Microsoft and Viacom Engage in Talks to Bring Entertainment Content to Microsoft Network

Microsoft Corp. is negotiating with Viacom Inc. to bring popular Viacom entertainment franchises, such as MTV and "Star Trek," to its new Microsoft Network. The talks have been ongoing since late last year and a nonexclusive deal is expected within the next few months. Viacom has content agreements with America Online Inc. and Prodigy Services Co., but a deal with Microsoft would bring significant credibility and revenue to the proposed online network. The business model for Microsoft's online service allows content providers to charge user subscription fees, sell advertising, and maintain file servers in exchange for a minority stake of revenue generated from online use.

Key Takeaways:

• Microsoft is in negotiations with Viacom to bring popular entertainment franchises to the Microsoft Network.
• The talks involve brands such as MTV and "Star Trek," and a nonexclusive deal is expected within the next few months.
• Viacom currently has content agreements with America Online Inc. and Prodigy Services Co. for MTV and Nickelodeon/Showtime, respectively.
• The Microsoft Network will allow content providers to charge user subscription fees, sell advertising, and maintain file servers in exchange for a minority stake of revenue generated from online use.
• Custom cable software developer, O.C. Communications, has developed a data communication manager for Microsoft's network which will allow users to access the network through O.C. software.
• Scott Kurnit, executive vice president at Prodigy, believes that content providers will do better to offer their product on the Internet rather than allying with Microsoft.
• Content providers will be able to reach a wider audience by offering their product on the World Wide Web, which will be accessible through the Microsoft Network and other platforms.

Statistics:

• 52 PC hardware and software companies announced they would begin offering technical support and related data on the new MS Network.
• ical content deals for MTV Networks Inc. have slowed as the company takes on more deal-making responsibilities.
• MTV's deal with AOL, which expires this spring, will be renewed for another year on a nonexclusive basis.
• The Microsoft Network is expected to launch in August.
• Microsoft has been in talks with other content providers, including America Online Inc. and Prodigy Services Co.

Sources:

• CMP's Interactive Age, February 27, 1995
• Viacom Inc.
• Microsoft Corp.
• America Online Inc.
• Prodigy Services Co.
• O.C. Communications
• Scott Kurnit, executive vice president at Prodigy
• Paramount Pictures
• MTV Networks Inc.