Interactive Quarterly: WARNER’S WEB

At the WB Online, the challenge is to ensure that the phrase “online entertainment” isn’t an oxymoron.
While CityWeb was taking shape in the Hollywood corridors of Warner Bros. Online last year, Jim Moloshok had set his sights a few thousand miles east. To New Orleans, to be exact, for the annual television industry deal-making and star-gazing bash known as NATPE. At first glance, the January event–the gathering of the National Association of Television Program Executives–seemed an unlikely place to herald the arrival of the studio’s new, untested Internet product. The broadcast world could do very well, thank you, with its existing supply of proven programming formats. But Moloshok, the senior vice president of Warner Bros. Online, had high hopes for CityWeb. The project, simply put, would franchise its sites on television stations around the country. CityWeb would allow an NBC affiliate in Dallas, or a CBS affiliate in Atlanta, for example, to host highly sophisticated, interactive and yet very localized sites. At the same time, CityWeb sites would have all the advantages and elements of a national presence, rich in well-known content, courtesy of Warner Bros., which could draw material from its own vast archives as well as from sister Time Warner media properties such as CNN and People.
As proposed by Moloshok, WB Online would create each local site, provide the bulk of the content and maintain it. Little responsibility would rest on a station’s tech-slender shoulders. Ad positions would be sold and revenues split between the local station and WB Online, much like the standard barter deals struck for syndicated TV programs. From the consumers’ point of view, the package would be seamless. It would look as if their local station had created CityWeb from scratch.
TV station executives, often been frustrated in their attempts to develop a meaningful and cost-effective presence on the Web, quickly grasped what Moloshok was offering. Cheap programming, brand-building among desirable Net-connected viewers, potential revenue. No wonder they flocked to the WB booth on the NATPE floor.
The major network brass also got it, however. To them, it looked more like WB Online was orchestrating a pre-emptive strike that would tie their affiliates to CityWeb. Any such deals would dilute the networks’ shot at wrapping up affiliates for their own online products–though none existed in any concrete form at the time of NATPE.
“On the second or third day of NATPE, Neil Braun, the president of NBC, said if it’s not [the NBC] brand it should be panned, banned and buried in the sand,” recalls Moloshok. “It was the nicest compliment to us, because it showed they were concerned. Secondly, it drove a lot of stations to us to ask what CityWeb was. Braun’s comments made it something they suddenly needed to be aware of.”
Within days, the major networks had posted missives to their affiliates warning them not to lock into competing Web services. CityWeb was not mentioned, but implied. At the same time, the networks were pressing for time with Moloshok; they wanted to examine this new creature up close. One of the three majors wanted to buy CityWeb lock, stock and barrel for its affiliates. Moloshok passed. A second network has met with him extensively and figures CityWeb will work well with its online plans. And “the third one came up to me at a convention [in July] and said perhaps we would do better joining forces than working against each other,” relates Moloshok.
Compatibility among competing networks is possible, Moloshok insists. While CityWeb promises exclusivity in each market–one CityWeb station only–it will not demand exclusivity from the stations. “In our prototype we show the station site linked to the network projects in multiple locations.”
CityWeb is now set to launch in early 1998. About 40 stations, representing roughly 40 percent of the country, have already signed on. WB is in the midst of hammering out some overlap issues with big station groups, which have not wanted to cede any markets to a competitor. By launch date, Moloshok expects to have CityWeb in virtually all major and many secondary markets. Additionally, he is in talks with advertisers in the packaged goods and technology categories to win their backing.
“The deals with advertisers that are being negotiated now are for long-term associations, up to five years, that would give the advertiser an equity interest in our CityWeb project,” says Moloshok. He points out that WB Online ad sales are completely separate from any ad sales conducted by other WB divisions, including the WB network and WB syndicated programs. (The Chinese Wall is ironic, given Moloshok’s other key responsibility at Warner Bros., as senior vice president of corporate marketing and advertising. In that role, he oversees promotion and marketing of all WB products to local TV stations, in addition to working with the studio’s divisions.)
