The growing numbers of broadband homes is giving rise to new forms of broadband Internet content and packaging.
Two years ago, Real Networks launched the first of what is now more than a dozen subscription services built on news, sports and entertainment franchises.
A bit less than three months ago, a second party entered the subscription Internet-content party: Yahoo, the giant portal service that hopes to parlay its reach—80 million people at home or at work—in the broadband space.
Yahoo launched its Platinum subscription service in March with content from Showtime (boxing), National Hockey League, National Geographic, CNBC, Major League Soccer, BBC America, ABC News, CBS Marketwatch, NASCAR, Discovery, The Learning Channel, Animal Planet, Travel Channel, the Weather Channel, CBS's Survivor Insider
and Warren Miller Entertainment, among other content providers.
Yahoo is trying to reach the broadband audience at both work and home with that content lineup. "Very few people have cable in their workplace," said Jim Moloshok, senior vice president of media, entertainment, information and finance, at Yahoo. "Their computer becomes their TV."
But as broadband penetration closes in on 20 million homes, Yahoo launched Yahoo Platinum with an eye to that audience also, Moloshok said. "People who sign up for broadband go through different eras. The first phase is 'I can get web content faster.' The second phase is a whole series of downloads … Then one day, there's nothing else for me to download," he said. "The next question is, 'What can broadband give me that narrowband can't,'" Moloshok said. "They start spending time using this as a distribution source for broadband media, for streaming. They start using it in a different way and it happens amazingly fast."
That's where Yahoo Platinum fits in.
Yahoo differs from other packagers of broadband content because of its portal reach and its presence on desktops. But the company also has a decided entertainment history, with both Moloshok and Yahoo chief executive officer Terry Semel coming from Warner Bros., Semel from the film side and Moloshok from the syndication side. Moloshok, however, also led Warner Bros. early online efforts in the 1990s, giving him a blended entertainment/online history prior to joining Yahoo.
Moloshok said Yahoo Platinum is resonating at both home and at work. "We have huge usage during the day. A lot of people at work are connecting. We have large success in the entertainment area. But there are also lot of people who come to Yahoo in the evening. We have mix of home and work users."
Actually, Yahoo has been in the streaming space for awhile, having bought Broadcast.com from Mark Cuban in 1999. Since then, broadband has continued to grow along with the public's appetite for online video news, evidenced by usage during the 9/11 disaster and the Iraq war. "They want to witness history in front of themselves," Moloshok said.
Yahoo's reach of 80 million home- and work-users is larger than the entire U.S. cable industry, Moloshok points out. The company estimates its broadband reach at 22.3 million unique visitors. Its worldwide reach is 220 million homes. "Our home page reaches 12 million to 13 million unique people a day," Moloshok added.
Yahoo News reaches a unique audience of more than 16 million unique users a month, Moloshok said, which is on par with cable's news networks.
In fact, Yahoo may mean as much to fledgling cable programmers, as well as current networks, as to cable operators. That large reach has drawn cable networks to advertise on the service. "The trend is to make Yahoo a marketing partner," he said. Sci Fi Channel and USA Network have purchased ad time on Yahoo for Taken
and Monk, respectively.
Program networks can also get a second or new life from content by placing it on Yahoo Platinum. CNBC provides news stories throughout the day for an at-work audience that may not have access to a TV. Yahoo Platinum carries 40 minutes of exclusive, behind-the-scenes footage from Survivor. "This allows you to tap new revenue streams from content you've already paid for," Moloshok said. "And you can get branding and sampling across the Yahoo Network.
"For cable networks, we have two great advantages. Many cable networks can't get to the consumer during daytime. We can distribute cable-network programming to consumers at the workplace during daytime and create a revenue stream for them," Moloshok said.
Perhaps more important, Moloshok is looking for new cable programming ideas that can't get launched on cable systems, but serve niche audiences that Yahoo can find through its vast user-group segment. "I'm very interested in, and actively having discussions in, that area. We present an alternative source of distribution and we create a way they can get branding in front of consumers. Consumers can learn there is a new channel out there and it gives new cable networks a chance of getting in front of consumers."
Moloshok envisions Yahoo Platinum as an alternative cable system for the workplace, with the added ability to serve niche audiences. He points to the television launch of The Tennis Channel and says the Yahoo Tennis section under sports draws millions of hits.
As for future Yahoo Platinum product, Moloshok is looking to expand in news and sports, as well as niche audience fare.
"News and sports are very important," he said. Yahoo carried all the Indy 500 qualifying races throughout race week and also carried the first 56 games of the NCAA men's basketball tournament. "Sports is wonderful for acquisition," while news is number one in consumption even though people do not rate it highly prior to subscribing to the service," he added. "News reduces churn."
"We're looking for entertainment affinity groups," Moloshok also said, to build on the success Yahoo's had with CBS's Survivor
and Fox's American Idol. It recently picked up Fawlty Towers
TV episodes from the BBC. "Fawlty Towers
has a huge affinity group across Yahoo," Moloshok said. "We see that and say: 'This is gold'."
"What we're looking for in a genre is entertainment that is fresh and new and has a level of exclusivity. A new cable network has great value to me," he added. "To us, it's the only place they can get it, especially in the workplace."
'Don't compete with cable'
Yahoo has some subscription gaming content, while its relationship to movies and music have been largely marketing-related.
"We sell movie tickets through movetickets.com," Moloshok said. "We have to place bets where we get the biggest return." Movielink and CinemaNow are third-party companies, complicating their revenue picture, and movie downloading is not yet a widespread practice, he said.
Yahoo has partnered with pressplay, the online music service, largely through a marketing arrangement.
Yahoo does have subscription Games on Demand, using technology from Extent. Users can rent a game for three days.
In addition, there's a marketing deal with SBC Communications to help them sell its DSL service through the site. Yahoo Platinum is integrated into that offering.
But Moloshok also is open to working with cable operators and networks. "Yahoo Platinum is in the market to help cable systems and help cable networks," Moloshok said. "We don't compete with cable. We complement cable and promote their content and we want to work with both of those entities."