Peter Kafka

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First M&A of 2010: Flixster + Rotten Tomatoes

280Flixster

Here’s the Flixster/MySpace deal Kara Swisher sussed out on Christmas Eve: News Corp. is handing over its Rotten Tomatoes movie review site, previously owned by its IGN unit, to the movie-centric social network and will get an equity stake in the combined company.

MySpace COO Michael Jones approves, which is good, since the Flixster/Rotten Tomatoes combo is supposed to link directly into MySpace.

This is part of News Corp.’s (NWS) turnaround/shape-up strategy for MySpace and the rest of its digital portfolio, which looked very valuable just a few years ago and is now in need of an overhaul. The media company is shedding noncore assets while trying to turn MySpace into a hub for entertainment that you share with your pals. Expect to see more announcements and product rollouts in the coming weeks.

From Swisher’s 12/24 story:

Several sources noted that this deal being contemplated is typical of the overall strategy at News Corp., which has been targeting digital units that are not an obvious fit inside the company any longer for sale or other disposition.

In fact, the deal is not unlike one News Corp. did recently, flipping photo-sharing Photobucket into mobile photo service Ontela, with the media giant holding a large equity position in the the new entity.

The possibility of linking MySpace and the combined social movie site is interesting and yet another signal of one of the new strategies of MySpace: “Playing on other platforms,” as one source described it.

For example, MySpace recently announced it was adding its data stream to real-time search results on Google (GOOG).

And, it seems dead obvious that MySpace is likely to adopt Facebook Connect sooner than later, perhaps beginning with a smaller implementation early next year.

Disclosure: News Corp. owns this Web site.

Here’s the official press release:

Flixster Inc. Acquires Rotten Tomatoes
From IGN Entertainment

Combination of Top Brands Creates a Leader in the? Online Movie Space, Reaching 30 Million Monthly Moviegoers; IGN to Receive Equity Stake in Flixster

SAN FRANCISCO (January 4, 2010)–Flixster Inc., producer of the world’s largest online movie community at www.Flixster.com, today announced that it has acquired Rotten Tomatoes from IGN Entertainment. IGN, a division of News Corporation, will receive a minority equity stake in Flixster as part of the acquisition. Financial terms of the transaction were not disclosed.

The combination of Flixster and Rotten Tomatoes reaches a huge global movie audience of an estimated 30 million monthly visitors worldwide across multiple platforms: on the Internet, through web-based social networks, and via mobile apps for the iPhone, Blackberry and Android devices.

Both Flixster and Rotten Tomatoes will continue to be available to movie fans as individual properties. Together, Flixster and Rotten Tomatoes give movie audiences an unprecedented total picture of movie trends and opinions, combining half a million reviews from leading critics with 2.3 billion user ratings and reviews.

“To use movie terminology, we think this is a blockbuster double-bill,” said Joe Greenstein, co-founder and CEO of Flixster. “It’s a huge step forward in our goal of connecting users to their own personalized world of movies on any platform they choose. We can’t think of a better pairing for movie fans and our technology partners.”

Flixster’s president and COO Steve Polsky added, “Rotten Tomatoes has built a fantastically well-known brand that moviegoers trust when making their decisions. Combined with Flixster’s social networking and word-of-mouth, we’re creating the leading movie destination on the Internet.”

“Joining Rotten Tomatoes with Flixster creates a company that can dominate the online movie category,” said Roy Bahat, president of IGN Entertainment, who will join Flixster’s board of directors as an observer. “This also enables IGN to focus on serving the male 18-to-34 audience–especially videogamers–and the advertisers looking to reach them.”

Flixster already operates the leading embedded movie applications on Facebook, MySpace, Bebo, iGoogle, and for the iPhone, Android devices, Blackberry and Palm Pre. Together, Flixster and Rotten Tomatoes will be the most comprehensive, one-stop movie-information provider for both end users and technology partners, including: a database of more than 250,000 movies; 2.3 billion user reviews; 500,000 critic reviews; more than 20,000 trailers and videos; the well-known Tomatometer™ and Flixster Scores; unique movie news and editorial content; category-leading social-networking features; localized movie showtime information; theater maps; and online ticketing.

Prior to the acquisition, Flixster and Rotten Tomatoes partnered in several areas, including a recent deal that syndicates critic reviews from Rotten Tomatoes to Flixster’s online movie community, both on the Web and via Flixster’s mobile apps.

Since its inception in early 2006, Flixster has rapidly become the Web’s largest community for movie fans, with more than 20 million monthly users.

As the web’s leading aggregator of reviews from top movie critics, Rotten Tomatoes offers the most comprehensive guide to movies, and its Tomatometer™ rating-based on the published opinions of hundreds of film critics–is a trusted measurement of movie quality for millions of moviegoers. The site has also seen tremendous year-over year growth, with its monthly unique user base rising on average nearly 40 percent in each of the past five months compared to the same months in 2008.

The deal follows a series of moves by IGN Entertainment to refocus its efforts on building out its suite of game-related and men’s-lifestyle offerings. The company recently launched Game On, a videogames-dedicated portal on MSN, and its network of sites currently reaches the most concentrated audience of males 18 to 34 and technology influencers on the Web today.


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