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Last Updated: Wednesday, 23 August 2006, 15:55 GMT 16:55 UK
Sony splashes out on video site
Paris Hilton
Youtube now features branded channels
Video sharing website grouper.com has been bought by film giant Sony Pictures Entertainment (SPE) for $65m (34m).

The Californian based site claims to be the "second largest independent video community" on the web and allows users to upload, watch and share videos.

Sites like Grouper are drawing increasing attention from traditional media groups who see the sites as an important way to reach new fans.

Users of industry leader YouTube.com watch 100 million film clips every day.

However, although the site has mass appeal most of its offerings are free. YouTube and others are now working on ways to generate cash from their sites.

Huge potential

For example YouTube has recently signed a deal with Paris Hilton to provide a branded channel dedicated to the hotel heiress.

The channel showcases Hilton's new pop career and allows users to watch and rate her latest music videos.

In addition, the site is in talks with record labels like EMI and Warner Music to offer current and archive music videos from other artists.

It's like a virtual global audition
Michael Lynton, Sony Pictures

Users of Grouper can also expect changes to their site following the acquisition by Sony.

Although no immediate overhaul is planned, Sony said that the site had potential for developing "ad-supported and premium-based services".

"Grouper gives us a strong platform for growth," said Michael Lynton, chairman and chief executive officer of SPE.

The media giant has already taken its steps into video on the web. It allows paid for downloads of some of its films and distributes video sharing and editing software called Screenblast.

But unlike many entertainment companies, like Walt Disney or Universal, it does not own a broadcast network.

The purchase of Grouper gives it immediate access to an estimated 8 million users.

"Consumers are spending more and more time on sites like Grouper, and as one of the world's largest creators of entertainment, we want to be where the audiences are," said Mr Lynton.

As well as watching video, the audiences on Grouper can also download content to portable devices and link videos to their blogs or profiles on social networking sites like MySpace

Sony studios are also interested in the content of the site as a source of new ideas and talent.

"It's like a virtual global audition," said Mr Lynton.

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