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Bubble Bursts for's Online Entertainment Site


DreamWorks SKG and Imagine Entertainment effectively scrapped their highly touted Internet venture Tuesday, pulling the plug on would-be entertainment site before it was ever launched, and laying off about 70 of its 84 employees.

The demise of the fledgling company comes just days after a last-minute attempt to merge with another entertainment site,, was aborted, and marks the latest example of how thoroughly the Internet continues to vex mainstream Hollywood., announced amid great fanfare last fall, was conceived by some of the most influential people in Hollywood, including Jeffrey Katzenberg, Steven Spielberg and Ron Howard. It also had $50 million in backing from Microsoft Corp. co-founder Paul Allen.

But the site spent nearly a year and $9 million of Allen's money vainly searching for a viable business model at a time when advertising seemed unlikely to support the costs of developing programming for the Net and the stock market had lost its appetite for "dot-com" public offerings.

Brian Grazer, president of Imagine Entertainment and a co-founder of, said Tuesday that the partners are still interested in pursuing Internet-related ideas, but compared the company with a wayward ship caught in an unexpected storm.

"Our goal is to get out of the storm," Grazer said, "until there's enough visibility to see what we should be in, in this space."

A company spokeswoman, Vivian Mayer, said the company "will retain a small staff to support our creative endeavors." She declined to elaborate.

But sources inside the company said only about 14 employees will be kept, and that most of those are being retained solely to maintain an Internet site for movie buffs,, that recently acquired.

Many of the laid-off employees had made a last-ditch appeal to the partners to save the site Friday, printing paper copies of prototype Web pages and sending them to the founders. One employee said they sent paper copies because they weren't sure all the founders had the computer skills to view actual versions.

Sources said the company has yet to decide what will become of dozens of short films and animations it created and acquired, including contributions from Howard, Spielberg, Steve Martin and other major Hollywood players.

It was also unclear what would become of about four employees who are under contract to the company, including chief executive Kenneth Wong, who announced the layoffs at a company-wide meeting Tuesday morning.

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