Just when it seems everyone is getting into Internet video, in a reverse twist, Sony is backing out; at least with regard to their strategy.
Last year, Sony bought video sharing site Grouper for a crisp $65m. It was to by Sony’s portal for sharing video, Sony’s clone of YouTube. ….now, the towels been thrown in and the fight called. Instead of trying to compete with established players, Sony will rebrand the property and redeploy it toward a new end: video creation.
Henceforward Grouper will be called Crackle. And lest there be any doubt about a change of direction, there is the official pronouncement of its demise from Josh Felser, a founder of Grouper and the man in charge of Crackle. He said unequivocally, “User Generated content is dead to us. … We are definitely leaving video sharing and focusing on emerging talent.” Crackle will help to finance, promote and syndicate the work of Internet video auteurs.
With little barriers to entry and hundreds of sites popping up to share, syndicate and distribute content, the choice to focus on the creative (and not be a distribution channel) seems a smart one. It acknowledges success with Internet video requires a different approach; one where the role of distribution and creation is strikingly different from the models used for TV:
See, on TV, bred in part by the high cost of full length content development, a program is usually developed and nurtured with dollars from the distribution partner (the Networks). It is then housed exclusively on a single channel until it’s so big and known that older episodes of its library can be syndicated. That early exclusivity insures a distinction from one channel to the next; and it gives the gatekeepers to the distribution channel’s programming choices measurable power and influence. Online, it’s the opposite. There is no schedule maker. Content is available any time, all the time. When it comes to cost, short form content doesn’t need financial backing to be developed. Anyone can create it. When it comes to distribution, there is no gatekeeper to say “sorry, we won’t air your video.” There are no walls to climb. No barriers. Online, the same content can appear in twenty (or thirty or more) locations; grabbing different audiences, or overlapping, as the case may be. So what’s on YouTube can be on Revver, Metacafe, MySpace TV ….or Veoh or wherever. Online content can be ubiquitous.
In this climate online, the channels become like a commodity. They lose their leverage. Such distribution channels are easily exchanged from one to the next. They are interchangeable. The audience at YouTube, if it finds something better, can move in dramatic shifts. Tomorrow they might watch on Veoh. Day after that MySpace. After that, who knows.
(And sure, it’s true leaders, may attract more content because of the size of their audience, and that may be a cycle that helps them stay in the lead, but always they teeter one or two missteps away from going from hot to not. In a world where anybody can compete, to succeed you always have to remain the best; that’s not easy to do.)
Shifting to get away from that marketplace is a smart move. Focusing on content, something that is potentially unique; that’s much smarter.
In scrapping Grouper and becoming Crackle, Sony isn’t breaking new ground but they are adapting to the times and moving from a crowded indefensible market to one that is a little less crowded and a lot more defensible. (Quality content development is a skill not a commodity and the content itself is a unique product subject to Intellectual property protections.)
So it’s official. The epitaph for Grouper shall read "Distribution out. Content in".
Newborn Crackle won’t be alone in its debut however. Around the entertainment industry, others are making the same choice. It’s a logical fit. Experienced filmmakers whose core competencies lie in telling a story visually use the same skills and tools regardless of whether they are making a story for the small screen (TV), for the wide screen (Movies), or the virtual screen (Internet). Why not make some shorts? Why not play online?
Stories are unique. Good content sells itself. Crackle can now consider themselves competitors with Vuguru, a digital studio which was founded by Michael Eisner to focus on creating online content. They will also vie for audience with National Banana which has the cash backing of US Venture Partners and the film making skills of Jerry Zucker (Airplane, Naked Gun etc). They’ll even go up against the the Coen brothers (Fargo, Raising Arizona etc) who are making content just launched 60 Frames Entertainment.
Competing with content developers is still competing but it’s a lot better than competing over distribution.