The CityWeb site will be divided like a newspaper into familiar elements–headlines, features and weather. National content will account for about 80 percent of the site, with the rest contributed by the local station. WB Online’s technology will enable the local stations to incorporate their on-air look into the site, while such regional-interest areas as weather will be updated automatically by WB Online’s server.
Although CityWeb has generated much of the recent focus on WB Online, it’s just one part of the division’s online equation. In two years, the entertainment conglomerate’s online unit has proven itself prolific and willing to experiment. In hard numbers–or at least as hard as they get in the amorphous Internet world–WB Online has leaped from ground zero to No. 2 among all studio sites, just behind Walt Disney in the most recent PC Meter report. (PC Meter, renamed Media Metrix, has ranked Web site traffic only by home, not office, users.) The studio now ranks No. 5 in the overall news, entertainment and information category behind ZD Net, Pathfinder, The Weather Channel and Disney. In June, page views hit a record 50 million. And credit card sales at the studio’s online store have quadrupled from a year ago.
Under Moloshok’s aegis, WB Online has launched a diverse mix of entertainment and promotional elements. They include sites for such syndicated TV hits as Babylon 5, a Kids’ WB! site, and sites for all the latest Warner movie releases and records. The Superman Radio Show offers a weekly 15-minute RealAudio drama. In the Looney Tunes Karaoke area, you can sing along in the privacy of your own home. At the Warner Bros. Post Office, WB Online viewers send WeB Cards via e-mail. This fall WB’s relaunch of People’s Court (to be hosted by “Judge” Ed Koch) will include a live connection to the Web.
Going forward, Moloshok and his crew are looking for ways to build a sense of online communities within the WB brands. The area devoted to Babylon 5, for instance, has added the capability within its site for fans to set up their own personal home pages. The pages are located literally in the spaceship model that flits about the site.
But Moloshok is interested in more than just the newest Web bells and whistles. He wants to imprint WB Online with the same sort of mainstream consumer marketing and broadcast sensibilities that are the centerpiece of his other studio job. Perhaps the pieces fit together for Moloshok because of his long tenure with WB, as well as the years he has spent focused on consumer marketing. He had started his career on the station side in the early ’70s, as a director and producer for TV stations in Syracuse, Detroit and Philadelphia. In 1976, Moloshok left to join Group W Productions as director of creative services and station relations, marketing such popular daytime fare as The John Davidson Show and The Mike Douglas Show. In 1981, he jumped to a small syndication company, Telepictures, which grew fivefold in five years and then merged with Lorimar, which was acquired by Warner Bros. in 1989. Through all the mergers, Moloshok continued to oversee television marketing and promotional efforts for what was a rapidly expanding media empire.
The lessons learned by being at the center of Hollywood’s merger and consolidation phase have framed how Moloshok views the online future. In a sense, he believes history does repeat itself.
“The element I still believe that will separate successes from failure is not just content but carriage,” says Moloshok. “As more and more sites come up, you have to consider how much traffic is being carried to your sites, just like with cable. There are a lot of excellent cable channels that can’t get on enough cable systems to be viable.”
An example of his emphasis on carriage is a recent deal he cut with Microsoft, which puts a Warner Bros. icon–and a highly visible doorway to the studio’s home page–on every copy of the new version of Microsoft’s Web browser, Internet Explorer, and on the upcoming Microsoft Windows ’98. That deal alone should to more than double current page view levels. WB Online also has expanded its arrangement with America Online, where it already has a major presence. Moloshok also has hammered out a new agreement with WebTV, which allows consumers to surf the Internet on their TV, and one with its competitor, NetChannel. The WebTV deal gives WB Online a rotating premium position on the main screen.
With these new deals come new challenges. The higher levels of traffic these agreements represent, along with WB Online’s own growth rate of 20 percent per month, is creating a scramble to accommodate the increased demand. Moloshok knows it’s an issue that could trip up the company.
