January 8, 1999 5:25 AM PST
New buzz word: "Destination" site
The buzz word at the Digital Hollywood sector of the trade show this year is "destination" site, and executives from television networks and portals (last year's word) alike are touting not only the importance but the need to be one in the coming years, as companies continue to partner and the landscape changes drastically in the Internet, broadcast, and entertainment industries.
Frank Gens, senior vice president at research firm International Data Corporation, last month noted in his predictions for the year: "Deflated valuations, growing cash needs, intensifying competition, the need for critical mass, and a possible recession will drive two trends [in 1999]: acquisitions of Internet pure-plays by Internet-challenged 'real-world' media, financial services, and retail giants; and mergers among Internet pure-plays.
"Barring a Microsoft purchase, Yahoo needs to position itself for the next great media war. Partnering with a real-world media company is the next step--if it can find one that won't screw it up. Time Warner, CBS, and News Corporation are candidates...Ditto Lycos and Excite," Gens added in his report.
The stakes are rising as deals proliferate in the media space--such as the one between Disney and Infoseek and one between NBC and Snap, a joint venture between the TV network and CNET: The Computer Network.
Just this week, new talk of portal consolidation has made the rounds in Silicon Valley and on Wall Street. The stock price of Lycos, for example, practically doubled this week amid buyout speculation.
"These kinds of rumors are regularly circulating, but there seems to be some credibility this time," said Andrea Williams, an analyst at Volpe Brown Whelan. Williams added that Time Warner and News Corporation are at the center of the speculation, though AT&T also entered the fray in reported talks over the possible acquisition of Microsoft Network.
While the concept of being a destination site per se is not new, there seems to be a notable move away from simple content aggregation and feature stockpiling. Many of the destinations being discussed here will look to replace content aggregation with using familiar content brands to attract Web surfers and TV viewers.
Moreover, whereas individual sites have used strong brand awareness to draw users into specialized portals--such as CBS SportsLine, which offers free email and stock quotes along with sports coverage--the destination sites will bring together several content sites under one umbrella in a network format.
"The only way to win is to become part of a larger network. We believe there is a real market for destination sites," Patricia Vance, senior vice president and general manager of ABC Internet Group, said during a panel session entitled "Entertainment, News, Sports, and Finance--the TV/Internet Hybrid Champs."
Lycos is employing a "classic media strategy" by using its various properties to gain users, including its flagship portal site Lycos.com, HotBot, Tripod, WhoWhere, Suck, and others, said Bob Davis, chief executive of the portal firm.
Lycos is not subscribing to the same strategy as some other destinations, however--although users can navigate between Lycos's properties with ease, Davis said, each site is maintaining its own URL. It isn't obvious to users that all the sites are part of Lycos; on the Go Network, for example, each site has "go" in its address, such as "espn.go.com."
Broader news coverage on the Net and differentiating TV network brands were also among the goals for the destination sites born from TV networks.
Merrill Brown, editor in chief of MSNBC on the Internet, suggested that with the popularity of chats, one way for TV networks to differentiate themselves could be by spotlighting their on-air personalities on the Web. He said a network potentially could use a Matt Drudge-type gossip columnist or a Motley Fool-type financial analyst to attract TV viewers to the Web for interactivity and community.
Another draw of these destinations will be "utilitainment," a word used by Matt Farber, senior vice president of programming for MTV Networks, to describe sites that are entertaining in and of themselves, along with offering functionality users have come to expect, such as free email.
Of course, along with the functionality and compelling content that appeals to an array of vertical markets, commerce has become a vital part of many sites that formerly were strictly ad-supported content properties--and the destination sites will take that concept and run with it, according to the speakers here.
Harry Motro, president and chief executive of Infoseek, said the site earns roughly two-thirds of its revenue from ads, about one-third from sponsorships, and a small fraction from commerce. He said that in two years, however, he expects to be drawing less than half the revenue from ads, with most of it coming from commerce. Infoseek, in which Disney bought a 43 percent stake in June, is moving from the traditional portal model to being the search component within Disney's Go Network.
"Portal-based commerce will be the winning strategy over the long term," he said, defining the "long term" as the next three to five years.
At his closing keynote yesterday, Motro detailed Disney and Infoseek's plans for Go, emphasizing that unlike the portals--which, although they offer many services to users, still often serve as maps to other sites--will be better positioned to keep users by offering a network full of content to appeal to a broad audience.
"We'll continue to promote the [individual] verticals, but as part of the Go Network," he said.
In keeping with that strategy, Motro said the Go Network will offer what he called "universal registration, personalization, and navigation." For example, a user registers once--on ESPN, for example--and he or she won't have to do so again on ABCNews.com, or any of the Go Network's other properties.
And instead of spending a lot of time personalizing all at once on each site, a user can personalize as much as he or she wants to on any of the sites, and all the others on the network will recognize the user's choices. Motro called that concept "creeping personalization."
IDC's Gens noted the importance of personalization for commerce sites.
"Personalization/customization will be the 'ante' for successful commerce sites. Why? Because it works," Gens wrote in his report last month. "IDC research indicates that users who've personalized a site visit with frequency two to four times that of users who have not."
And along with the strategies to integrate sites under a "destination" umbrella, many of the executives pointed to the potential convergence between PCs and television and the explosive growth in use of handhelds, pagers, cell phones, and other small devices, noting that such technological changes are causing them to look for ways to personalize and scale their content to fit anywhere.
"We want to be everywhere--that's the only way you win in this space," ABC's Vance said.