Hollywood internet bubble is popped

Even Steven Spielberg couldn't make Pop.com work

By BBC News Online's Iain Rodger

When even Hollywood heavyweights admit they are at a loss over how to make money out of a dot.com they themselves set up last year, you have to wonder about the internet revolution.

Just how much is vision of the future and how much is hype?

The problem was that we could not figure out how to actually make any money

Michael Rosenberg, Imagine Entertainment

The eagerly awaited entertainment site Pop.com has closed down before even really getting started.

Backed by Steven Spielberg's Dreamworks and Ron Howard's Imagine Entertainment, with funding from Microsoft co-founder Paul Allen, Pop promised "a mix of live action and animation, video on demand and live web events".

"Pop's content will be immediate, raw and interactive" it said in a statement last October, looking ahead to a "spring 2000" launch.

Creative risks

"Pop will encourage its viewers to submit their own programming, with the best submissions being broadcast alongside Pop's own shows," it said.

Paul Allen: Pop investor

"The creators of the most popular submissions will be rewarded with development contracts at Dreamworks and Imagine."

The idea was that the production companies could take creative risks with Pop they could not contemplate in commercial film or television.

But less than one year later the venture has been abandoned, with Imagine's president Michael Rosenberg saying: "The problem was that we could not figure out how to actually make any money in this format. It just wasn't working."

Most of Pop's 80 staff based at Glendale, California, have been laid off.

There had been talk of a sale to the independent film portal, iFilm, and when this was not forthcoming rumours of interest from America Online or Vivendi also proved groundless.

Wobble

Dot.com casualties are no surprise these days but the failure of some of Hollywood's top players to make it work has rocked confidence.

The message is that traditional Hollywood media skills don't necessarily translate into building a great internet business

Media analyst Eric Scheirer

The demise of Pop followed the high-profile failure in May of Digital Entertainment Network, backed by Microsoft and NBC.

At the same time as it was winding up this week, films and games site Shockwave.com also shed 20 out of 170 staff in a cost-cutting and repositioning exercise.

"This is a challenging time for everybody," said Shockwave chief executive Lawrence Levy.

"It's a matter of getting focused and efficient."

Some media analysts have suggested that there have been online entertainment company failures because they were simply trying to repackage traditional content for the internet.

"It has to have interactivity and community," says Mr Levy.

Solid base

"The message is that traditional Hollywood media skills don't necessarily translate into building a great internet business," said Eric Scheirer, media analyst at Forrester Research.

Film sites such as Icebox, Atomfilms and iFilm say they are thriving and have no trouble attracting new funding for what they say are solid business plans.

Doing business is of course essentially the same on the internet as anywhere else.

You have to think up your great idea, work out how it will make money, then secure your backing and launch.

The problem with Pop was not so much that it flouted these rules, but that it followed them in the wrong order.