As an example, when WB Online went up in January 1996, 5 million page views were recorded at the end of the first month. Eighteen months later, that level has increased tenfold; the Microsoft deal will only stretch capacity further. “The problem we are facing now is that growth has so exceeded our expectations, it’s a strain on our technology to keep up with requests from people coming to our sites,” says Moloshok. “Unlike television, where it’s essentially the same whether you’re broadcasting to one or to 20 million sets, the more people that come to the sites, the more bandwidth you need.”
There are two other fundamental realities, he says, that WB Online must never lose sight of. “When people come to Warner Bros. Online, they’re expecting a site that’s going to be colorful and exciting, enhanced to make it an entertainment experience, not an informational retrieval experience,” says Moloshok. (That expectation, of course, faces all entertainment companies’ online ventures.) “We also realize because we’re a mainstream company, our main appeal is not to computer types, but to the people who buy tickets to our movies, who watch television, who consume our brand. So we are cognizant that we cannot be building for the latest technology and the latest plug-in. We make a point of trying to have the coolest new technology, but we always build so we’re at least one generation backwards compatible.”
Moloshok notes that although Netscape, the most popular Web browser, releases upgrades every six months or so, more than half of Netscape’s users have not downloaded the latest version. Not only that, WB’s own research shows that the Web’s demographics are quickly broadening. So those who drop by the sites are even more of a mainstream crowd than were visiting just a few months ago.
“The fact is that the easier you make it, the more turnkey you can make it, the less frightening you can make it, the more people who will venture out of the fort into the land,” says Moloshok. “If you know the streets are safe at night, you’ll go out there. What we need to do is make it comfortable.”
Arguably, the genesis of WB Online, from a rough idea about four years ago to today’s multi-headed efforts, has much to do with how well WB Online integrates with the rest of the entertainment giant’s operations. There was no corporate directive handed down from above to get Warner Bros. into the online business. Instead, it was an organic movement. Executives inside the company who had found their way onto the Internet began meeting informally on ways to bring the studio online.
Because the people inside the studio who pushed for an online venture are themselves heavy computer and Internet users, there is a lot of cooperation between divisions when it comes to online projects. That sort of cooperation and internal conversation made it possible to quickly create a newspaper ad for the summer movie Contact. Instead of using the predictable critics’ quotes, the ads featured comments from ordinary movie-goers who had seen the film and gone online to rave about it. And every one of 40 million McDonald’s tray liners used to promote the movie SpaceJam included the WB Internet address.
Moloshok works at developing just as much of a comfort zone for advertisers on the WB sites. “We recently worked with IBM and [Ogilvy & Mather] to create advertising creative for Deep Blue that was more suitable to our environment,” says Moloshok. “We had Looney Tunes [characters] playing chess, and that took you into IBM Deep Blue.”
WB Online’s tracking research indicates that the click-through rate on ads that are within some kind of contextual environment, like the IBM Deep Blue/Looney Tune package, is about four to five times higher than that for free-floating banners. If you navigate down the streets within the Warner Bros. virtual lot, for instance, next to a chat room for Friends (a Warner Bros.-produced show) and Batman (the popular film series), you’ll come upon a Microsoft office building. “That takes you to Office ’97,” says Moloshok. And it will soon take consumers to Office ’98.
To date, the strategy of embedding the ad come-ons with the site’s editorial seems to be paying off (though some analysts contend it will ultimately turn off consumers). In online advertising revenue, Warner Bros. outranks all of its studio rivals, according to Jupiter Communications’ WebTrack survey. And WB Online has yet to lose an advertiser it has signed on. From the beginning, the philosophy at WB Online has been to make it a businesss–one that merges the creative talents of Warner with the post-industrial strength of the Web.
“What I see is the Web converging with television,” says Moloshok. “Devices like WebTV and NetChannel will allow content companies to merge the experiences of interactive online with passive television programs. I would love to be in the middle of this conversion–a matchmaker between two families of entertainment.”