Viacom and Software behemoth Microsoft have entered into a strategic alliance under which major divisions of both companies will collaborate on advertising, content distribution, event promotions and games over the next several years.
This landmark multiyear deal will see both companies collaborate on content distribution, advertising, event promotions and gaming.
The contract spans across the two companies and includes a number of significant components. Among them:
• Microsoft will license, on a non-exclusive basis, long- and short-form television and theatrical content from across Viacom’s cable network and motion picture businesses, including MTV, Comedy Central, BET and Paramount Pictures, for use on Microsoft properties such as MSN and Xbox 360.
• Microsoft’s Atlas division will become the ad server for Viacom’s U.S. Web sites and Microsoft will have the exclusive right to sell remnant display advertising inventory on Viacom’s U.S. Web sites.
• Microsoft will buy advertising on Viacom broadcast and online networks over a five-year period and the companies will work together on promotions and sponsorships for MTV Networks and BET Networks award shows.
• Viacom will work with Microsoft on opportunities to become a preferred publishing partner across Microsoft’s casual gaming platforms.
“We are very impressed with how closely Microsoft’s business plans complement our strategic objectives. This is a novel and comprehensive partnership that demonstrates the scale of our digital operation and the value of our branded content across all distribution platforms. By taking advantage of industry-leading assets at both our companies, this landmark alliance brings valuable promotional power and increased monetization to our wide portfolio of branded Web sites, which collectively represent the leading entertainment presence online,” said Philippe Dauman, president and chief executive officer of Viacom.
“We look forward to collaborating closely with Microsoft as we move forward. This partnership will generate significant value on both sides. This deal is an important example of how the growing success of our digital properties is driving greater revenue for Viacom as a whole.”
“We are delighted to establish this long-term partnership with Viacom. Viacom’s portfolio of original content and strong consumer brand connections are a terrific complement to Microsoft’s Web, gaming and digital advertising assets. This deal is another milestone in our quest to build a world-class advertising platform to serve the broad needs of advertisers and publishers. If ever there was a ‘win-win’ partnership across two companies, this is it,” said Kevin Johnson, president of Microsoft’s Platforms & Services Division.
Viacom will provide unsold display advertising inventory on its digital sites for Microsoft to sell and serve through both Microsoft Digital Advertising Solutions and DRIVEpm. Revenue generated from the sale of this inventory by Microsoft will be shared between the two companies.
During calendar year 2008, Microsoft and Viacom also said they will partner to promote a co-branded Web site with exclusive content from at least four MTV Networks and BET Networks events, such as the MTV Video Music Awards and BET Awards, and will share certain advertising revenue generated by the site. Microsoft will provide a pre-determined amount of online promotion for each event.
Detailed financial terms were not disclosed, but the deal has a projected base value of approximately 500 million dollars in financial considerations and business services between the two companies over the initial five-year length of the agreement.
The deal includes a combination of revenue sharing provisions, guarantees and content licensing agreements. The agreements contemplate the potential for expansion of the transactions. |
