Reminder: Online Video Is The Afghanistan Of Media Industry
Last week Machinima confirmed that it had raised a $35 million round of financing, making it the most heavily funded online video content company, ever. Of course, there are online video companies in technology, advertising and distribution with bigger funding -- some of which have gone on to successful liquidity events while others have crashed and burned.
I always say that online video is the Afghanistan of the media world, where its strategic importance and possible upside lures confident backers thinking that they can overcome its inherent challenges. But more often than not, those backers leave with shattered egos, bloodied balance sheets and bruised income statements.
Considering that Memorial Day remembers those who have sacrificed their lives in all wars, in today’s Video Insider, we commemorate the many online video startups that perished over the years. I’d like to stress: this article isn’t a case of dancing over anyone’s grave, it’s a look back at some of the companies that could have done much more had a bounce gone their way. In fact, with success being a function of six variables -- namely vision, ambition, determination, execution, luck and timing (the first four being within one’s control and the latter two, not) -- these are companies that possibly simply weren’t in the right place at the right time.
While YouTube was founded on February 14, 2005 and its first video was uploaded April 23, 2005, Revver launched on October 29, 2005 but was the first “video-sharing website to monetize user-generated content through advertising and to share ad revenue with the creator.” Revver was also lauded by the industry, being awarded the Most Influential Independent Website by Television Week and nominated for an Emmy, too.
By 2007, after YouTube was acquired by Google, Revver had shelled out its first million dollars to producers -- but, in the winner-takes-all distribution game, it was too little, too late.
Despite a long list of prominent backers including William R. Hearst, III, Comcast Interactive Capital and Turner Broadcasting, before the full effect of the 2008-09 recession hit, investors threw in the towel.
My company looked into acquiring Revver to leverage its audience and base of producers -- but ultimately Revver was sold to LiveUniverse in February 2008, which soon discontinued the revenue share model. So Revver lost its one differentiator, which led to its ultimate demise.
Ripe Digital Entertainment was either well ahead of its time or simply spending way too much money; probably a combination of both led to its downfall.
The company didn’t lack any pedigree, that’s for sure, having been founded in 2002 by Ryan Magnussen, who had previously founded and built Zentropy into one of the largest interactive ad agencies, selling it for $50 million to InterPublic.
RipeTV targeted a young male audience with short-form programming, offering multiplatform distribution and allowed "immersive advertising" to a who’s who list of marketers including Chrysler's Dodge, Cingular, and Procter & Gamble's Old Spice.
But once the $45 million in funding ran out in the wake of the 2009 recession, Ripe Digital Entertainment shut down in June 2009.
PodTech was founded by John Furrier, featured Microsoft blogger Robert Scoble, and raised $7.5 million from US Venture Partners and Venrock. But in the end, it was a classic example of how VCs didn’t feel comfortable with the content business, particularly video content.
After unloading the company’s assets for half a million dollars, PodTech simply ceased publishing any content. For what it’s worth, while most of the sites mentioned in this article display a dead site, Podtech remains online, though it hasn’t been updated since April 17th, 2009.
Joost was the brainchild of the duo that bought us Kazaa and Skype. The problem was that it was the brainchild of the duo that brought us Kazaa and Skype since they believed that better technology and user interface would address their lack of programming over time. Whereas Skype and Kazaa relied on viral marketing to take off, Joost’s lack of content chops made it a matter of time before the company’s strategy would hit a wall. Despite raising $45 million from luminaries and media behemoths Viacom and CBS, Joost was acquired by Adconion, who over time killed the brand.
A very high-profile case in the battleground where traditional media, the government and tech entrepreneurs meet, Megaupload accounted for a massive percentage of all Web traffic, which made it the poster child of piracy -- and public enemy #1 for the traditional media companies who argued that MegaUpload’s scale, size and success came at their expense.
Big government agreed, and shut down the site with federal indictments. As of now the company has ceased operations and its future remains, at best, murky.
While some companies shut down with a lot of fanfare, others, like On Networks, just fell off the face of the earth. On Networks focused on producing high-definition programming and giving creators a tool to publish and monetize their content. With $16 million in financing, On Networks didn’t suffer from a lack of funding. But with HD equipment becoming commonplace, basically anyone could join the network -- leading to quality issues, and perhaps a lack of demand and interest.