Yahoo Enters New Arena
San Francisco Chronicle
Nov 14, 2004 5:00 AM PT
Is Yahoo going Hollywood?
It's a question that analysts are increasingly asking after the Sunnyvale, California, Web portal's hiring two weeks ago of Lloyd Braun, a former chairman of ABC television. He is charged with overseeing Yahoo's entertainment and media properties, including movies, music, gaming, sports, news and finance.
The thinking is that by recruiting Braun, Yahoo is signaling bigger media aspirations. Namely, the company is setting itself up for a day of digital convergence in which consumers watch films and listen to the latest rock bands online as much as on television sets and stereos.
"I give Yahoo a tremendous amount of credit for recognizing the shift in distribution of films and music from the physical to digital," said Phil Leigh, senior analyst for Inside Digital Media, a firm that follows the Internet entertainment industry. "What we are seeing is a beginning, just like cable programming in the early 1980s."
Driving digital entertainment's higher profile now is the proliferation of high-speed Internet connections. Nearly half of all users now log onto the Internet via broadband, downloading large video and audio files much faster than they could through traditional dial-up connections.
But Yahoo has had a mixed record as a Hollywood wannabe. During the dot-com boom, and even more recently, the company has been forced to retreat from several major entertainment initiatives.
Yahoo became infamous for excess during the dot-com boom when it bought online audio and video service Broadcast.com for US$5.7 billion in 1999. The service, which featured primarily dated, B-quality films, drew relatively few users.
Soon after, Yahoo introduced Finance Vision, an online business channel that was broadcast from the company's headquarters. It was canceled in 2002.
Then last year, Yahoo introduced a $9.95 monthly subscription service, Yahoo Platinum, that gave users access to online video and audio content, including the television shows "Survivor" and "American Idol." Just a few months later, the service was quietly shut down because of tepid interest.
Leigh, the analyst, believes that demand for such offerings is higher now, especially with all the new broadband users.
"What we saw during the dot-com boom was a prelude of what was to come," Leigh said. "All those ideas weren't bad, they were just ahead of their time." Braun's job is to bring unique content to Yahoo. His office is in Santa Monica and he is expected to use his Hollywood contacts to get access to their vast audio and video libraries and new productions.
During the Internet's brief history, unique entertainment content has been hard to come by. Many sites have offered much of the same programming, making it difficult to charge for.
Braun led ABC television until April, when the division's parent, Walt Disney Co., undertook a reorganization because of low ratings. Among the shows he helped create were "Desperate Housewives," "The Bachelor" and "Wife Swap." Yahoo has several other executives with Hollywood backgrounds, most notably Terry Semel, the company's chief executive. A former co-chairman of Warner Bros., he still keeps close ties to the movie industry, attending premieres and socializing with celebrities.
Jim Moloshok, an executive in Yahoo's entertainment properties, was also at Warner Bros. He is still with Yahoo, and will report to Braun.
Yahoo's entertainment properties include a movie site that features film trailers and reviews. There's also Launch, a music destination where users can listen to online radio and watch music videos.
To supplement its music offerings, Yahoo said in September that it will acquire Musicmatch, a music downloading service, for approximately $160 million. The site makes money through advertising and by charging for subscriptions to legally download music.
One deal that Semel holds out as an example of things to come is with Mark Burnett Productions, the creator of the hit reality show "The Apprentice" starring Donald Trump. Yahoo hosts the program's Web site.
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