The Financial Times of the 10th of May mentioned in an article called: “Viacom sags on MTV restructuring costs” that Viacom’s second quarter earnings fell 36 percent. The decline in earnings was caused by a restructuring of MTV Networks earlier this year in which 250 jobs were cut and dozens of freelance workers were let go. MTV Networks International (MTVNI) is the world's largest global network, spanning niche brands from pre-school to adulthood, broadcast on air, online and on mobile. The organisation broke new ground 25 years ago when it debuted as a music-video TV channel. MTV was a pioneer in the youth cable tv market in the 80’s and its business model was extremely succesfull.

What went wrong at MTV Networks?
Due to the market developments MTV is loosing its competitive edge and it now faces daunting challenges:

• The core audience has expanded its interests to global media. No piece of the network is under as much fire as the core MTV channels. Its younger audiences are the most easily lured away in this age of do-it yourself music mixes, pod casting, and streaming video.
• The marketing arena is rapidly changing. Faith in advertising and the institutions that pay for it is waning, while faith in individuals is on the rise. Peers trust peers. Top-down messaging is losing traction, while bottom-up is gaining power. Besides this, advertisers are seeking direct contact with their customers instead of reaching the masses.
• The competition is getting tougher. A growing number of Web sites are using music videos to lure young people and steal some of MTV’s market share. Major Internet players, from search engine Yahoo! to YouTube, are striking deals to broadcast music videos over broadband. They pursue the same strategy that won Viacom’s MTV Network cult-like control of the 12-34 years old audience two decades ago and hope this strategy will prove just as successful today on the web.
• Competitors have made some key advances. Yahoo Music has streamed video since acquiring Launch Media in December 2001. LAUNCHcast, along with being a free music service, is a polling machine of remarkable size. It is in a sense constantly taking the pulse of the culture, learning how artists fit into it through the clicks of millions of music fans. Consequently Yahoo! knows quite a bit about the listeners who liked a song. It knows their gender, age, zip code and a lot about their musical taste from having tracked their listening behaviour and ratings. These data streams can unlock a powerful new way of marketing. Yahoo! was mid 2006 the most visited destination on the web for free music videos, followed by AOL Music. MTV Networks, with 8,3 million unique viewers ranked 3 (Nielsen/NetRatings). Yahoo Music has the same content as its competitors. But it lets people exchange playlists through instant messaging and generally has a more personalized experience which contributes to having the largest audience.
• MTV, with its cable stations and online presence, is still the go-to brand for music content, both for young people and artists. It has stayed this way in part because of time-limited agreements with artists that enable MTV to broadcast artists videos exclusively for a brief period. Musicians sign this agreements to gain access to a large music-buying audience that flocks to MTV in part because it knows MTV’s Web site and cable channels will have the video first.

To stay ahead of the competition MTV Networks decided on the following actions:

• Penetrating new segments: MTV for Life . MTV has spent nearly all of its first 25 years trying to capture the attention of young people. But as viewers age, they often move to other TV offerings or entirely different media. More than half the American public is 35 and older, and they dominate the wealth in the country. MTV wants to be able to reach that audience instead of seeing them leave some of MTV’s existing channels. A half-dozen new channels, focusing on lifestyle, money, and health are in development that will target late teenagers and early boomers. Getting distribution for new TV outlets is no easy task since more than 400 channels are already on cable and satellite systems focusing on every imaginable niche. And plenty of them are aggressively trying to connect with boomers, from HGTV to CNBC. Nielssen Media research shows that people in 35 to 50 range are watching even more tv these days and that they represent the fastest-growing segment on the web.
• Expand distribution: Mobile telephone. MTV Networks is trying to build viewers through a new medium: mobile telephone screens.
• Research done by MTV learned that viewers watched an average of three hours a week, demand was very high in the morning and the evening during the commuters hours. Parents are tuning in for their kids when they have to wait somewhere. The key is snack-size content.
• Expand distribution- online gaming platform. New York's MTV Networks is integrating its television series with a new online gaming platform to draw in more young viewers and entice more advertisers. The network recently launched Daily Rage! at dailyrage.mtv.com where players embark on scavenger hunts designed to mirror MTV's primetime series such as My Super Sweet 16, Hollywood Reporter said Monday. Players seek hidden icons that win them cash and merchandise prizes.
• Expand distribution- non-exclusivity. More and more content providers will become open to showing their content online and splitting the advertising profits with internet companies. Part of that approach has been for both big media and online companies to embrace non-exclusivity. Both AOL and Google, for example, have content deals with MYV. It makes sense from a business perspective because MTV wants as many people as possible to see its ads and drive traffic to its site.
• Growth through acquisition and partnerships. MTV Networks is doing something alien to the start-from-scratch culture: seeking acquisition and partnerships. MTV Network bought companies like an amateur short-film website, a children’s website and a number number of digital properties like Harmonix Music Systems, Inc., Quizilla.com,  Atom Entertainment, Inc.,Youth Media & Marketing Networks, the parent of Publisher, Xfire, Inc.and BET Interactive.

Although MTV Networks is losing its competitive edge the organisation has opted for a horizontal growth strategy. In our opinion this makes MTV Networks even more vulnerable. What it should do is redefining its business model and enhancing its value proposition to its core customer.

When you use the analyses and ideas, which are published on our site, we would be happy if you properly name and link the source: science-strategy.com