As part of Wednesday's deal, Microsoft will license TV shows from MTV and other Viacom cable networks, as well as movies from Viacom's Paramount studio, for its MSN website and Xbox 360 game console. The two companies also plan to collaborate on websites and video games.
At the core, though, the deal is for advertising.
Microsoft promised to spend more on TV spots on Viacom's cable channels. It also landed two pieces of Viacom's business for Web ads: Microsoft will use AQuantive's ad-serving tools to deliver all display advertising, and it will be in charge of selling the so-called remnant ads that aren't sold directly by Viacom staff.
"This is about getting another customer for Microsoft's ad platform," said analyst Matt Rosoff of Directions on Microsoft, a research firm that closely studies the company. "Microsoft gets more inventory on which to sell ads."
Redmond, Wash.-based Microsoft remains far behind Google, whose method for selling ads tied to search results has generated much more of what analysts predict will be a $28-billion online ad market in the U.S. in 2008.
But Microsoft CEO Steve Ballmer has said his company was committed to becoming a more serious challenger in that field as it continued to diversify from its core businesses of operating systems and office productivity software.
"We've got a very strong ad proposition, and clearly publishers and advertisers want a choice," said Kevin Johnson, president of Microsoft's Platforms and Services division.
Microsoft might have some advantages in cutting deals to sell content on behalf of big media companies, Rosoff said, because it has worked hard to develop technology to deter illicit copying of digital content.
When those companies think of Google, on the other hand, YouTube's copyright problems might come to mind.
"Content owners are more likely to trust Microsoft than Google," Rosoff said.
Analysts said Microsoft might be moving so quickly to seal deals because Google was still in the process of acquiring DoubleClick, which controls technology for delivering ads that is similar to AQuantive's. The deal is being held up by regulators.
"Microsoft's online services business has been a boat anchor," Citigroup analyst Brent Thill said. "Now, it's turning around."
joseph.menn@latimes.com
