While Yahoo has had a tumultuous last few years, one unit that has consistently been at the top of the heap is its sports news division. At the same time, NBC Sports has been getting a boost — even without the NHL’s help — ever since Comcast bought NBCUniversal. Apparently between Yahoo’s need to better leverage its media properties and NBC’s free agency after calling it quits with Microsoft the two have found common ground and struck a deal. Although both websites will continue to operate independently, expect multi-platform crossover between TV and internet, cross-promotion with links to NBC Sports Live Extra streams from within Yahoo, new made-for-the-internet video shows combining their assets and Yahoo’s fantasy sports will be the exclusive game for NBC’s Rotoworld site. Check after the break for the press release and a heads up on why even non-sports fans that pay for TV may need to keep an eye on this move.
Filed under: HD
The Argument Against CEO Marissa Mayer’s Alleged Plot To Go After Google And Facebook (GOOG, YHOO, FB)
Yahoo’s board hired Marissa Mayer to be its CEO because board members want the company to embrace a “products” strategy instead of the “media” strategy that interim CEO Ross Levinsohn would have gone with if he had gotten the full time job.
What kind of software tools?
Google products include Google News, Gmail, Google Maps, and Google Docs. Facebook products include Events, Photos, and News Feed. Yahoo’s top products are email, Yahoo Finance, and Yahoo fantasy sports.
It’s obvious why this strategy is appealing to Yahoo’s board. All you have to do is look at the size of Google, a $200 billlion company, and Facebook, a $65 billion company.
One reason they are so big (other than lots of growth) is because they have wonderful margins typical of the Internet software business, where raw materials and freight are cheap. Also, you can build Gmail once and then move most of the engineers who built it onto something else, leaving only a few behind to maintain and upgrade it.
Margins aren’t as lovely in the media business. If your business is to create content, you have a recurring cost the software business does not have; you have to pay people to create it over and over. If you depend on these people too much, they ask for too much money. Likewise, if your business is in the distribution of content, the people who make it will do their best to figure out, and then cut into your margins. (This is why Hulu and Spotify are longshot bets to take over the world.)
So, focusing on a “products” strategy seems like a smart, no-brainer, right?
Not so fast, says one long-time Yahoo-watcher we recently spoke to.
This person says that the conventional wisdom about the software business’s excellent margins, outlined above, is outdated and that Google is to blame.
He told us:
“12 years ago, engineering and helpful tools were such an incredible change in lifestyle so that if you were good at it, you could make a lot of moeny. Software was a crazy high margin business. But here’s what’s changed: Google and companies worth $100 billion and $200 billion have brought software innovation to a zero margin business. They don’t charge for software. They don’t charge for ad serving. They don’t charge for reporting. Google makes all their money on a monopolistic position in advertising. There are no software businesses anymore. The software business is dead. The people who are making their money there are doing it because Google hasn’t killed them yet.”
Translation: Google can afford to make software tools for consumers free to use because it’s search business makes so much money, so Yahoo would be nuts to go out and try making a Yahoo Docs, Yahoo Maps, or Yahoo mobile operating system.
Hopefully, that’s not Mayer’s plan for Yahoo.
Hopefully, the plan is to bring “product” features to Yahoo’s powerful media brands, Yahoo Sports, Yahoo News, and Yahoo Finance.
Dr. Augustine Fou is Digital Consigliere to marketing executives, advising them on digital strategy and Unified Marketing(tm). Dr Fou has over 17 years of in-the-trenches, hands-on experience, which enables him to provide objective, in-depth assessments of their current marketing programs and recommendations for improving business impact and ROI using digital insights.
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