In 2006, Shane Felux was on a makeshift set near his home in northern Virginia producing a Web video when he received an out-of-the-blue phone call from Barry Jossen, who was then executive vice president of production for Disney's ABC Studios.
"I thought it was some friends of mine screwing around, but my wife said the caller ID read 'Disney' and I should take it," recalled Felux, who was already a minor celebrity on the Web for his "Star Wars" fan film "Revelations," but had never earned a penny doing it.
Jossen dangled an irresistible offer to the aspiring filmmaker with no Hollywood connections: Did he want to be part of a new venture Disney was planning to produce original shows that viewers could watch on the Internet?
In February 2008, Disney launched Stage 9 Digital with an initial roster of shows that included "Trenches," a 10-part sci-fi series from Felux with a budget of $250,000. But "Trenches," completed last September, still hasn't shown up on the Web. In fact, with the exception of its first series, "Squeegees," a comedy about window washers, none of the more than 20 projects in development at Disney's digital studio have ever seen the light of day. In March, after little more than a year, Stage 9 shut down.
It's far from the only Hollywood-backed Internet video business to go dark. 60Frames, an online content company that launched in 2007 with $3.5 million from investors including the United Talent Agency and advertising agency Spot Runner, closed in May. Other Web video flops have included Turner Entertainment's SuperDeluxe, HBO and AOL's This Just In, and NBC's DotComedy.
Conceived with great fanfare, big media's attempt over the last two years to capitalize on the Internet video phenomenon embodied by YouTube and "Saturday Night Live" digital shorts has fallen victim to recession-triggered cuts and inflated expectations about the advertising revenue they would command.
"It's very similar to what happened in '99 and 2000, where everyone saw gold in the hills," said Mika Salmi, the former head of digital media for MTV Networks and now a technology venture capitalist, in reference to the first dot-com boom. "The reality is that it's much harder to make money than everyone thought."
The calculus was elementary: If amateur Web stars like "Fred," the high-pitched persona of Nebraska teenager Lucas Cruikshank, can create the most popular channel on YouTube, imagine what Hollywood could do with its stars, budgets and marketing muscle.
