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The (Wannabe) Industry

The Net Is Creating a New Entertainment Infrastructure


Louis Rodriguez and his friends at KidShows.Com hope to be part of the next big thing on the Internet's World Wide Web.

They're developing "shows" for kids who might prefer an interactive story that can be delivered over the Web to a passive afternoon of watching cartoons on television. "The Adventures of Moo Moo the Cow," the Santa Monica company's first offering, features a 7-year-old bovine who tries to rescue her father from kidnappers while teaching children about oceans, caves and other things.

But like their growing number of counterparts in the fledgling Web entertainment business, the folks at KidShows.Com must not only develop shows worth tuning into, but also figure out how to finance, market and distribute their offerings.

For even though it's relatively easy to put something onto the Web, getting a significant number of people to look at it is difficult indeed. Without a big audience, there's little chance of attracting advertising, and without advertising there's no profit.

And thus a whole new cyber-infrastructure, replete with Hollywood labels such as "studio" and "network," is springing into being with the aim of supporting these new shows. The most recent addition is Culver City-based CyberStudios, launched two weeks ago with the goal of bringing the diffuse community of Web site creators together with commercial online networks, Internet service providers, corporations and others with cash and an appetite for programming.

"We see ourselves as the intellectual glue for this community," says CyberStudios founder Steven Koltai, who spent eight years as a senior executive at Warner Bros., most recently as head of Warner Bros. Interactive.

Even mighty Microsoft Corp. has jumped into the fray with Microsoft Multimedia Productions--a.k.a. M3P--whose executives make regular visits to Los Angeles and New York to hear pitches from Web production companies that want to create shows and sell them to the revamped Microsoft Network.

"We've set up a stage, we've got a box office, we've got season ticket holders, but we need shows to fill the stage," said Madeline Kirback, M3P's business development manager.

It is not at all clear that the Web is ready to morph into a general entertainment medium. It will eventually be able to handle full-motion video and thus will be able to offer a plethora of TV-like shows and action-packed games. For now, though, the technology is mostly limited to text, sound and still pictures, and few have figured out what to do with interactivity. And the potential audience remains small compared with TV or film.

Still, there have been a few early successes, notably the episodic soap opera called "The Spot," in which Web surfers follow the lives (and read the diaries) of five twentysomethings sharing a house in Los Angeles. Some practically oriented interest forums that have an entertainment component--such as the Motley Fool investors service on America Online--have also been hits.

Certainly, there's no shortage of ambitious entrants, and Internet studios could unlock cash for further development, said Emily Green, an analyst with Forrester Research in Cambridge, Mass.

"This approach is the right way to go," Green said. "It's the most viable model for managing the development of this stuff that I know of. I'm surprised they haven't moved to that much sooner."

It's an attractive model for many developers, who are seeing the cost of creating and marketing a state-of-the-art Web entertainment site reach into six and seven figures.

"There's quite a lot of production studios out there that have great creative skills but are not well-funded, and most of them are struggling to stay in business at this point," said Mark Mooradian, a senior analyst with Jupiter Communications in New York. "The whole idea for a studio is to be a bank for a creative industry. That's the main reason why I see this as a positive development for this industry."

Says KidShows.Com's Rodriguez, who signed his company up with CyberStudios to try to speed the process of finding corporate partners: "Without CyberStudios, this would be an annual show instead of a weekly show."

Of course, these Internet studios are a far cry from their Hollywood counterparts in several important respects. A traditional studio typically finances production for movies and arranges sources of revenue such as home video and merchandising deals. The financial relationship between a Web developer and an Internet studio is far more tenuous.

And in the world of movies, the studios handle distribution--making sure that a blockbuster film opens on 1,000 screens over Labor Day weekend, negotiating rights for overseas markets and inking deals with cable channels such as Home Box Office.

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