Windowing Central to Viacom’s Online, Mobile Video Strategy
Imposing the right window determining how soon consumers can watch Viacom shows online or on mobile devices is vital to the company’s strategy in extending its distribution to the platforms, CEO Philippe Dauman said Thursday on the fiscal Q1 earnings teleconference. “A window makes it complementary” to Viacom’s traditional businesses “and makes the revenue that we're getting under this deal incremental,” he said. Dauman was referring to a new deal with Hulu that will bring some Viacom shows back to Hulu.com and add programming to Hulu’s nascent subscription service, Hulu Plus.
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The deal will give Hulu Plus subscribers access to more than 2,000 episodes of Viacom shows, and new shows will be added 21 days after they're on TV, Dauman said. “We look at windowing not just on an aggregate basis, but based on particular shows and genres,” he said. For instance, episodes of The Daily Show and The Colbert Report will be available on Hulu the day after they air, rather than after the three-week window for most programs, because they're “topical shows and we have a new show every day,” he said. Viacom has found that streaming those shows the next day on their own websites has increased their cable audience, he said.
Viacom was attracted to Hulu Plus by the prospect of earning both subscription and ad revenue, Dauman said. “We are very interested in the new business plan that Hulu has come forward with, because it replicates the dual revenue streams we enjoy in the traditional distribution realm,” he said. As new distributors gain momentum, they'll be able to pay more for programming -- a boon to content owners such as Viacom, Dauman said. There was evidence of that in Viacom’s deal with Netflix to stream movies from its Epix pay-TV network, he said. “The amount that Netflix was able to pay increased significantly in the more-than-a-year that we were having discussion with them,” he said.
All the new online distributors want to license Viacom content, Dauman said. “We look at what their economic model is and what the potential is for us” before deciding whether to work with them, he said. “We like the dual revenue stream, but different distributors will have different models and we'll have to explore those,” Dauman said. Viacom is also looking more closely at mobile distribution as mobile networks’ capacity increases, he said.
Fiscal Q2 sales at Viacom fell 5 percent from a year earlier to $3.8 billion as weakness in its home entertainment businesses offset ad sales and affiliate fee growth, the company said. Revenue at its media networks gained 6 percent from a year earlier to $2.38 billion and operating income at the unit increased 7 percent to 1.05 billion. Profit fell 11 percent to $620 million.