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In a matter of weeks, Warner Bros. (NYSE: TWX) went from testing movie rentals via Facebook Credits to owning one of the top social conduits for movie info. The Time Warner company is adding Flixster and Rotten Tomatoes to the digital family, picking up 20 million unique users with a passion for entertainment — and for sharing it — as part of a broader push to increase digital dollars.
The announcement was timed for Time Warner’s earnings, giving Chairman and CEO Jeff Bewkes the chance to tout it during the call. He explained: “We’ll use the Flixster brand and platform to launch several initiatives that can dramatically improve the consumer precipitation of owning digital movies. We’ll do that in a studio agnostic way that should benefit the whole industry.” He promised more details “in time” but said “in short order we plan to expand Flixster to allow consumers to organize and access digital movie collections on whatever device they want as well as buy and rent movies.”
The emphasis for Time Warner’s TV Everywhere has been on making subscription content available across platforms; the Warner Bros. version is aimed at making owning content more desirable by making it accessible and manageable. Last month, WB said it will start testing an app called “Digital Everywhere” aimed at managing video content in the cloud.
“We think it makes sense to play a leadership role in the marketplace,” Thomas Gewecke, president of Warner Bros. Digital Distribution, said in an interview. They want to tap into both the need for new services and ways to handle what is already out there. Flixster is in the business of providing information, utility and search — and brings WB a serious number of users likely to be receptive to ideas like “Content Everywhere.” Warner Bros., which Gewecke reminds me was a leader in moving to day-and-date VOD, is part of the premium VOD experiment that started last week, offering still in theaters Hall Pass through DirecTV (NYSE: DTV) for $30.
San Francisco-based Flixster, founded in 2006, has about 60 employees. None are expected to lose their jobs in the sale and the management team led by Joe Greenstein, co-founder and CEO of Flixster will stay. (His title on the site is “Figurehead.”) The Flixsters stay in San Francisco; the Rotten Tomatoes crew in LA.
But one stakeholder will be out of the business. News Corp (NSDQ: NWS). acquired Rotten Tomatoes with IGN in 2005. IGN paid $7.8 million for the site in 2004. As part of the unwinding of Fox Interactive Media, News Corp. sold the movie criticism site to Flixster in 2010 for a 20 percent stake, later valued at $12.5 million.
The price for this deal isn’t being disclosed but AllThingsD said early on that Flixster was looking for at least $60 million, which has wound up as the figure flying around today. The News Corp. deal suggests the value was about $62.5 million early last year but Greenstein told paidContent then that the $12.5 million shouldnt be seen as a gauge. The company raised $10 million in two funding rounds.
That’s not nearly the number the startup was reportedly looking for in 2008 when it was in talks with IAC (NSDQ: IACI) — and not a huge amount for a company that can spend that kind of money marketing a major film.
But to keep Flixster and Rotten Tomatoes valuable, Warner Bros. now has to walk the tricky line of making the most of the acquisition and letting the sites maintain the promised independence needed for credibility.
Greenstein is confident Warner Bros. can do just that. Interviewed with Gewecke, he told paidContent: “Certainly acquisitions are a mixed bag but for every failure there’s also a YouTube (NSDQ: GOOG) story.” He sees this as a perfect fit that will help Flixster expand. “We think we’re on the cusp of an amazing opportunity.”
In addition to the sites, Warner Bros. is getting instant mobile presence with apps on all major devices and a deep archive of movie info: a database of over 250,000 movies; 2.3 billion user reviews; 500,000 critic reviews; and more than 35,000 trailers and videos. Flixster.com already streams movies and TV shows, including from Hulu.