Daily Marauder

ONLINE SERVICES/INTERACTIVE MEDIA by Marauder

ONLINE SERVICES/INTERACTIVE MEDIA

Blockbuster has acquired Movielink, the online movie service launched 5 years ago by Sony, Universal, Paramount, MGM and Warner Bros. Movielink has failed to have much of an impact in digital media, partly because of rigid DRM rules that prohibit burning of purchased movies to DVD-R’s by users. Blockbuster will be able to utilize Movielink’s digital rental and purchase licensing agreements to add to its online rental business, which is still playing catch up with Netflix.

To put this in perspective for you, Blockbuster’s Total Access service currently has 3.6 million subscribers as compared to Netflix’s 6.7 million subscribers.  Back in early ’07, Netflix added a “Watch Now” feature to their web site allowing members access to online downloads of approximately 3,000 titles to watch instantly on users’ computers.   

Here’s how this service works: Netflix does not limit the number of movies downloaded; alternatively, they limit based on hours.  Users are given 1 hour of content for every dollar that they spend on their monthly plan.  In essence, Blockbuster probably figured that they would buy a service like Movielink rather than build something on their own end (as Netflix did).  In this case, they also bring Movielink’s customers into the fold who may or may not also be Blockbuster customers.  Very interesting strategy and apparently Blockbuster acquired Movielink for MUCH less than the estimated WSJ price point of $20 million.  SEC filings next week will most likely disclose the actual amount.

The chart below compares the online DVD rental plans offered by Netflix and Blockbuster.

News Corp. reported that Fox Interactive Media had its first profitable full year, clearing $10 million on revenue of $550 million, doubling revenue during the quarter from the same period a year ago. The company expects MySpace will help FIM earn $1 billion in revenue during fiscal year 2008 on operating margins of 20 percent. A new behavioral targeting program attaching ads to MySpace user profiles will command higher rates from advertisers. (http://www.marketwatch.com/news/story/news-corp-sales-up-company/story.aspx?guid=%7B3DD63A43%2D0589%2D469F%2DB197%2DC2E3D0122A9F%7D 8/8) 

Providence Equity Partners, a media investment firm, is said to be investing $100 million for a 10% stake in NBC Universal and News Corp.’s so-called “YouTube killer” online video venture. The investment will allow the companies to accelerate the introduction of the service. (http://www.nytimes.com/2007/08/09/business/media/09online.html?_r=1&oref=slogin 8/9) 

Google and Yahoo are the No. 1 and No. 2 Internet brands, respectively, according to a survey of online users by JupiterResearch. Men prefer Google, while women prefer Yahoo. By age, the No. 5-ranked MySpace is near parity with Google and Yahoo among young adults. (http://searchengineland.com/070809-092238.php 8/9)

NBC Universal’s USA Network is marrying commercial videos with social networking in the network’s first digital media initiative not linked to programming. Didja.com will stream current and classic commercials on demand, offering favorite web 2.0 tools including sharing, user ratings and mash-ups. Advertisers will be able to upload commercials remotely, customize functionality and messaging and offer additional content such as store locators, coupons and incentives. The site, which will eventually extend to all NBCU divisions, will also mine data, offer virtual focus groups and provide behavioral targeting for clients. (http://www.variety.com/article/VR1117969864.html?categoryid=1236&cs=1 8/7) 

AMC has devised a new multiplatform campaign to promote its hit series Mad Men, featuring over 14 30-second vignettes that will run exclusively on AMC and amc.tv beginning today. Each spot will showcase a story from one of the legends of the glory years of Madison Avenue, including Jerry Della Femina, George Lois and Martin Puris.

MTV and Voxant announced a partnership that will bring MTV News programming (particularly gaming-focused content) to Voxant’s distribution site TheNewsRoom.com. Web publishers and bloggers who register with TheNewsRoom may obtain free video and print clips from MTV News and post that content to their own Web sites.

MTV and Paramount Home Entertainment enlisted digital creative agency Bradley and Montgomery to create “EmotiClips” to promote the release of season 2 of MTV’s The Hills on DVD. EmotiClips are outtakes that can be embedded, emailed and sent via mobile messaging to express card-like sentiments. Here’s one posted on YouTube to describe a “sucky person.”

Veoh raised an additional $25 million on third round of funding, led by Goldman Sachs and including Spark Capital, Shelter Capital Partners, Time Warner Investments and Michael Eisner’s Torante. Former Viacom CEO Tom Freston and former Viacom Entertainment Group Chairman Jonathan Dolgen also joined the round, according to paidcontent.org.

Revver.com is seeing a 4-7 times jump in revenue by adding pre-roll ads to user-submitted videos, according to comments made by Revver co-founder and chairman Steven Starr in an email debate on WSJ.com with Sab Kanaujia, VP/Digital Product Strategy for NBC Universal. Starr characterizes the digital media revolution as social and inclusive, demanding a new skill set. Kanaujia agrees, but sees no reason why traditional media can’t adapt and integrate.

Scripps Networks acquired Incado, operator of user generated management platform that powers Pickle.com. The technology enables uploads of photos and videos from computers, mobile phones or digital cameras to any web site, functionality that should be a perfect fit for Scripps Networks’ lifestyle content. (http://www.multichannel.com/article/CA6466918.html 8/8) 

Traditional media companies are busy plotting deals to acquire Web 2.0 start-ups (Hearst and Kaboodle; Forbes and Clipmarks). From a Silicon Valley perspective, says GigaOm blogger Om Malik, the “emergence of buyers outside the Google-Yahoo-Microsoft triumvirate is a good thing.” (http://news.com.com/8301-10784_3-9756734-7.html 8/8)

Universal Music is acquiring a stake in the operator of urban social networking Web site Loud.com. The advertising-supported site caters to hip-hop fans who can upload their own raps and compete for a record deal with SRC Records, a label distributed by Universal. (http://news.yahoo.com/s/ap/20070809/ap_en_bu/universal_music_loud_com 8/8) 

Craigslist’s estimated annual revenue of $25 million is only about 5% of what it would be if the mostly free classifieds Web site put more of an emphasis on monetization. But CEO Jim Buckmaster insists: “We’re making enough money for all of our needs.” (http://www.theglobeandmail.com/servlet/story/RTGAM.20070808.gtcraig0808/BNStory/GlobeTQ/home 8/8)

ESPN’s all-video site, ESPN360.com, launched in 2001, will relaunch next month with an emphasis on live sports events. ESPN execs found that their fans “were having trouble differentiating which service offered which content” when choosing between ESPN.com and ESPN360.com. (http://online.wsj.com/public/article/SB118653779728391300-csLqOadRju9QV9XZqJRAR38UT4A_20070815.html 8/8)

Mattel reports that BarbieGirls.com, its new social networking and virtual world website, has exceeded 4 million registered users, with an average of 45,000 new users signing up each day. Targeted specifically to girls, the site launched in April 2007.  The news comes as Mattel releases the Barbie Girl MP3 player (512 MB, with space for a 2GB memory card), which is shaped like a fashion doll (with snap-on fashions and accessories) and acts also as a USB key that when connected to computer will unlock additional exclusive content on BarbieGirls.com. 

Success and failure of online video businesses will be determined by the quality of the viewing experience, according to a new JupiterResearch survey conducted on behalf of content delivery provider Akamai. The greatest sources of frustration for dissatisfied viewers were interrupted streaming (44%), excessive waiting for video starts (36%) and poor picture quality (32%). Consumers still showed significant interest in online video although, with news clips, TV segments and music videos the preferred genres.