'South park," a pungent social satire in the form of a crudely animated cartoon, helped establish Viacom Inc.'s Comedy Central as a fixture on basic cable. Now, perhaps, the series will help the network figure out how to maximize its revenue online as well.
This week, the network announced a joint venture with the show's creators, Matt Stone and Trey Parker, to establish a "South Park" digital animation studio. It could cut distribution deals with websites and other digital outlets as well as develop new uses for the show's characters. Notably, any ad revenue generated online would be split 50-50 between the creators and the network -- a rarity in the television business.
There are many new ways for the joint venture to exploit the "South Park" brand. One example is video games -- say, killing Kenny in 3-D. But the most important may be squeezing revenue out of what's already happening with the show online. Today, Comedy Central is selling downloadable episodes for $2 a pop through outlets such as Apple's iTunes Store and Microsoft's Xbox Live Marketplace. But the vast majority of online video viewers aren't keen on paying; instead, they're getting their "South Park" episodes free through unauthorized channels such as YouTube (which Viacom has sued for $1 billion).
Those viewers are an untapped audience that advertisers would pay to reach. But unlike the major broadcast networks, Comedy Central has yet to make full episodes of "South Park" available for free online. Instead, it offers snippets of the shows through a pair of sites -- meaning the legitimate outlets are vastly outnumbered by the bootleg-friendly ones. The network does let fans spread those clips to their own Web pages, but the clips carry no advertising.
One reason Comedy Central hasn't exported its "South Park" broadcasts to the Web is resistance from cable operators, who are reluctant to give viewers an alternative source for the network's programs. Another reason, though, is that Viacom's networks simply haven't been as aggressive online as some of its rivals. Its approach seems stuck in the era before widespread broadband, when the conventional wisdom held that Internet users didn't have the patience for long videos. Today, the appetite for video on the Net is enormous. At the same time, putting shows online often helps build their overall audience, leading to higher ratings when they air on TV. In other words, offering shows online doesn't dilute the TV audience, but rather picks up viewers who missed the broadcast version or want a quick repeat.
Networks are still figuring out how to best use the Net, and there's no guarantee that viewers will choose legitimate outlets over illegitimate ones. But it's important for content owners to experiment and help new models develop. Parker and Stone clearly want to move more quickly online than Comedy Central has done so far. If they can't pick up the pace, the new venture's prospects may be little better than Kenny's.