Sony's entertainment unit said it had agreed to pay $65 million to buy Web video-watching site Grouper.com, marking the growing embrace of the user-generated video craze by big media.
Sausalito, California-based Grouper is one of a number of Web start-ups operating
in the shadow of YouTube.com -- the most popular destination for user-generated
videos, which plays host to an average 100 million video showings a day.
Grouper has attracted a following of millions of its own fans not just as passive
viewers of Web-based videos but also as creators of their own videos, which can in
turn be shared by users or downloaded to portable video-playing devices.
The acquisition by Sony Pictures Entertainment (SPE), the Hollywood movie and
television production unit of Japan's Sony , aims to infuse the studios with new
ideas and talent for movies, television shows and games, a top executive said.
Michael Lynton, Sony Pictures chairman and chief executive, said in an interview
that user-generated content as a complement to professionally produced media has
been a hot topic within Sony's different businesses for more than a year.
Sites like Grouper give big media companies like Sony a ready-made network to
deliver both Hollywood produced content and niche-market consumer-created videos
using viral distribution where users share favorite items with friends.
Unlike Walt Disney Co. with ABC, News Corp. and Fox, General Electric Co.'s NBC
Universal or CBS , Sony does not own a broadcast network. So it does not have a
direct distribution outlet for movie and television.
Viacom Inc. has MTV. Last year, MTV bought iFilm, another popular Web video
destination. Also last year, News Corp. bought MySpace and has its Fox TV and
Grouper encourages viewers to browse through videos and post their favorite items
to their profile pages on other popular Web sites, such as MySpace, Google Inc.'s
Blogger and Friendster.com.
In effect, Grouper becomes an online talent audition for Sony. And while Sony
might feature promotional movie trailers on Grouper, the site also gives the media
conglomerate access to hundreds of thousands of consumer-generated clips, which
can be mixed with copyrighted movies and TV that Sony produces.
No immediate changes are planned for the Grouper.com site
(http://www.grouper.com), although over time Sony may develop
ad-supported and premium content businesses -- Hollywood jargon for selling video
While Grouper will retain its current management and work within Sony Pictures,
the acquisition also fits with several other Sony business arms, including its
consumer electronics and video gaming groups.
Grouper videos can be downloaded to connected devices like Apple's
iPod music and video players and Sony's own popular PSP handheld gaming and
Grouper's backers include T-Ventures, the investment arm of Germany's T-Online,
and DAG Ventures, which recently led a $10 million financing round for Friendster.
In May, Grouper.com said it had surpassed 8 million unique visitors to the site.