Warner Bros. has acquired Flixster Inc., an online social network that each month attracts millions of movie buffs and is the corporate parent of popular movie review site Rotten Tomatoes.
The studio owned by Time Warner Inc. hopes to use the online community, where people read and write reviews, watch trailers and check movie times, as a launching pad to spur advertising sales. It plans to add tools that help people access and manage their digital movie collections online, in the same way they now do with their digital photographs or music playlists.
"We view that as an incredibly important potential vehicle in the future, because it's just such a powerful platform," said Kevin Tsujihara, president of Warner Bros. Home Entertainment Group.
Warner Bros., like other Hollywood studios, is looking for ways to encourage people to buy movies. Sales of newly released films on DVD and Blu-ray discs and digital versions fell 19% in the first quarter, according to Digital Entertainment Group. Digital purchases, although up 10% over the same period a year earlier, accounted for just $141 million out of the $2.2 billion that consumers spent to buy movies in the first three months of the year.
"The value proposition [of ownership] has been flagging a bit," Tsujihara said. "You have two things you can do, either lower the price or increase the value."
Joe Greenstein, Flixster's co-founder and chief executive, said he and Warner Bros. executives shared a vision of creating a simple way for people to watch the movies they've purchased anywhere, on any device and at any time.
"That promise is not upheld today," Greenstein said. "That's the opportunity we're after."
Flixster already has 11 million people who use its software on portable gadgets including Apple Inc.'s iPhone and iPad, Research in Motion's BlackBerry and devices powered by Google Inc.'s Android software. That's more than the 8.4 million people who visited Flixster's website in the last month, according to online measurement firm ComScore Inc.
Although Flixster ranks among the top 10 entertainment sites, it is dwarfed by the Internet Movie Database (IMDb), Yahoo Movies, Moviefone and Fandango Movies Portfolio, based on ComScore rankings. Flixster and Rotten Tomatoes will operate independently. The purchase price was not disclosed.
Forrester Research analyst James McQuivey said Flixster had lost some of its momentum to Facebook, which has become the place where people to share everything, including favorite movies. Nonetheless, it's "not a bad asset" for a studio like Warner Bros. to own.
"Flixster owns a database of preferences that span all of the movies in the market, not just Warner Bros. movies," McQuivey said. "This gives them an excuse to now have a relationship with the customer, one they can't have outside of specific properties like 'Harry Potter' or 'Inception.' That digital relationship will be crucial to competing with Netflix."