M&A and VC Activity
In April 2007, Comcast acquired online movie ticket destination Fandango for $200 million. Fandango is a fast growing site with about 5 million unique monthly visitors. Founded in 2000 by seven of the top 10 largest U.S. theater chains, Fandango services movie ticketing for more than 15, 000 screens.
Recently, Blockbuster acquired Movielink, the video on-demand service that was owned by five major film studios, including Universal, Paramount, Sony, MGM and Warner Bros. for approximately $6.6 million in cash.
Viacom acquired Atom Entertainment in mid 2006 for $200 million. Atom was founded in 2001 and has more than 1,500 short films and animation titles from independent and upcoming directors.
Hollywood Media acquired UK-based CinemasOnline for $3.45 million in November 2005. CinemasOnline operates websites for over 300 cinemas with over 1,200 screens in the U.K., representing approximately 35% of the U.K. cinema market on a per screen basis, and over 60 cinemas in Ireland.
Recently, video rental chain Movie Gallery acquired MovieBeam for less than $10 million, including the acquisition costs and development expenses.
Flixster, a San Francisco based social network where users rate and discuss movies, closed a round of financing of approximately $ 2 million in January 2007 with LightSpeed Ventures.
Seventymm, the online movie rental site in India received $7 million in funding from Matrix Partners. The site has also raised capital from other VCs including Draper Fisher Jurvetson and ePlanet Ventures.
The acquisition of the various online movie sites by media companies like Comcast, Movie Gallery and Viacom indicate that they are gearing up to support online distribution of movies, likely to be a big trend in the future. However, timing-wise, that future is still at least a decade away, in my opinion, and straightforward DVD-rental will continue to be the dominant mechanism of how consumers access the film rental market.
The Online Movie industry has come a long way from illegal downloads of yesterday to today’s social networking sites dedicated to movies and paid downloads. Today there is a trend in which the users not only watch movies but also take part in live discussions with preferred groups, writing reviews and rating movies.
Finally, the company that is best positioned to become the true manifestation of my Web 3.0 framework is Netflix. However, as I have described earlier, it is also a company that needs to rethink its current strategy,
as it is buried in a low-margin corner, and has not taken advantage of the community and content features enough, and thus, has not benefited adequately from online advertising.