YouTube Faces Challenge

NEW YORK In an unprecedented joint offensive aimed at defending the audience of the traditional networks on the Internet, News Corp. and NBC Universal have formed a partnership to launch a Web video distribution channel to challenge YouTube.

The new channel, which will house a wealth of network TV shows and movies in a copyright-protected environment, will go live sometime this summer.

In addition to creating a unique Web destination for online video, the two broadcast giants have struck sweeping video distribution pacts with Yahoo!, MSN, AOL and News Corp.’s MySpace to showcase the new site’s library of content.

At launch, the site will host both full-length episodes and short clips from series such as NBC’s Heroes, My Name Is Earl, Saturday Night Live and Friday Night Lights, along with Fox’s House, 24, The Simpsons and Prison Break, among others. Unlike YouTube, all shows will be ad supported.

Like YouTube, user-generated content will have a place on the site, said officials, as fans will be able to create mash-ups of network content.

However, the big point of differentiation for the new property is that users will not be able to post whatever they want on the site, affording News Corp. and NBC a level of control not seen on YouTube.

Besides TV shows, users will be able to watch full-length movies on the site, including hits such as Borat, Little Miss Sunshine and The Devil Wears Prada.

Neither company has said whether these movies would be free to users or available through some sort of pay-per-download arrangement.

“This is a game changer for Internet video,” said News Corp. president and COO Peter Chernin. “We’ll have access to just about the entire U.S. Internet audience at launch. And for the first time, consumers will get what they want—professionally produced video delivered on the sites where they live.”

NBCU CEO Jeff Zucker emphasized the built-in safeguards as being key for the new site. “This venture supercharges our distribution of protected, quality content to fans everywhere,” he said. “Consumers get a hugely attractive aggregation of a wide range of content, and marketers get a novel way to connect with a large and highly engaged audience.”

Yet it remains to be seen whether the networks can manufacture the attraction of YouTube, which has built a huge audience in less than two years.

Many observers have been critical of the stance take by companies like Viacom (which is noticeably absent from this partnership), which they say are trying to control user behavior in a medium that doesn’t lend itself to a broadcasting model.

“Media companies are eager to pounce on YouTube’s distracting legal troubles to offer any alternative to YouTube’s dominance in the market,” said Forrester Research media and technology analyst James McQuivey. “But if they aim to create a single site where people have to come to watch their shows, and deprive the rest of the Net of their clips—then they’re missing the point.”

However, while the networks will have to work hard to create awareness for the new site and convince users to choose it over YouTube, the sheer audience power of portals like MSN and Yahoo, along with MySpace will certainly help.

Said Terry Semel, Yahoo! chairman and CEO, “We believe that this relationship underscores Yahoo’s respect for content owners and copyrights and positions us as one of the premier distribution sites on the Web for entertainment programming.”