It’s easy to believe that online entertainment is dead, gone and buried when dot-coms have been dropping like flies. But that would mean believing one of the Web’s biggest misconceptions.
Naysayers may call them the walking dead, but at least 40 individual entertainment sites are still alive and well, continuing to post short films, animated Webisodes and interactive games on the Internet. No, online entertainment is far from dead. The question of whether anybody is watching is another story.
But the fact that online entertainment players still exist, at a time when the tech economy has soured, says a lot. And no matter what site they are, the reasons for their survival in this dot-com storm are the same:
- Each company continues to pursue profits from several revenue streams including advertising, sponsorship, pay-per-view, content licensing, syndication and e-commerce offerings.
- Partnerships with other dot-coms or major media companies are key for financing and exposure.
- Mergers have created online congloms that share resources, including customer service, ad sales, content production and development divisions, and boast lowered burn rates and customer acquisition costs by sharing traffic.
Just ask AtomShockwave.
The new venture, formed out of the surprising December merger of short film darling AtomFilms.com and animation giant Shockwave.com, has created what’s being heralded as the largest entertainment company on the Internet.
Headed by AtomFilms’ almost iconic CEO Mika Salmi, the combined company now boasts 10 million viewers to its syndicated content worldwide; its individual sites alone attract 5 million monthly visitors, according to Jupiter Media Metrix.
But don’t call the company a dot-com. Since the merger, Salmi and his fellow 200 San Francisco-based staffers have aggressively been working to downplay its online components and stress its offline deals and partnerships — content syndication deals with Showtime, HBO, Blockbuster, TiVo, Volkswagen, Ford, British Airways, and with handheld device makers, including Microsoft’s Pocket PC.
“This is a new entertainment company with an even broader array of distribution channels via its two distinct brand offerings,” says Salmi, CEO of AtomShockwave. “AtomShockwave will continue to be at the forefront of the entertainment industry as both distribution and technology evolve.”
It’s this image strategy that’s being attributed to AtomShockwave’s recent raising of $23 million from power players such as Shockwave-parent Macromedia, Sequoia Capital, JP Morgan Entertainment Partners, Arts Alliance, Intel Capital and Frank Biondi’s Waterview Partners.
“The name of the game is survival right now,” says Robert Hertzberg, an online entertainment analyst with Jupiter Media Metrix. “It’s about who can ride out the economy, build a strong brand online and off and show that they can make money sooner than later.”
But AtomFilms and Shockwave are one of few veterans that can still say their doors are open since launching in 1999. Add iFilm to that list.
Although its business plan seems to change every month, the Hollywood-based company, overseen by the penny-pinching Kevin Wendle, has long operated alongside one-time rival AtomFilms to build its brand among Netizens.
Once its own seperate entertainment destination, iFilm, with just south of 100 staffers is now an Internet portal for all online entertainment and when talking about survivors, ironically provides a laundry list of 30 entertainment Netcasters that have survived the storm. And those are just the companies that have partnered with iFilm.com, providing links to 15,000 short and feature-length pics.
Side businesses such as the Hollywood Creative Directory, Lone Eagle Publishing, ScriptShark and iFilmpro.com, however, still generate much of the company’s revenues. Company raised an additional $10 million in February from Yahoo, Sony and Kodak, among others.
But there are other players, as well, targeting multiple demographics.
Netcasters have all said that their futures depend on crossing over Web projects to television or movie screens, but few have been able to do that.
Yet Urban Entertainment has emerged as one of the only Netcos bringing credibility to the Internet as an incubator of potential breakout hits. And it’s been able to do so by focusing on the often-ignored hip hop market.
Last year, the site run by a staff of ten sold its Web series “Undercover Brother,” written by “Three Kings” scribe John Ridley, to Imagine Entertainment and Universal to turn into a feature film. Pic is currently in production and stars comedian Eddie Griffen.
Separately, UPN has also inked a deal with Urban, ordering a pilot for an animated sketch comedy series. Similar to AtomShockwave, it is now also licensing its online independent film library for broadcast off the Web.
Through its relationships in the biz, the company has evolved into the top site for A-list African-American talent to develop, produce and distrib their Web projects: The Netco has deals to produce original animated series with helmers John Singleton (“Shaft”), George Tillman Jr. (“Soul Food”) and Malcolm Lee (“The Best Man”).
And it’s paying off. According to CEO Michael Jenkinson, Urban will be cash flow positive and profitable this quarter, with revs coming from shows’ derivative rights and producing fees.
“With the movie going, there are a lot of fees and that has put us in a good financial position,” says Jenkinson, who is producing “Brother” with Urban’s production and development prexy Damon Lee and Imagine’s Brian Grazer.
Also targeting urban auds are hip-hop destination sites Hookt.com and
Platform.net, which merged earlier this year. Sites have deals with rapper Eminem and Sean “Puff Daddy” Combs. short film lovers
Now that AtomFilms has expanded out of its short film niche to also include animation and games, other sites, including Hypnotic.com, MediaTrip.com, CinemaNow.com, Alwaysi.com, Sputnik7.com and Eveo.com are quickly stepping in to fill the void to cater to the hardcore indie pic crowd.
