BW Online | April 16, 2001 | Where NBC and Disney Went Wrong

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APRIL 16, 2001

PERSPECTIVE
By Heather Green

Where NBC and Disney Went Wrong
Latecomers to the portal party, the media giants neglected to establish a clear vision for their ventures

Green covers the Internet for BusinessWeek in New York

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Take a look at the traditional brand-name dot-coms out there, and the big question that comes to mind is: How could these established giants have flopped?

NBC is merely the latest media behemoth to give up on building a dominant portal. The network is buying the outstanding shares of its spin-off, NBCi, bringing its Web efforts in-house and dramatically cutting staff.

That follows a similar move in January by Walt Disney Co., which bought back the shares of its own limping portal, Walt Disney Internet Group, and stripped the service to the bone. So just when everyone is trumpeting the superior advantage of established brands, it's a wonder how these companies have done so poorly.

MISCONCEIVED. The wrong lesson to take away is that traditional brands aren't as powerful online as they seem. Companies have to be smart about the markets they attack and which aspect of their brand is appealing online.

Take NBCi. The thing was a blunder from the beginning. What people forget as they look at the writhing carcass of the wannabe portal is that it's just the latest iteration of a service that was poorly thought-out in the first place. NBCi's roots actually date back to Snap!

Snap! was the CNET brainchild that debuted in September, 1997. Well, even three years ago, Snap! was late to the portal party. Yahoo! was already the dominant player and doing well. Despite the later problems that Yahoo! got into by depending too much on dot-com advertising dollars, its early performance was remarkable. Yahoo defined what it meant to be a portal and signed up tens of millions of customers.

When NBC first got involved with Snap! in June, 1998, the fledgling portal was already on shaky ground. The problem only got worse because there was never a clear vision for it. The Snap brand was heavily advertised through inscrutable TV commercials on NBC. Then, in May, 1999, NBC bought direct marketer and community site Xoom.com. It then rolled Snap, Xoom, and its Net properties into the new NBCi portal, which began trading on the Nasdaq in November, 1999, as NBCi. Then NBC spent millions marketing the new brand. Talk about confusing.

BURYING THE GEMS. Disney's portal evolution isn't any clearer or more prescient. After acquiring lagging search engine Infoseek in June, 1998, Disney rolled together its brand-name properties, ESPN and ABC News, into a new company, Go.com, which was launched in January, 1999. Beyond the fact that Disney was burying the gems under an unknown brand, the revamped portal was promptly enmeshed in legal problems because its new logo was too similar to rival Goto.com. In short order, Go.com went through different incarnations as a portal and then an entertainment site.

After sloughing through all the facts, the importance of getting in early with a clear strategy is clear. By comparison with the media companies' portal sagas, the other properties run by NBC and Disney look pretty good. ESPN.com has always been one of the best sites on the Web. CNBC and MSNBC definitely have traction. All three share the trait of being distinctive, consistent brands.

Granted, the media companies were struggling in an environment of fear when it came to portals. They were frightened that they were going to be rendered obsolete, but they weren't willing early enough to pony up money to buy the dominant portals when they were affordable.

STILL EARLY. It's odd, though, to see how much the media companies dropped the ball in terms of branding and marketing. NCBi means nothing to consumers. Maybe if NBC had stuck with the initial Snap! brand, the portal would have gained more ground.

Of course, even the successful portals don't look like much to write home about right now. But it's early days. The leaders are established: America Online, Yahoo!, and Microsoft Network. Their consumer appeal is real and will only become more compelling when broadband eventually takes off (and it will).

Despite Yahoo!'s troubles, bets are the company will end up with a partner and be stronger for it. That partner could very well be Disney or NBC. That might seem like poetic justice, if the acquirer can get Yahoo! at a low price. But just think of all the time, energy, and money the media giants wasted getting to the same point they could have reached three years ago.