Nickelodeon sells families on cruises with SpongeBob
Dan Lieberman
USA Today
January 28, 2008
NEW YORK — Nickelodeon might as well call its latest
launch Nick at Naut.
Viacom's (VIA) popular cable channel for children, eager
to diversify its revenue stream, is about to sail into
the cruise business with the introduction this week of
its Nickelodeon Family Cruise with Royal Caribbean.
The network has rented the largest ship in the cruise
industry, Royal Caribbean's Freedom of the Seas, for
Aug. 10-17.
Beginning this week, it will sell tickets — figure at
least $4,000 for a family of four — to take more than
4,000 passengers to Mexico, Grand Cayman, Jamaica and a
private beach in Haiti.
"The cruise space is intriguing," says Nickelodeon
President Cyma Zarghami.
Although only one trip has been scheduled, "We can ramp
up really quickly to come back in February if all goes
the way we'd like it to go," she says.
Nick-arranged games, shows and characters, including
Dora the Explorer and SpongeBob SquarePants, will
supplement the ship's usual activities and entertainment
such as mini-golf and ice skating.
The venture fits with several recent initiatives to
establish Nick in the family travel business. For
example:
•Nick will open its first theme park at Minnesota's Mall
of America on March 15.
•Two months later, it will break ground in San Diego on
the first of 20 planned Nickelodeon Resorts By Marriott.
•Last month, the company, in partnership with Hertz,
introduced Nick on the Go. It provides vacationing
families with a portable touch-screen media player
loaded with the channel's programming.
The goal is to have recreation account for about 10% of
Nick's revenue within five years.
"We as a brand are still young enough that we have to
prove that when you do family entertainment with
Nickelodeon, there's something for kids — and something
for parents," Zarghami says.
She's confident that her company can make a strong case
for itself as it appeals to the first generation of
parents who grew up watching Nickelodeon, even though
the strategy pits her against the mighty Disney in the
competition for family vacationers.
"There will be distinct differences between our brands,"
she says. "People will make decisions based on their
relationships to the brands."
She also recognizes the need to expand as the cable
network business matures.
Nick's cash flow will grow 4.7% this year, to $1.3
billion, on revenue of nearly $2 billion, up 5%,
research firm SNL Kagan forecasts.
TV ads and subscriber fees account for about two-thirds
of the revenue, with the remainder largely from license
fees from consumer products, including toys, clothing
and electronics.
Nick's expansion plans mesh well with Royal Caribbean's
needs. "In the U.S. market, we are still in the mode of
convincing parents that a cruise vacation with Royal
Caribbean is a great idea," says Royal Caribbean (RCL)
CEO Adam Goldstein. "The brand association is attractive
to our marketing efforts."
The company's efforts to woo families already include
alliances with Crayola and Fisher-Price.
As part of the deal, ads for the cruise will run
throughout the day on Nick and sister channel Nicktoons,
the company's various websites and in Nickelodeon
Magazine and Nick Jr. Family Magazine.