KEY POINTS:
Hollywood giant Viacom is expanding into New Zealand cyberspace and picking up more advertising revenue along the way.
The company claims good growth for its youth-oriented MTV and child- focused Nickelodeon channels on Sky Television and is concentrating on 10 websites, most of which are aimed at children and youth.
Its sites include mtv.co.nz, www.neopets.com, gaming websites www.xfire.com, www.shockwave.com, www.gametrailers.com and www.addictinggames.com, short film www.atomfilms.com and a male-focused www.spike.com, which MTV calls the premiere destination for men and includes "Girls' Videos".
Some of the websites already enjoy the benefits of cross-media promotion with the Sky channels, but the new approach opens the door for cross-media advertising deals.
The two media - television and online - are expected to grow in tandem.
But as the border disappears between television and online content, there are issues on how to allocate public money.
New Zealand On Air is meant to ensure local content. Under its rules it can do that not by supporting New Zealand programmes but by inserting local content into overseas-sourced media. The bigger the audience the better and American-sourced cartoon shows deliver the biggest audiences.
With the explosion of online content there is a question of whether grants should be given to popular overseas-based websites with a high proportion of overseas content and drawing advertising revenue as gaming sites do, or whether they should be set aside for New Zealand-based sites with a local theme.
New Zealand on Air chief executive Jane Wrightson said the ownership of a broadcaster - be it overseas or in New Zealand - was irrelevant in funding decisions.
But to simply have a large audience base was no guarantee that they would receive funding for local content. That was the case with television and would be the case in the future as NZ On Air takes on a designated role funding online content. Convergence between television and online media has brought the issue to a head.
It started with $1 million a year for the past two years and next year. But after that more is expected to be put into online.
Viacom websites owned by its MTV Networks division are already popular and it raises questions whether they will be candidates for public cash.
MTV Networks Australia and New Zealand managing director Dave Sibley declined to comment about approaches for grants to make local content on its channels MTV and Nickelodeon.
Both have big audiences for young people but are on pay TV and NZ On Air cannot fund programmes only half the country can watch. Taxpayer funding of content on pay TV channels is off the agenda for now.
But NZ On Air is keen to reach young viewers who go to MTV Networks websites. MTV Networks has announced plans for its digital arm to boost the profile for its 10 websites by selling New Zealand access on to them and with sales deals that will link the television channels and the websites.
In its marketing push MTV Networks claims 10 per cent of the online audience target, with users typically spending 2 1/2 hours at its sites.
An integral part of MTV Digital's strategy is gaming. It points to its games website, www.addictinggames.com, claiming 48,644 unique visitors and 639,200 page impressions a month.
The US company said advertisers and content companies wishing to engage with youth audiences need to understand the changes taking place in how they lead their lives.
