Sony's decision to relaunch Grouper as Crackle signals a shift away from user-generated video as we know it, but will high-quality virals deliver advertiser results?
Last week, Sony pulled the plug on Grouper, a YouTube wannabe that never quite took off. But rather than eating the $65 million purchase price, Sony announced it would rebrand the site as Crackle, a virtual talent farm system that creates incentives for professional-quality submissions by dangling money, fame and Hollywood jobs in front of would-be producers.
Happy to leave virals of mock light saber battles and stupid pet tricks to YouTube, Sony says it is following the money.
"It's not a business for us," Grouper founder and co-president Josh Felser said of user-generated video. "The content is rarely exclusive and it's hard to monetize. Advertisers don't want their content next to a video of someone jumping off a roof and falling on their head."
While Crackle may be light-years behind YouTube in terms of traffic and brand recognition, it could be close to the ground-floor in what CNNMoney.com editor Paul La Monica characterizes as an evolving video landscape.
"It's hard to say how much value there is in advertising on a really short user-generated clip," La Monica says. "Do advertisers really want their images associated with say, a cat playing piano or two Chinese teens lip-syncing to the Backstreet Boys? Perhaps. But I do think that advertisers are quickly learning that it's more important to find an engaged audience, even if it's a smaller one, than an audience of very fickle consumers."
Tremor Media CRO Randy Kilgore agrees that advertisers ultimately want an "environment that is more palatable." But numbers still count, he says.
"The trick will still be to attract [a] critical mass and package it to advertisers," Kilgore says.
Right now, Crackle, which is still in beta, needs to make up a lot of ground in a hurry. Sites such as Revver and Metacafe already encourage users to up the ante by cutting top performers in on some of the ad revenue.
But Crackle's play is a little bit different, if only because of its corporate parent. While Crackle may not have the name or the traffic, it does have Sony behind it, and if it's a question of quality over quantity, the backing of a major Hollywood studio may make all the difference when it comes to attracting the best producers Tinseltown doesn't yet know about.
Joost, which has close ties to Viacom, could also make such a play. Ditto for NBCU and News Corp. in their as-yet-unnamed joint venture. And even Veoh, which counts former Disney Co. CEO Michael Eisner as an investor and board member, could link up with a Hollywood teammate.
What they need is a hit
Gobs of traffic might not be all it's cracked up to be, but talent isn't a panacea either. Ultimately, success in the online video arena won't be all that different from success in the TV world. Crackle and the rest of the field are in search of the same thing networks and TV advertisers crave: a hit program.
"Crackle needs buzz-worthy videos to succeed," La Monica says. "Clearly, online videos take on a life of their own and barriers to entry are pretty low. Just look at the new FunnyOrDie comedy site. That quickly became a magnet for traffic because of a Will Ferrell video that wound up being emailed and linked to from various social networking sites. Sony needs to make sure, now that it is going to actually fund original online videos, that it can create content that will attract heavy viral interest."
Of course, finding an online hit is probably just as challenging as striking pay-dirt in TV-land, if not moreso, given the rapidly shrinking attention spans of most users. But Sony seems to think it can apply its Hollywood-know-how to the problem.
God, give us a hit!
While there's no recipe for creating online video that hits the trifecta of traffic, buzz and ad-safe content, executives at Sony are putting their faith in God, aka "Mr. Deity," a one-time YouTube sensation that Crackle managed to pry from the ranks of amateur auteurs with a little cash for locations that go beyond the producer's living room.
Brian Keith Dalton, who created "Mr. Deity" in 2004, went from 1 million views on YouTube over a three-month period, to 1 million views on Grouper within three weeks. The difference? Sony pushed hard to market the series on the site, rather than leaving the rankings to an algorithm.
Sony has since inked Dalton to a 10-episode development deal on Crackle.
Whether 1 million views in less than a month will be enough to wrestle advertisers away from the internet's more eye-popping numbers remains to be seen.
But if the directive is quality, the question may soon become: How much will Sony ask for God to wear Nike shoes, while drinking a Coke in his IKEA living room?
Michael Estrin is associate editor at iMediaConnection. Read full bio.