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Confirmed: Lovefilm Considering Sell-Off Options
DVD-by-post rental business Lovefilm told us it is reviewing some kind of sell-off options, after earlier FT reports hinted at a deal. A spokesperson told us: “We can confirm Lovefilm has received approaches and the board is considering options on on behalf of the group and its shareholders.”
Investment bank Jeffries has been appointed to coordinate the deal. But what kind of offers have been made, and what shape the deal might take, isn’t yet clear - FT.com suggested some VC backers now want to exit: “Discussions are focusing on new investors acquiring a majority stake rather than a full buy-out of existing shareholders”.
Lovefilm has been coming in to its own during the recession, with heavy marketing outlay tempting hard-press viewers to stay home and get movies through the post. We understand the company has added 200,000 customers in the last six months, now up to a 1.2 million total, and that it’s aiming to break through £100 million revenue this year, charging between £3.91 and £15.65 per month.
It’s thought Amazon (NSDQ: AMZN) now owns just under a third of Lovefilm, after the bookseller put its UK and German DVD rental businesses in to the company last year. Remaining shareholders include Arts Alliance Media, Index Ventures, Balderton Capital, DFJ Esprit and company management. Speculation on those “new investors” may centre on Netflix (NSDQ: NFLX) - the US DVD renter could be seen as a natural counterpart.
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WaPo’s Brauchli: Evaluating Online Fee Options ‘Prudently’
One question that inevitably comes up these days when a top newspaper exec talks online with readers: How can I pay you for online news? (Of course, that shouldn’t be interpreted as a sign that enough readers want to pay for online news to make it work.) Today was Washington Post Managing Editor Marcus Brauchli’s turn and, while the response didn’t move the needle one bit, it does offer a little insight into the way the paper is approaching the matter: “We’ve certainly considered whether it would be possible to charge for our content online. We fund our news operations from revenues generated largely by advertising. Online advertisers pay for an audience—the larger, the better. If we put up a wall that readers would have to pay to cross, and then readers didn’t cross it, our advertising revenues would probably suffer. So we are, you might say, evaluating our options prudently.”
But the rest of his answer sounds a lot less active in terms of options—and very uncertain that there is one: “That said, just about everybody in the news business is thinking about the question of whether or how to charge for news online. And if there were an answer that made sense for our readers, our advertisers and us, we’d no doubt weigh it seriously.”
—Kindle edition: Brauchli has hopes for paid distribution via hand-held devicesOne place to start might be with better promotion about what WaPo already sells, like subscriptions via the Amazon (NSDQ: AMZN) Kindle. Brauchli told one happy-to-pay reader who wanted to know when WaPo would be on the Kindle: “We’re intrigued by the possibility of reaching a large audience through such hand-held readers, although so far the number of people who are reading The Post on Kindles is relatively small.”
—Working on mobile: Another reader took the Post to task for a mobile service that “lags far behind the competition.” Brauchli: “We agree that our mobile site could be better, and we’re working on it. We’ve put a lot of effort into mobile news alerts in the last couple of months.”
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WaPo’s Brauchli: Evaluating Online Fee Options ‘Prudently’
One question that inevitably comes up these days when a top newspaper exec takes online with readers: How can I pay you for online news? (Of course, that shouldn’t be interpreted as a sign that enough readers want to pay for online news to make it work.) Today was Washington Post Managing Editor Marcus Brauchli’s turn and, while the response didn’t move the needle one bit, it does offer a little insight into the way the paper is approaching the matter: “We’ve certainly considered whether it would be possible to charge for our content online. We fund our news operations from revenues generated largely by advertising. Online advertisers pay for an audience—the larger, the better. If we put up a wall that readers would have to pay to cross, and then readers didn’t cross it, our advertising revenues would probably suffer. So we are, you might say, evaluating our options prudently.”
But the rest of his answer sounds a lot less active in terms of options—and very uncertain that there is one: “That said, just about everybody in the news business is thinking about the question of whether or how to charge for news online. And if there were an answer that made sense for our readers, our advertisers and us, we’d no doubt weigh it seriously.”
—Kindle edition: Brauchli has hopes for paid distribution via hand-held devicesOne place to start might be with better promotion about what WaPo already sells, like subscriptions via the Amazon (NSDQ: AMZN) Kindle. Brauchli told one happy-to-pay reader who wanted to know when WaPo would be on the Kindle: “We’re intrigued by the possibility of reaching a large audience through such hand-held readers, although so far the number of people who are reading The Post on Kindles is relatively small.”
