NBC Joins Portal Battle Just in Time for ShakeoutNBC entered the portal fray June 9 by agreeing to buy a piece of CNET Inc.'s online directory service Snap (www.snap.com). CNET and NBC will operate Snap as a joint venture.
Portal is the buzzword recently coined to describe Internet companies trying to become entry points on the Web for masses of people, thereby gaining the right to charge big advertising dollars like online heavyweights America Online and Yahoo.
According to Forrester Research, Cambridge, MA, portals attract 15 percent of Internet page views and 59 percent of the ad dollars spent online. Forrester predicts, however, that a shakeout looms. The firm said that although portals will grab 20 percent of all Web traffic by 2002, they will draw just 30 percent of online ad dollars as media buyers venture beyond the top five sites and as more Internet ad dollars come from direct marketers buying on a performance basis. As a result, Forrester predicted, fewer than five portals will be left standing.
In a report released in March, Forrester concluded that Snap was a clear underdog and recommended that it sell out "to a large media company that fears being left out of the [portal] game." The report said that in 2002, there will be $2.4 billion in ad dollars for portals to split up and that AOL and Yahoo (www.yahoo.com) will grab more than half the pie. Among Snap's hurdles, according to the report, was that parent company CNET's shareholders would not have the stomach for losses it would probably suffer in a portal war.
NBC said it will acquire an unspecified minority stake in Snap and the option to increase its ownership to 60 percent. NBC also announced that it will buy a 4.99 percent stake in CNET.
"We are clearly defining the Internet and interactive media as fundamental to NBC's growth strategy," Bob Wright, president and CEO of NBC, said in a prepared statement. "The addition of Snap will enable us to utilize the power of NBC to reach out to current Internet users, as well as to the 80 percent of the country that is not yet online."
NBC said the deal will give Snap "top brand association, media core competencies, advertiser connections, marketing and a level of promotion that is unprecedented in the Internet portal market."