DMGI Sees Entry in Online Video

Nov 13, 2006  •  Post A Comment

New media distribution company Digital Music Group Inc. announced last week it’s expanding into television syndication, seeking to become a middleman between production content owners and online video outlets such as iTunes, Google Video and MSN.

DMGI’s goal is to compete with traditional syndicators for the distribution of video content online-or, even better, attract as clients the media giants that might need help navigating the bewildering new world of online distribution.

The company’s new venture comes amid a bloom of new-breed syndication companies such as Debmar-Mercury and the recently formed Trifecta that are going after deals that larger companies might not be tempted to pursue. DMGI last week announced distribution agreements for classic TV series “The Gumby Show,” “Clutch Cargo,” “I Spy” and “My Favorite Martian,” adding to a library of 4,000 hours.

“Larger companies are going by the traditional retail curve; they’re not really interested in only generating hundreds or thousands of sales per year rather than tens of thousands,” said Mitch Koulouris, CEO of DMGI. “I can go through a list of hundreds and hundreds of titles that fall into the category of `out of print’ that do not justify the cost of a DVD-model physical distribution.”

DMGI is one of a handful of companies grabbing at a piece of the digital video distribution market, along with more established firms such as ROO, Brightcove and thePlatform, which recently sold to Comcast.

DMGI is a Sacramento-based public company founded last year that took in about $1.2 million in revenue the most recent quarter.

Though chasing small, independent deals is one aspect of the business, its model is also dependent on helping the major studios to distribute their own digital content.

For instance, 5-year-old ROO does small-scale deals and also lists ABC and Fox among their clients.

“There’s an enormous barrier on the technology side, this all looks easy to do but it’s not … and it costs millions,” said Robert Petty, CEO of ROO. “The big barrier the media companies are finding is if they start developing now, they can’t enter the market for a few years.”

There are about 200 online venues for video content, and many have unique requirements for receiving and encoding content. Plus, file storage can quickly become expensive and deal-making can be complex.

To wit, a couple of major syndication companies declined to speak for this story due to a lack of an established new media division. NBC spun off an independent new-media syndication company in September to compete with the ROOs and Brightcoves of the marketplace called the National Broadband Company, or NBBC.

Brian Buchwald, general manager of NBBC, said his company has a strong advantage because it’s entering the market with the NBC library of content in hand and NBC’s advertising connections on tap.

“You have a lot of people trying to provide a brokerage relationship to aggregate content,” Mr. Buchwald said. “My gut tells me there will only be one or two winners in this space. But the more people talking to content providers and creators about how to monetize their IP online, it’s better for everybody.”

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