Microsoft Joins the 'Real World'
As part of the deal, Microsoft will get access to loads of Viacom content, including Comedy Central and Paramount Pictures, for MSN and Xbox 360, among other products or services. Given the Hollywood writers' strike, Microsoft will be serving quite a bit of recycled content for a while. The TV season is winding down rather rapidly this year. I suppose the strike could be good for MTV reality shows like "Cribs" or the "Real World," assuming Microsoft uses some of that content.
Based on early details about the deal, Xbox 360 would be initially the biggest beneficiary among Microsoft products or services. Already, Microsoft offers movies through Xbox Live, including a fair amount of Viacom content. Additional Viacom content could make the video service more appealingand in the place Microsoft wants. While Apple has done quite well selling movies or TV shows from the iTunes Music Store, video content's more natural place is the living room. For years, I've said the Xbox is Microsoft's Trojan horse in the living room. The console is increasingly about more than just gaming. The Xbox is Microsoft's home entertainment portal.
Gaming is certainly part of the deal, as Viacom plans to provide casual gaming content for the Xbox, and also MSN and Windows. There are lots of cross-content and cross-promotional gaming possibilities, should Microsoft and Viacom choose to engage in them. Among them:
-Viacom ads or video shorts placed in console games
-Cross-promotional game and television marketing, such as mini-episodes on Xbox Live or TV show-specific games on MSN
-Windows Live or Xbox Live social network tie-ins to live MTV broadcast or reality show programming
-More video content or mini-games for cell phones or other mobile devices
If the companies aren't thinking about stuff like this, they should.
More broadly, the advertising arrangement is quite the tangle. Atlas will serve ads across Viacom's U.S. Web sites, but not internationally. Microsoft also gets rights to sell leftover advertising banner space, for which the two companies would share revenue.
As part of a five-year agreement, Microsoft will buy advertising on Viacom's broadcast and online networks. That portion of deal includes awards show promotions and/or sponsorships on BET and MTV. My prediction: Microsoft's Live Earth sponsorship, which included video streaming, will be a model for award show content available online.
Next page: Why Is This Deal a Party?