Oxygen: Women at center of convergence

As the upstart company gets ready to launch, industry watchers are eyeing its strategy to exploit the mounting PC-TV convergence wave by targeting an immense and obvious audience: women.

Oxygen Media is waiting to exhale.

While the upstart company gets ready to launch its Web site next month along with a 24-hour sister cable channel in 2000, industry watchers are honing in on Oxygen's strategy to exploit the mounting PC-TV convergence wave by targeting an immense and obvious audience: women.

It's no secret that there is serious money to be made by serving a demographic that accounts for more than half of the world's population. In the United States, 101 million adult women watch television, according to Nielsen Media Research, and more than 22 million are online, according to Forrester Research. That women hold the purse strings in many households sweetens the pot.

A snapshot of the Net landscape shows old and new media scrambling to stake claims in what some skeptically call the "pink content" market. America Online and NBC have lined up behind IPO superstar iVillage, and Cosmopolitan and Redbook publisher Hearst's new media arm merged with Women.com in January. Moreover, a Time Warner executive confirmed rumors that the media giant is mulling a cable TV channel to compete with Oxygen.

But Oxygen's founders insist they aren't looking to simply join the growing flock of lipstick/retirement tip Net sites or cooking shows geared toward consumers with the XX-chromosome. Oxygen is aiming to be a media empire.

The company's prime weapon is its marquee, which reads like a "who's who" in the entertainment business.

Founder Geraldine Laybourne is the former president of Disney-ABC cable networks, as well as Nickelodeon. Oprah Winfrey's Harpo Entertainment Group is a partner, as are Marcy Carsey, Tom Werner, and Caryn Mandabach, the masterminds behind TV hits such as The Cosby Show, Roseanne, Grace Under Fire, and Third Rock From the Sun. Silicon Valley consultants, such as Oxygen vice chairman Lawrence Wilkinson, also are backing the venture.

For the Oxygen partners who come from television, the venture is a move forward into the new medium. "Much of our programming is working on the convergence of the computer and the TV," Werner said. "I would hope everything on our service looks a little bit different so you don't feel like you've wasted your time."

Even with the talent mine, the venture has required hefty investment and a keen understanding of the differences between TV and Net users. Moreover, its market is laced with competitors who have a head start.

Laybourne is relentless, however, and not short on confidence.

"With the explosion See special report: 
When worlds collide of new technologies and the convergence of the Internet with traditional media, I see many of the same conditions today that existed 20 years ago when we invented Nickelodeon," Laybourne said in a statement when she announced Oxygen.

Along with the partners, ABC is a financial backer and will develop shows for Oxygen, bringing the company's original programming budget to $75 million for the first year, according to reports.

Laybourne's lofty goals meet the large budget. She has said her converged network will have 50 million subscribers in 5 years. By comparison, Lifetime Television for women, which is 15 years old, has about 73 million viewers to date. Lifetime is working on building up its Web presence, executives say.

Even so, analysts agree that Oxygen's cross-platform plan for women could be a breath of fresh air, pardon the pun. That's because unlike the females they seek to attract, many so-called women's sites are cut from the same cloth when it comes to advertising and content.

"We are seeing a lot of duplication from one women's site to another," said Lisa Allen, a senior analyst at Forrester. "So blending cable and the Web is good because both cater to cultivating niche communities, which will become increasingly important to further erode network TV's mass appeal."

No doubt there is a great opportunity to deliver something for everyone--from the Dawson's Creek clique to Friends watchers and Martha Stewart disciples. The key, however, is not only to tap these existing female niches but to carve out new ones by speaking to underrepresented interest groups.

"The trick is not just targeting women, but all these specific verticals," said James Preissler, an Internet analyst at PaineWebber.

Content is expected to be Oxygen's strong point--after all, its partners arguably are some of the most powerful minds in television. But fostering true crossover between TV watchers and Net users won't happen overnight. The media may be converging, but when it comes to TV vs. PC content, consumer behavior and the cost of doing business are still dramatically different, analysts say.

One challenge Oxygen faces is getting picked up by cable providers, which is harder to land than a link on ChickClick. For now, Oxygen has announced one carriage deal with TCI, which guarantees 7 million subscribers over the first few years.

Analysts also predict that women's sites will battle it out over exclusive deals with high-speed Net access providers. "While building their Web businesses, each site will stake claims in the broadband market and look to partner with @Home or [Time Warner's] Road Runner," states a Forrester briefing paper on iVillage's business deals.

Still, the promise of PC-TV convergence, in which consumers increasingly can flow between entertainment and interaction, is not lost on any media company.

"The secret is great, compelling content and giving the user something to do," said Eileen Ratnofsky, manager for communication and network cross-promotion for Discovery Online.

When the Discovery Channel beefed up its Net team and cross-promotion efforts last August, its online traffic surged from 10 million page views per day to up to 18 million per day. Like Oxygen, Discovery also feels women are underserved by the media. "Our goal in 1999 is to create more that relates to women," she added.

Oxygen's strategy: Something old, something new
Oxygen's plan is to beat rivals with content and reach beyond the mainstream. Winfrey has said the company "will focus on women and treat us like the busy, smart, and complex people we are."

But Werner puts it more bluntly. "Not everybody has to be 28 years old, white, and pretty," he said. "You're going to see all sorts of colors and ages on our shows."

Oxygen wants to create TV personalities--like Winfrey--who will drive its community of viewers online where personalization and e-commerce will be waiting. However, Oxygen will diverge from the well-established Lifetime by going after tech-savvy teens as well. A programming block called "Tribes" will feature "real TV," such as talk shows hosted by peers or a show where young women are given handheld cameras and asked to film their daily lives.

"My own daughter, the very first thing she does when she gets home from school is go to the computer and start chatting with her friends," Werner said. "We feel that teenagers are a somewhat neglected segment of the population, and this is 70 million people born after 1979 who have grown up with a computer."

Other programming blocks will include: a morning TV show called The Hive in which women will send in topics and questions via the Net; Working Lunch, which will target telecommuters and those on their midday breaks with financial and business content; and original comedy shows and movies hosted by pundits in the evening. Extreme sports, travel, and a show about single life are other areas Oxygen is exploring.

Oxygen's online play
Online the focus will shift to common Net buzz words: tools, aggregation, and customization.

"We want to create a personalization area for investments, for example. The challenge is to not have it be this testosterone-based, day-trading site like the ones out there for men," said Sarah Bartlett, editor in chief of Oxygen online.

Oxygen already is building its Net portfolio with prime positioning on America Online, which boasts that 51 percent of its members are women. The company also purchased four sites from AOL: Thrive, Moms Online, Electra, and Oprah Online--which pull in about 57 million page views per month, according to the company.

But while Oxygen builds its business, TV competitors such as Lifetime also are quietly beefing up their Net strategies.

"We think that eventually we could have a very good e-commerce business on Lifetime, and we have a lot more younger people visiting the Web site," said Jane Tollinger, executive vice president at Lifetime. "And we have a 15-year relationship with women," she added. "iVillage and Oxygen don't have that household penetration."

No matter, say Oxygen's architects--there is room for everyone.

"I mean, $17 billion was spent on NFL football by the networks to reach men for a few hours a day on Sunday. Can you imagine that being spent in any form to reach women?" Werner quipped. "You have to try and connect with that market if you're at all interested in being successful."

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