Ripe Digital Entertainment, the LA-based digital entertainment company backed by Hearst-Argyle (NYSE: HTV) and Time Warner (NYSE: TWX) investments, has closed down, we have confirmed from sources, and the remaining management is trying to sell the company’s assets.
My two cents:
- Both companies raised obscene amounts of money: Mania raised $32M and Ripe $45M. In the history of mankind, more money has not solved more problems; think 99% of VC-backed startups, the NY Yankees, NY Mets, NY Rangers (you get the idea) or of course, Biggie Smalls.
- Sometimes it hurts to be too early in a market. Ripe and Mania were both very early players in the online content space. I wonder at times if WatchMojo.com was too early, but then again we didn’t raise VC money so time is on our side.
- Both companies focused on tough markets, Mania picked music, which I think was suicidal. Ripe chose the lad mag approach. Having been a partner at online men’s lifestyle magazine AskMen from 2000-05 before I started WatchMojo.com, I can tell you that winning over advertisers when half your content is boobs and butts is pretty challenging. I think this is why online video startup Kush TV renamed itself Red Lever and then sold to ad network Adconion (I certainly see ad networks buying online video studios to hedge themselves from exposure to display ads).
To their credit, Ripe over the years started three main brands, RipeTV (men’s entertainment), OctaneTV (auto), and FlowTV (urban), but was bleeding money despite having VOD distribution on Comcast (NSDQ: CMCSA) and Time Warner (TWX).
Ripe was founded by Ryan Magnussen, Patrick Bradley and Steven Voci, all three of whom were founding partners for interactive agency Zentropy that sold to Interpublic 1999. The main investor is Hearst-Argyle who owned about 23.4% of RDE on a fully diluted basis, according to its SEC filings.
Of course, it’s not just the online video 1.0 companies that are shutting down, 60Frames shut down recently.
60Frames shuts down, highlights two major problems with online video strategy so far.
1 - Why the VCs are Being Stupid About Online Video
A couple of nights ago, a successful and well-known entrepreneur/investor was telling me that VCs would only invest in content when they saw some kind of competitive edge. Today, with 60Frames sadly joining Mania TV as shuttered VC-backed online video content plays, I submit one more piece of evidence of how VCs are going about content the wrong way:
R.I.P. 60Frames Entertainment. Sources tell THR that the United Talent Agency-backed digital studio is shutting down operations due to a lack of funding. 60Frames joins the ranks of recently shuttered studios ManiaTV, PluggedIn (and HBOlab, to a certain extent), that have succumbed to a combination of dwindling ad budgets and wary VCs.
Incubated by both the UTA and web-based TV ad agency SpotRunner (which is having its own financial and legal problems), 60Frames officially launched in 2007; it raised $3.5 million in funding from Tudor Investment Corp and Bob Pittman’s Pilot Group, among others. The UTA-connection was supposed to give the studio an advantage over rival digital startups when it came to securing talent and distribution deals.
60Frames did have a number of deals in the works, including a content development deal with NBCU and comic-book deal with Oni Press; it had also succeeded at getting its shows like Blood Cell (pictured) picked up by sites like TheWB.com and FunnyorDie—but clearly none of that was enough. The studio laid off 6 staffers in November; the remaining seven employees have been let go.
Again, 60Frames might have failed for 10 other reasons… but just because you have what VCs perceive to be an advantage doesn’t mean it’s an advantage in the marketplace.
It’s a darn shame to see video content startups fall apart and shut down… I will tell you that.
2 - Why the Media Guys are Being Stupid About Online Video
While the VCs are looking for riches in all of the wrong places, the media guys aren’t any less “s2pid” either.
The media guys aren’t looking for anything competitive, they’re chasing hits. I’ve long argued that chasing hits - be it by way of viral comedy hits or series - is the sure way to go broke. 60Frames, after all, has had hits (nearly 7M views), such as this one:
How did that help them?
60Frames burned through $3.5M in funding. We, on the other hand, have crossed 50,000,000 views all time with no notable hit… and meanwhile, we have dozens of paying clients who license videos from us.
People, stop being stupid about online video and start building real businesses!
But, of course, no one will listen to me… so expect more shuttered startups, especially VC-backed ones.
When hits don’t translate into dollars, from PaidContent.org:
—60Frames Entertainment : Beverly Hills, Calif.-based 60Frames Entertainment has laid off six employees, or about 40 percent of its workforce. The digital entertainment studio announced a number of deals over the summer, including one to produce print- and Web-based coming books with Oni Press, and a content development deal with NBCU, but The Hollywood Reporter says the job cuts won’t affect the output. The brainchild of execs from talent agency UTA and Web-based TV ad company SpotRunner, 60Frames launched in July 2007, with $3.5 million from Tudor Investment Corporation and the Pilot Group. It’s the latest—though likely not the last—video startup to cut staff as a result of the economic climate, including Heavy.com, ManiaTV and Veoh.
60 Frames are the folks behind this amazing video:
This is the problem with most of these new media studios: they aim for hits… which is never easy, but even when a hit is created, it is not easily monetizable. This is a perfect example of this video: 3M views in 10 days or so, but not exactly easy to create a business around. Unless, of course, Obama 2008 paid 60Frames to produce it… which is very possible, in which case it supports my other argument, that ad-supported online video might not even be the right tree to bark up to.
PLAY
