The New Studios

'Net changes H'w'd skeptics into believers

Hollywood is suspicious of technology. It always has been.

But when it comes to the World Wide Web, it turns out that Hollywood has actually taken over the reigns of Internet entertainment. It just hasn’t done it the way everyone thought it would.

For a business that traditionally waits to see what innovators create before swooping in with its big bucks, Hollywood has infiltrated the dot-com biz from the inside, recreating a familiar circle of friends, culture and business practices.

From funding to content creation and distribution, former Hollywood players are now among the movers and shakers of e-trepreneurs.

And these execs are seeking out and relying on people they know best when in search of Webisodic programming to fill their traditional pipelines and new digital channels.

The end result could be exactly what new-media types never wanted to happen: Where the Internet was once imagined to enable creative newcomers to break into the biz, the doors are now beginning to close.

Hollywood’s takeover of the ‘Net was a sort of covert operation whose results are only now becoming apparent.

Over the past two years, the major studios have watched while whole phalanxes of execs have migrated to dot-coms. These advance troops have, fled their cushy high-level studio posts in droves to occupy more lucrative, but certainly more risky, posts at startups like AntEye.com, AtomFilms, Icebox.com, iFilm.com, MediaTrip.com, Pop.com, Shockwave.com and Z.com.

Last year, Disney lost over 50 Internet execs. Not one top exec who was in place two years ago remains at Sony Online or Columbia TriStar Interactive.

If the studio refugees not working at Internet companies, they’ve managed to plant themselves on boards of e-businesses.

Frank Biondi, Warren Littlefield, Terry Semel, Frank Mancuso and Barry Diller all have chairs at several ‘Net tables.

The Hollywood studios may not have instigated the migration of these execs to the Internet, but they stand to benefit from the exodus.

It’s a no brainer that the Internet is part of Hollywood’s future,” Joe DiNunzio, CEO of Z.com, says. “It’s not surprising that people who have an entertainment background are heading to the Web and are doing fun and exciting things. They have a lot to offer and a lot of people are willing to pay for their knowledge.”

Meanwhile, Hollywood studios have bowed their own Netcasting ventures such as Fox.com, Warner Bros. with its Entertaindom.com and Warner Bros. Online and Sony with a still-in-the-works venture to broadcast original programming on the Web.

Actors and producers — former DreamWorks topper Robert Cooper, Phoenix’s Mike Medavoy, actors Matt Damon and Ben Affleck, musicvid and commercial shops Propaganda and HSI — are starting production companies for the Web.

“Angry Boy,” one of AtomFilms’ biggest Internet hits, comes from Ardman Animations, the creators of “Wallace and Gromit” as well as DreamWorks’ “Chicken Run.”

Much of Icebox’s senior management team is made up of former execs from Virgin, Disney, Fox, Warner Bros. and Roger Corman’s Concorde Pictures.

“You’ve seen a lot of people move into influential positions and steer Web companies into the entertainment space. In the realm of online entertainment, all of the interesting stuff that’s happening has come from great creative people who’ve done something in the entertainment business before.”

Following the executive flight to the ‘Net are big deals with talent agencies.

The William Morris Agency, Creative Artists Agency, Endeavor, United Talent Agency and Michael Ovitz’s Lynx Technology Group have all linked up with former industry execs now positioned inside dot-coms, and have landed clients or inked creative pacts and distribution deals for theirstables of clients. That list of agency clients now includes technology corporations.

“South Park” creators Matt Stone and Trey Parker were among the first to take to the ‘Net with their unprecedented $2 million deal with Shockwave.com.

Tim Burton, Chris Rock, David Lynch, Kelsey Grammer, Adam Sandler, comic book icon Stan Lee, rapper Eminem, “Seinfeld” co-creator Larry David, among many others, have followed.

Celebrities have helped brand Internet companies — Whoopi Goldberg with Flooz and William Shatner with Priceline.com — the same way that a movie studio goes to a star to brand a movie.

Get ready for more to come.

“For us, this has always been about positioning for the future,” says Lewis Henderson, head of new media for the William Morris Agency. “We have a responsibility to our traditional clients to help guide them and help them move into emerging new mediums. You can’t ignore the future. We need to understand what everyone is doing. You never know who’s around the corner who has a better technology.”

The crossover of projects from the Web to the bigscreen is also beginning to happen. And not surprisingly, the move is being led by entertainment players.