—Working on mobile: Another reader took the Post to task for a mobile service that “lags far behind the competition.” Brauchli: “We agree that our mobile site could be better, and we’re working on it. We’ve put a lot of effort into mobile news alerts in the last couple of months.”
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Studios-Backed Web Video Efforts Stalled For Now; Who’s Left?
Time was when everyone was starting their own online video studio, inspired from the early successes on YouTube. It wasn’t that long ago when Disney (NYSE: DIS), HBO, NBC and AOL (NYSE: TWX) started funding these projects, with flashy announcements and high-profile backers. Now, as the bubble on original online video has burst, most of these efforts have been stalled, and network-backed options such as Hulu have taken off, LAT surveys the scenario and trends going ahead:
—In Feb last year, Disney launched Stage 9 Digital with an initial roster of about 20 shows. With the exception of its first series, “Squeegees,” a comedy about window washers, none of the others saw the light of the day. Earlier this year, it laid off most of its staff, and in March Stage 9 was shut down.
—Turner’s online comedy venture SuperDeluxe, launched in 2007 as edgy, multiplatform brand aimed at men 18-24, folded last year into its much more recognizable AdultSwim brand.
—HBO and AOL’s comedy venture ThisJustIn folded due to, well, pure and simple mismanagement, besides the macro issues. Then we all know siste company Time Inc’s doomed venture with OfficePirates: that closed down two years ago.—Besides big media, startups like 60Frames and ManiaTV have also closed down in the last year. Some of these moved away from creating original content but served as distributors, but even then, ad dollars didn’t grow fast enough to cover production costs, let alone overhead, as LAT story explains.—Just yesterday, CBS-backed EQAL announced that it is moving away from development and funding of its own standalone series, in favor of running the online video properties for existing brands like CBS’ Harpers Island (called Harper’s Globe) or Food Network icon Paula Deen.
The reasons for the above failures came down to hubris, the hope that advertising would help tide the way. With the economy, and general lack of a big enough audience to monetize, most of the optimism has frittered away. Some of the new ideas include integrating sponsors into projects ahead of production, instead of baking them in later. One latest example is the show MSN and Reville are working on with Jack and Suzy Welch: the new show, to debut on MSN, is called “It’s Everybody’s Business With Jack and Suzy Welch”, and is as sort of a business-intervention series, in which the duo doles out advice to companies, reports Variety. Microsoft (NSDQ: MSFT) gets to promote its suite of small business software and technology services as a result. For a deeper dive into the state of brand-funded video content, read this AdWeek story that came out today.
Meanwhile, some of the studio efforts left in the field include Sony’s Crackle which mixes original series with TV shows and movies owned by the studio; MTV Networks’ Atom.com which has morphed into a comedy video site feeding into ComedyCentral; Warner Bros’ Studio 2.0 which i used to attract audiences to the company’s TheWB.com site; and among startups Sequoia-backed FunnyorDie, which features well-known stars and don’t really have to pay them; Michael Eisner-backed Vuguru, which is taking things slowly after two big online productions, and others like Deca, which is now focusing on video-focused vertical community sites like Momversation and others.
As for their distribution strategies going ahead, beyond advertising support, VideoBusiness looks at some alternative strategies: Walt Disney Studios Home Entertainment will launch its first original Web series, Time Jumper, a graphic novel series produced with legend Stan Lee, and will sell it only as a download on iTunes and in 2010 on DVD. Warner Home Video launched a series tied to the Terminator: Salvation theatrical release that re-uses graphics from the videogame spinoff and is being sold as a download through iTunes and Amazon (NSDQ: AMZN) VOD. Also, Starz accidentally found online success with its Starz Bunnies show, an ongoing series of 30-second animated shorts, and while the show is ad-supported and airing Crackle and Netflix (NSDQ: NFLX) and on-demand on Starz, it took to licensing the series international in in France and Germany, which made it “made it a very profitable game,” said Marc DeBevoise, head of Starz Digital Media.
On a related topic, Henry Blodget wrote an impassioned essay over the weekend arguing that the TV industry will look a lot like today’s newspaper industry in the next 5-10 years: not able to support its current cost-structure as audience move online and online-based distribution gathers steam. Agree with him or not, the argument is compelling.
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