has dipped its toes in the immersive user experience arena. Over time, enhancing this expertise can yield for them very sticky communities.