MediaTrip’s animated “Lil’ Pimp,” created by Peter Gilstrap and Mark Brooks, was scooped up by Joe Roth’s Revolution Studios to become a feature for Sony to distrib. (MediaTrip is Roth’s inhouse Internet division.)

Similarly, Icebox’s “Starship Regulars” was the first Web series to make the leap to a traditional TV broadcaster. It was licensed to Showtime, which plans to run the Webisodic strip on the air and turn it into a half-hour live action show.

UrbanEntertainment.com sold the film rights to John Ridley’s “Undercover Brother” to Universal for $2 million for Imagine Entertainment to turn into a feature. Ridley co-created NBC’s drama series “Third Watch” and earned story credit for the WB film “Three Kings.”

And the film rights to Stan Lee Media’s animated Web series “7th Portal” were acquired by producer Mark Canton.

Dot-coms are using the Web to create content quickly and cost-effectively while gaining a proven audience to transition into TV or film. Instead of spending tons of money on developing a pilot, which will, most likely, never make the schedule, producers can get proven content more cheaply from the Web.

“Basically, the Internet allows you to throw ideas against the wall and see what sticks for less of an investment,” says an agent at a major Hollywood tenpercentary.

But that is a challenge.

“If you can take the characters or properties to another medium, then that’s fabulous,” says Joe DiNunzio, CEO of Z.com. “Our goal is to make a great Internet show first. It must be suited to the Internet first. It must be compelling, fun and interesting on the Web first. Everything else is gravy.”

Funding for the dot-coms is even coming from within Hollywood, with Biondi’s Waterview Advisors, Sandy Climan’s Entertainment Media Ventures and Semel’s Windsor Media handing out the big venture capital bucks.

Investment house and incubator Red Leaf, recently hired former Columbia TriStar Interactive topper Lynda Keeler as the head of its Hollywood office to oversee the investment of $300 million in entertainment ventures.

“There has been this skepticism that Hollywood can’t do anything on the Internet,” says Steve Stanford, CEO of Icebox.com and former exec at the William Morris Agency.

But it turns out that Hollywood can be a quick study.

Consider the use of the Web to make the indie hit “The Blair Witch Project.” John Hegeman, the credited guru behind the campaign, has launched the science fiction/fantasy site DistantCorners.com with producer Roth’s help.

Yet there is a downside to Hollywood’s infiltration of the Web.

Some doors are being closed, shutting out aspiring writers, directors or actors looking to test market their skills online.

Icebox.com, for example, has said it will only consider scripts from established writers, not unknowns. Others are also showing signs of limiting outsiders.

“We wanted to start with the talent that is clearly superior,” Stanford says of its decision to mainly deal with writers for TV shows such as “The Simpsons,” “King of the Hill” and “Party of Five.” among others.

There’s also another potentially negative effect of the Hollywoodization of the Internet: Once innocent e-trepreneurs are morphing into overwheening execs and their dot-com companies are beginning to operate like the closed Hollywood studio system.

A couple of years ago, Internet startups were ready, willing and able to provide detailed accounts of their business plans, marketing strategies and future expectations. But since competition has grown fierce and entertainment dot-coms have married with Hollywood, some companies have become much more reticent to share information.

Some argue, however, that these developments within dot-coms could be attributed to growing self-confidence.

“You’re seeing an industry start to mature,” says Kevin Wendle, CEO of Netcaster iFilm.com. “I don’t think it’s about having more attitude. In some cases it’s about these companies having more confidence or less of a sense of desperation.”

Wendle should know. Once based out of San Francisco, iFilm has now moved to Hollywood and filled its management ranks with entertainment types. Wendle himself helped launch the Fox network and E! Online.

At the end of the day, Hollywood’s new Web-friendly stance and new deals don’t necessarily mean Hollywood understands the ways of the Web.

Industry message boards have been active in chastising the new players for jumping into the space, especially criticizing their inexperience.

And sometimes for good reason: High-level execs heading their own Web ventures — the struggling Pop.com included — ask assistants to videotape Web sites for them to view at their leisure later at home.

Jerry Bruckheimer (“Pearl Harbor,” “Gone in Sixty Seconds”) may have linked up with Z.com to host his official Web site and serve as a boardmember, but the flashy producer doesn’t even have a computer.

“The old people have no idea how to either make things work, or even understand the medium,” one posted message on iFilmpro.com says. “They don’t get it. They only resent those that do.”

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