In Week Of New Launches, Financial Calamity Claims A DO Victim

The digital out-of-home video business has proved more resilient than most, as place-based video networks continue to launch new services and extensions -- with three new initiatives this week alone. But the ongoing credit crunch seems to have claimed its first casualty, as well.

First, the bad news: Reactrix, which installs and operates interactive digital displays in public places, is in receivership and has put itself up for sale after running out of funds. Rumors of the closure began circulating Monday and were confirmed today when the company hired Sherwood Partners, a consultancy that handles liquidations among other things, to "find buyers for the company's media and technology assets," according to founder and CEO Mike Ribero. This phrasing suggests the company may be split up into pieces, effectively ceasing to exist.

Reactrix has received praise for its innovative technology, which allows users to control the motion of eye-catching digital displays in public places, drawing them into interaction with the advertiser's brand with games, art, and other options. The company had also forged relationships with a number of desirable venues, including National CineMedia, which signed a deal with Reactrix to bring digital displays to its partner's theaters in March, and Clear Channel Airports, which followed suit with a similar deal in May.



However, top execs from other digital out-of-home video networks had been warning for over a year (in private) that Reactrix was burning through cash at a dangerously fast rate. The company managed to close four progressively larger rounds of funding from venture capitalists worth a total of $85 million or more, with the last round delivering $45 million in February, 2007. As many other media companies have discovered, however, this would prove to be the last round of easy money, with credit drying up as the American housing market imploded, followed more recently by the banks and the stock market. Execs are also predicting a shake-out in the digital out-of-home marketplace, which has seen networks proliferate, often trying to occupy the same niche.

On to the good news: the adverse financial environment isn't deterring some other digital out-of-home video networks from ramping up their distribution platforms, as evidenced by a series of announcements this week. On Wednesday Ecast, best known for operating a network of digital jukeboxes and sigange in bars and nightclubs, said it will expand its network to include interactive displays in venues including retail, hotels, healthcare, and sports arenas. The new product, called Ecast IQ, features a 40-inch flat-panel HD touchscreen that offers users Internet functionality, mobile texting, and photo uploads, among other things. Marketers can reach consumers as they engage with on-demand video and games, and interactive advertising can be coordinated with e-commerce, making the display a point of sale.

Also this week, Destination Media said it is expanding its convenience store TV network, C-Store TV, to a number of locations in Los Angeles, San Diego, and Phoenix, adding to displays already operational in New York, Boston, Los Angeles, and San Diego. C-Store TV is expanding in coordination with Gas Station TV, also owned by Destination Media, giving advertisers the ability to surround consumers with their ad messages at both the gas pump and inside the gas station convenience store. Together, the C-Store TV and Gas Station TV displays will reach 250 million viewers annually by the end of 2008, according to Destination Media.

Two weeks ago a rival gas station ad network, Fuelcast, announced a merger with Bhootan, which operates a network of digital displays in various retail locations, forming a new out-of-home network called Outcast. According to the companies, the merged network will reach 25 million consumers a month. Fuelcast's network consists of about 5,500 screens at gas stations in eight U.S. markets as well as Toronto, while Bhootan includes 500 screens at retail locations like Walgreens, Sears, Kmart, Albertsons, and Stop N' Shop.

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