Like most CEOs, a big part of Edward Horowitz’s job involves predicting the future. And besides death and taxes, he’ll tell you two things are certain: that the emerging digital publishing and entertainment market will be a multibillion-dollar industry within five years and, more importantly, that the companies that will have a prominent — and permanent — position within that industry are those that realize that the future lies not in code, chips, or CPUs, but in content.
Maybe that’s what you’d expect to hear from the chairman and CEO of the recently created Viacom Interactive Media division of iacom Inc., the New York-based entertainment conglomerate whose content assets include, among other things, cable TV properties such as MTV and Nickelodeon plus all of Paramount communications Inc., including Simon & Schuster, a handful of amusement parks, and vast film and TV vaults. Viacom acquired all this in February for $10.1 billion.
But let’s face it: His attitude would be hearsay to Silicon Valley, particularly coming from someone trying to “break into” the digital convergence world. But Horowitz, 47, isn’t interested in opening up shop in the Valley. He thinks the center of this new world will be New York. That’s where he thinks the content deals will be done. And that’s where he’s staying, in his office in Times Square.
VIM’s job, and Horowitz’s by extension, is — big surprise –to serve as the entrepreneurial and R&D spirit of Viacom and to use those assets as the basis for next-wave digital products, including CD ROM titles and interactive TV and on-line services.
What makes Horowitz confident about his predictions is the more than 20 years he’s spent working his way up through the once-fledgling cable TV industry. His career has taken him from a job designing and selling cable TV franchises to a 14-year stint at Home Box Office Inc. Along the way, he’s been named a visiting scholar at MIT’s Media Lab, served as chairman of the Federal Communications Commission’s committee that helped formulate the standard for high-definition television to be announced next year, an d won the National Cable Television Association’s President’s Award for his contributions to the cable industry.
He’ll tell you that what he’s learned while designing, implementing, and selling everything from microwave to satellite-based cable TV delivery systems and promoting everything from pay-per-view movies to MTV is that technology is just a means to an end. It’s not only how you deliver, but what you deliver — the kind and quality of content — that buys you an audience and a place in the market.
“We’re now at the threshold of change,” he says, speaking slowly and thoughtfully. The physics major turned market visionary reports directly to Viacom President and CEO Frank Biondi, a former HBO colleague. “We’re changing from a world of linear programming to nonlinear programming, from programming that’s only available to TV sets to programming that’s available on a combination of TV sets, computers, CD ROMs, and interactive networks. Eventually, the technology will fade into the background and what wil l become important is making sure that content is being created that can be delivered in all those combinations.”
VIM’s New Media group is producing entertainment titles, games, and reference materials on CD ROM and cartridges under both the Viacom New Media and Paramount imprint. Titles include an interactive CD ROM based on the characters created by best-selling children’s author Richard Scarry and a soon-to-be-released title featuring popular MTV characters Beavis and Butt-head. A virtual reality tour of the Starship Enterprise, from Paramount’s lucrative Star Trek empire, is also in the works.
VIM’s Interactive Services division is charged with developing interactive TV and on-line services, which Horowitz admits are still in the “alpha” and “beta” phases of development. The division, which now includes Paramount’s former R&D facility called the Media Kitchen, has made several strategic alliances with technology innovators, including one with AT&T that is developing an interactive TV delivery system. More alliances are in the works.
“We will seek out the technology we want and harness it, but we don’t need to own it or the specific distribution technologies because we don’t want to lock ourselves into anything,” says Horowitz. “We just want to harness the technology and get people up to speed on how things work. We’re sure that once the consumer gets a hold of it and test-drives it, they’ll use it.”
Horowitz is betting that the CD ROM and cartridges, on-line services, and interactive TV products, combined with Viacom’s consumer marketing expertise in the cable TV world and its retail access to consumers through its Blockbuster Entertainment Corp. holdings, will put Viacom in position to become one of the handful of players, along with Time-Warner Inc., Walt Disney Co., and Microsoft Corp., he believes will own the digital media industry.
Horowitz may be right, but analysts say it’s just too soon to tell. “Content is everything,” acknowledges Mitch Ratcliffe, editor of Digital Media, a San Francisco-based newsletter for industry insiders. “But content is also a word companies use to describe something they don’t know the shape of. It’s a noble goal to say you’re going to deliver content for whatever format, but we don’t know yet if it’s practical.”
In Viacom’s favor, Ratcliffe says, the company has taken steps toward putting an infrastructure in place that will make it a player in the emerging market. “The interactive world is a big kitchen with a lot of mud in it, and some of it’s going to stick. The problem remains that they may own all the content in the world, but the ‘interactive’ novel hasn’t been invented. Will they do it? Will they be a big player? Who knows?”
Only time will tell. But like most CEOs, a big part of Horowitz’s job will be to make sure that his predictions come true.