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Viacom makes major online push

The company will join other media powerhouses with new online projects: one aimed at music fans and another for children.

Viacom has made its move.

The company today will join other traditional media powerhouses in announcing a major online push involving two projects: one aimed at music fans and another at children.

The online music "destination" site, which bears the working title the "Buggles Project" and is scheduled to launch in June, will offer "customizable entertainment, information, community services, and e-commerce," according to Viacom. As expected, part of the plan for the site involves the acquisition of Imagine Radio.

The pop music band the Buggles played the first music video on MTV--"Video Killed the Radio Star"--in 1981.

The children's site, with the working title "Project Nozzle," comes out of Viacom's Nickelodeon unit and is expected to launch in September.

The television channels will provide the new sites with at least $250 million in marketing support, executives said.

Viacom joins media giants Time Warner and Disney, which also have been building their online presence. Time Warner last month launched "destination" site ACMEcity, which lets users create home pages using authorized images from the company's TV shows, movies, animation, and music properties. Industry analysts have speculated that the company could be next among large media properties to acquire an Internet firm to further its online campaign.

Disney launched its Go Network last month, which brings together all its offline brands, including ABC News and ESPN, as well as online properties such as Infoseek and Mr. Showbiz. According to Media Metrix, was the fourth-most popular Web domain on the Internet for January.

One of the main strategic differences between Viacom and both Time Warner and Disney is that Viacom is creating separate destinations for its different audiences. The Go Network, on the other hand, links all of Disney's widely varying properties.

Viacom executives stressed that the new sites are not portals, which traditionally offer a vast array of aggregated content and services to appeal to a broad audience.

"We decided to follow the same strategy that we have used on television--a vertical strategy," Viacom chief executive Sumner Redstone said, adding that because Viacom already knows that it reaches its targeted audiences, "spending billions of dollars to buy a portal didn't seem like a judicious use of our resources."

Not surprisingly, MTV Networks chief executive Tom Freston echoed that theme: "Portals are about so many things," he said, and Viacom would rather "'super-serve' one audience at a time" than try to appeal to everyone at one site.

"Viacom understands where media is headed," said Barry Hyman, an analyst at Ehrenkrantz King Nussbaum. "Whether the new [sites] are successful, that's to be determined. But it's important they understand" the significance of the Web, even if they're "a little late."

Redstone said the final names for the sites will be announced soon. Although the children's site is likely to have "Nickelodeon" in the name, the music site will not, according to Matt Farber, senior vice president of programming for MTV Online.

The Buggles Project is going to be "a one-stop, all-genre destination," Farber said, which means it will include such categories as jazz, gospel, and classical, those that are not associated with either MTV or VH1. "We're creating the ultimate new brand that MTV and VH1 will live under but will include all the other genres."

Part of Viacom's strategy to offer all genres in a customizable format comes from its acquisition of Image Radio, which will be announced today.

Viacom will leverage Imagine Radio's existing services, which let users listen to preprogrammed channels or program their own. The Buggles Project will draw in revenue from advertising as well as e-commerce in the form of CD sales, concert tickets, and other merchandise. The site also will feature news, concert information, reviews, and community offerings such as chat and message boards, Viacom executives said.

Freston added that the addition of customizable features will allow the site to target ads more effectively. Also, the site is looking to introduce more media rich ads that incorporate audio and video, he said.

Farber stressed that the Buggles Project is part of Viacom's plans for broadband access and devices of the future, which could include further convergence between television and computers.

"We're creating all the digital assets that are there whether you're having a television experience, a PC experience," or one that involves a device that incorporates the features of both, he said.

Project Nozzle will have an "almost seamless" connection to Nickelodeon on television, Redstone said.

Kris Bagwell, senior vice president and general manager of Nickelodeon Online, said children who have grown up with the Web tend to distinguish less between the media, making integration between Nickelodeon online and Project Nozzle even more important. "The just want to go where they can have the best experience," he said.

Bagwell stressed that Viacom is committed to making Project Nozzle--which is scheduled to begin beta testing in June--safe for children. To gain membership to use all the site's services, for example, children will have to get their parents to register them. The site also will meet safety requirements set forth by the Children's Online Privacy and Protection Act and the Better Business Bureau Online.

Bagwell also noted that the commerce part of Project Nozzle will be directed at parents. To that end, Viacom also will announce today that it has acquired San Mateo, California-based Web developer Nvolve and Red Rocket, an online educational toy retailer that was formerly part of Viacom's Simon & Schuster unit. The Nvolve staff will build the core communications part of Project Nozzle, which will include email, guided Web tours, bulletin boards, and moderated chats, Viacom said.

Project Nozzle also will "complement Nickelodeon's relationship with America Online," Viacom said. Nickelodeon has a site within the AOL Kids Only channel.

Along with its upcoming destination sites, Viacom is creating a new division for its online interests, which will have a satellite office in the Silicon Valley city of San Mateo.

Separately, Viacom still expects to sell as much as 20 percent of its Blockbuster Entertainment unit in an initial public offering within the first six months of the year, Redstone said. The IPO is likely to preceed an eventual sale of all of Blockbuster, the world's largest video retail chain.

Bloomberg contributed to this report.