Sony acquires Web video site
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Grouper Networks brought under studio umbrella in $65M deal
By Jennifer Netherby -- Video Business, 8/23/2006
AUG. 23 | Sony Pictures is the latest entertainment company to buy into Internet video, acquiring Web video-sharing site Grouper Networks in a $65 million deal set to be announced today.
Sausalito, Calif.-based Grouper allows users to post and share video on the site and transfer that content to video iPods, PlayStation Portables and other portable video players as well as to blogs and social networking sites MySpace and Friendster. The site grew from 1 million unique visitors in March to more than 8 million in July.
“Consumers are spending more and more time on sites like Grouper, and as one of the world’s largest creators of entertainment, we want to be where the audiences are,” Sony Pictures Entertainment chair and CEO Michael Lynton said in a statement announcing the deal. “Many people in the Grouper community use Sony cameras to create videos and Sony VAIO computers and mobile devices to store and view them. It makes sense to complete the circle by having Grouper be a part of Sony Pictures Entertainment, which itself creates so much content for people around the world.”
Sony won’t be making any changes to the site initially, the company said. But it’s possible that in the future, the studio will add downloads of TV shows and movies from its library, said Sean Carey, executive VP of digital distribution for Sony Pictures Home Entertainment.
“We view Grouper first and foremost as a growing business that has amassed a very big audience in a very short period of time,” Carey said. “Obviously, as a producer of content, we’re always looking for ways to produce content for an audience. There appeared to be a segment of the audience gravitating to this type of content.”
Sony will keep Grouper’s management team in place as part of the deal, citing its Internet experience. Grouper’s execs previously sold Internet music site Spinner.com to AOL in 1999 in a $320 million deal.
Carey said Sony likes Grouper’s Internet peer-to-peer distribution model and the fact that it has added features such as transfers to a range of portable devices that he said puts the site ahead of competitors.
“They have an expansive vision in terms of being very democratic about how they distribute video over the Internet,” Carey said. “It’s less about building Grouper.com as a destination, although that’s important, it’s also getting Grouper-streamed video on many different affiliates.”
The studio went to Grouper as user-generated content grew in popularity and as the studio itself was expanding its digital strategy, Carey said.
The studio is the latest to buy an Internet video site. Earlier this year, 20th Century Fox parent News Corp. acquired social networking site MySpace.com, which allows users to upload and share video content. Viacom acquired Internet video site Atom Entertainment earlier this month.
Sony’s Carey said the company is trying to go where its users are.
Along those lines, the studio hasn’t shied away from Web-sharing sites; earlier this summer, it struck a deal to sell movie downloads on peer-to-peer site Guba.com. The studio also is one of the few to allow download-to-burn of movies through CinemaNow.com.
Like other sites that trade on user-uploaded video, Grouper does have users who sometimes put up risqué or copyrighted material, but Carey said Grouper has been stringent about removing inappropriate material. When a user alerts Grouper to the inappropriate materical, the site will kick off the posters after one warning.
That policy was “one of the reasons that we actually gravitated to pursue a relationship with Grouper,” Carey said.
Still, on Tuesday, some of the most downloaded videos on the site included many videos of women in bikinis and underwear dancing around, while mashups (a mix of videos) included clips from Beverly Hills, 90210.
Carey said much of the copyrighted material on the site is put up by copyright holders for promotion.
