Viacom MTV's Salmi: Acquisitions, Hulu Deal Ahead

We interviewed Mika Salmi, president of Global Digital Media for Viacom’s MTV Networks (VIAB), who was at the centre of two of the bigger media stories of the day: MTV’s pact with Jerry Bruckheimer to create a gaming studio, and Viacom’s $500, 5-year advertising deal with Microsoft. Transcript below.

Mika discussed MTV Network’s digital strategy, which has consisted of buying or building small, targeted web properties targeting niche segments (the cable TV model on the web). Going forward, the strategy may also include a deal with the NBC U-News Corp. joint-venture “once it comes out of beta.” Despite losing out to News Corp on MySpace two years ago, Salmi also says MTV won’t rule out a major acquisition “if the right company comes up.”

SAI: MTV’s digital strategy has been characterised as haphazard, with lots of seemingly unrelated small Internet acquisitions. What’s the strategy?

Mika Salmi: We have taken a strategy of going deep with the consumer via targeted brands, an extension of cable model on the web. On TV we have multiple channels that target toddlers, preschool, 5-8 year-olds, parents–we want to extend that into the digital arena by touching consumers who want to go deeper. Think of all the brands we have–from Tila Tequila to “The Hills” or Spongebob–instead of having one web site for MTV we have different sites for different shows.

SAI: To what extent is MTV’s digital strategy a product of not having done a big Internet acquisition?

Salmi: We’ve had a phenomenal year with really tiny acquisitions. MTV has a history of being a fragmented company–that history is perfect as far as where the digital platforms are going and what viewers want. 50% of consumers start out on the web with search. They are looking for Borat or Jon Stewart or South Park. They want to dive in deep; I want our search results to be high up there. To us, the aggregation model has less meaning from people as opposed to getting what they want when they want it.

SAI: Viacom CEO Phillippe Dauman has said the company will hit $500 in digital revenue in 2007. How will you achieve it; through online advertising?

Salmi: The bulk of our products, even games products, even virtual worlds, there are places for video advertising everywhere. We want to be where consumers are. We’ve been allowing [consumers] to embed our video in their sites and blogs–we’ve been doing that since December of last year. We want consumers to be able to take our stuff.

SAI: How significant is today’s Microsoft deal in terms of other ad network deals at MTV?

It will help us toward our goal next year. Our ad business is a significant part of the $500 million in digital revenue. We offer a unique place to buy cross-platform everywhere, but we’ve never put it all together. We’ve never looked at anything at a long-term basis [like the Microsoft deal].

SAI: You just did a deal for MTV Networks video on AOL, does this mean you’ll also do a deal?

Salmi: Once Hulu comes out of beta we will be where our consumers are. It’s not about bringing people to you. What has happened is the consumers have taken control of their content and their media experience. People are managing their media and they’re in control. If you don’t understand that you will have a hard time getting your head around the business going forward.

SAI: What about a major acquisition?

I would never put it out of the realm. If the right company comes up–it hasn’t been ruled out. Everything is moving so quickly right now. We’ve been clear the whole year where we want to go. Who knows how things are going to shift?

SAI: How does the Bruckheimer deal fit into MTV’s gaming strategy?

Salmi: The key message there is we are serious about gaming and we’ve done very well with it. We break it into four segments: casual games (addicting games, Shockwave, Nickelodeon), games media (Xfire, Gamestrailer), console games (Harmonix and licensing of properties) and virtual worlds (Neopets, virtual “The Hills,” “Pimp My Ride.”)

SAI: Is MTV creating original content for the web, using the web to discover TV talent?

Gametrailers started as a digital thing and went over to television [SpikeTV]. “Lil Bush” went from mobile to TV. Tila Tequila came from MySpace. If something is hot, this company is good at turning it around. I think we are good at finding the right properties and making them our own. The shift over the last year we are producing shows even faster–a lot of them are about what’s hot in the market place.

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