But it’s Netcasters Hypnotic, MediaTrip and video-on-demand site CinemaNow who have held the survival card close to their chests a little longer, linking up with Hollywood players including Universal, Joe Roth’s Revolution Studios and Lions Gate for production and distribution, as well as lucrative marketing partnerships.
In fact, it’s deals with Universal and Revolution, respectively, that have helped put MediaTrip and Hypnotic on the consumer map, with their Web site addresses plastered across their studio partners’ properties.
Hollywood-based MediaTrip, although recently downsized to five staffers, continues to tout its discovery of “George Lucas in Love” and continues to promote Revolution’s pics on the Web. On the right coast, Gotham’s larger Hypnotic is helping identify upcominig talent for and producing pics with Universal, hoping that its film efforts help turn it into a full-fledged production company.
Quietly producing quality content for the past two years, Gotham-based Netcaster Heavy.com recently bucked the odds by securing $3 million in funding from BayStar Capital this March.
Originally bowing as a creative boutique for advertising agencies, the 35-employee company has a slate of a dozen original shows and recently inked a syndication deal with Warner Bros. Online, which ordered 20 episodes of “Sabotage News Network” and sudser-like reality program “D. Life.” Site is now packaging five volumes of its animated strip “Behind the Music that Sucks” on DVD to sell in May. A content deal with a major cabler is also in the works.
But Heavy is only one example of Hollywood-independents that are enticing buyers with their Web programming. Sites like JoeCartoon.com, Sarbakan.com (which also recently sold an online show to Warner Bros. Online), NewGrounds.com and JibJab.com, continue to attract online auds to their irreverent content.
And Internet production companies and animation houses are also garnering much warranted attention. Mondo Media, WildBrain, Pulse Entertainment, Zeros & Ones and Rumpus, among others, are not only providing the work-for-hire services to dot coms out of their San Francisco, Los Angeles and New York offices, but they are also creating some of the more innovative shows, including Mondo’s “Thugs on Film” and Zeros’ “Julius and Friends.”
The raunch factor
Adam Sandler’s Schnorff.com may never launch, but potty humor on the Web is alive and well at The Romp.com, founded by frat packers Bruce Forman and Eric Eisner.
Site recently bowed two new ways to exploit its popular male-oriented content, with the first initiative being a paid subscription service called “The Romp Mafia,” offering new content, including three new shows: “TV Interactive,” “Officer Krupt” and “Coach Bigot” — as well as a weekly installments of interactive game “Booty Call” and a bevy of exclusive pics and vids of scantily-clad women.
And so far, there’ve been takers. The site’s founders say it has had more than 10,000 paying subscribers sign up for the $4.95 monthly service.
Romp’s on again off again relationship with H&S Media is apparently on again, with plans to continue its mini magazine of repurposed content to accompany “The Edge,” H&S’s Maxim-esque magazine that targets the men’s market. The Romp was paid an undisclosed licensing fee for the second mini-mag, and the two companies are in final talks about a stand-alone Romp magazine, to bow later this year.
“A lot of people in the online entertainment space are trying to move into
the TV or movie (arenas),” says Forman. “We want to do that as well, but for now, a print magazine better fits our sensibilities. We can reach more customers without a big production cost.”
The studio sites
Despite in-house politics and the shuttering of Warner Bros.’ Entertaindom, a change in direction at News Corp’s News Digital Media and financial woes and closure of Disney’s Go.com arm, the studios haven’t fled online entertainment entirely.
In fact, under the guidance of Kevin Tsujihara, Warner Bros. is upping orders of original content for its WarnerBros.com site, programming it plans to promote in the coming months.
“This is an indication that our appetite for original content has not gone away,” says Tsujihara, Warner Bros’ exec veep of new media. “We’re going to be pretty selective. It’s not prudent right now to be scattershot in your original content. But this is definitely something we’re still interested in.”
Also over the next several months, Sony will unveil its new venture ScreenBlast, which will distrib a series of original Web projects across Sony’s family of products — from PCs to handheld organizers, PlayStation 2 to its set-top boxes and televisions. Although programming details remain hush, the company is actively seeking out new content.
Best of the rest
The best of the remaining rest include Santa Monica-based Eruptor.com, which although quiet features innovative interactive Web series such as “The Marty Show” and “Jonni Nitro”. The company has recently started launching handheld games and characters called PortaPets centered around Pamela Anderson, President Bush and The Grinch that entertain on a handheld organizer.
Nibblebox.com, the college-talent-targeting site co-founded by helmer Doug Liman (“Go,” “Swingers”) is still launching college radio stations and Web series mentored by directors Steven Soderbergh, Wim Wenders and Joe Dante, among others.
Neurotrash.com, which gained notoriety by bowing “Jar Jar Binks: The E! True Hollywood Story,” is ramping up its efforts beyond its Web site to include full-blown management and production divisions.
And DistantCorners.com, the 12-person Gotham-based sci-fi, horror and fantasy Web venture founded by former Artisan Entertainment marketing guru John Hegeman and backed by Sony, is still trying to scare auds with its original projects.