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UPDATE: Yahoo! Says Hooray For Hollywood

21 Mar, 2002 By: Holly J. Wagner

Yahoo! is diving into the entertainment waters to full depth, forging new marketing agreements with studios and surveying its own customers about how much they would pay for video-on-demand (VOD) and other content.

Entertainment has long been a mainstay of one of the Internet's most successful portals, but last year the company quietly extended its presence in the Los Angeles area with the purchase of Launch Media. Plans for the future reportedly include a rollout of a cobranded high-speed Internet Service Provider (ISP) via broadband line provider SBC Communications. Under that deal, Yahoo! will supply the content and SBC the services.

Just what that content will include is still up in the air, said Steven Kydd, director of Business Development for Yahoo Entertainment, but over the weekend Yahoo! began surveying users about what type of content would appeal to them – including $2.95 movies on demand, sports events, soap opera updates and what sounds like a reality TV version of "Sex and the City."

Then Monday the company opened a new office in Santa Monica, a mere stone's throw from struggling MGM.

"I can see the set of ‘Buffy theVampire Slayer' from my office window," quips Kydd.

While he wouldn't discuss Yahoo's future plans for content or how future deals with studios would be structured, Kydd did indicate the overhaul of the Yahoo! movies site is partly a response to studio demand and partly to Yahoo!'s search for new revenue streams.

"As far as we know there is no jockeying going on to buy MG

They might well investigate video-on-demand via broadband," said Forrester Research analyst Dan O'Brien. "They've had experience for that with Financevision. Yahoo! is, one by one, starting to charge for its services, including e-mail and photo storage and Terry Semel has expressed interest on getting more into the entertanment industry."

Kydd stopped short of saying Yahoo! would offer its own VOD channel but he didn't rule it out, either.

"There will always be those conversations happening. As the scale and scope of those [studio] relationships increases, content may be a part of those discussions." Kydd said, noting the influence of former Warner Bros. executive and Yahoo!'s chairman and CEO Terry Semel. "Terry has made it clear to The Street that we will find new, content-driven revenue by the end of the year."

One place that path is leading is to promoting films, home video and other entertainment products.

"Some partners are most interested in theatrical. Some are more interested TV, some are more interested in DVDs," he said. "There are different specific titles that they have chosen to focus on. If you took a snapshot of the entertainment business, theatrical was the key revenue driver and the one people paid attention to. With DVD penetration increasing, we're getting much more interest from [home entertainment] developers."

The new office launch comes on the heels of promotional deals with Artisan Pictures and Fox Filmed Entertainment.

The deal with Artisan kicks off with support for the upcoming movie National Lampoon's Van Wilder, due April 5, across the Yahoo! network in the form of exclusive editorial content from Artisan, an integrated marketing campaign, streaming video elements, a national sweepstakes, and tie-ins with the film's offline marketing programs.

Yahoo! Movies leads the studio's push to reach a target audience of 18- to 24-year-olds and will include a new expanding ad format that lets consumers interact with content from the film within the ad unit itself.

"Through this wide-reaching promotion with Yahoo!, we are able to expose National Lampoon's Van Wilder to one of the largest audiences of movie fans on the Web," said Amorette Jones, EVP of worldwide marketing, Artisan Pictures. "Our promotional program enables movie fans to experience many elements of National Lampoon's Van Wilder before they see the film in their local theatres. Yahoo!'s rich media platform directly supports our marketing efforts by providing movie fans online with video clips, images and information."

The new and improved Yahoo! movies site is both a lure for and a gesture of faith in the entertainment industry, Kydd said.

"Different partners need different things from us," Kydd said. "Artisan is a young, scrappy mini-major and they look for different things from us. Somebody like Sony with global tentacles looks for different things from us."

Fox warmed to Yahoo! with a package to promote Ice Age, the CGI animation feature that stormed the Box Office over the weekend, and Tom Cruise's upcoming thriller Minority Report, directed by Steven Spielberg.

The deal also covers promotions for the video releases of Don't Say A Word starring Michael Douglas; the Farrelly brothers' comedy Shallow Hal starring Gwyneth Paltrow; and the military adventure Behind Enemy Lines with Gene Hackman and Owen Wilson.

"The agreement represents Fox's largest advertising commitment to an Internet media company to date, and reflects the increasing consumer shift to new media resources for information on filmed entertainment," a spokesperson said.

The partnership will, for the first time, let the companies monitor the effectiveness of the online marketing on Fox's theatrical ticket sales and home entertainment purchases.

Part of how that happens is by unifying the promotional and sales channels, Kydd said.

"We know our audience and our audience is not only young teen males. It's much broader than that," Kydd said. "We have the ability not only to target specific markets, but to complete the transaction with Yahoo shopping."

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