Peter Kafka

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SnagFilms Grabs $7 Million to Share Indie Movies Online

It’s easy to find blockbusters like “Transformers” online. What about movies like “Casino Jack and the United States of Money”?

That’s where SnagFilms comes in. The start-up has distribution rights to more than 3,000 indie movies, which it shoots out to platforms like Netflix and Hulu. The four-year-old company is best known for the documentaries it puts out, like “Casino Jack,” the story of the disgraced political fundraiser Jack Abramoff; others include “Super Size Me” and “Enron: The Smartest Guys in the Room.”

Now SnagFilms has raised another $7 million, following up a $10 million round from a year ago. Earlier investors like Ted Leonsis, New Enterprise Associates and Comcast have re-upped; new investors include Terry Semel, the former Warner Bros. studio and Yahoo boss.

SnagFilms started out by asking bloggers and other Web site operators to embed its films on their sites for free. It made money by selling ads against the films and sharing revenue with the movie owners.

It still does that, but it has expanded to offer free movies on other platforms, like the iPad and Android tablets. It has also started making its movies available on pay-per-view outlets like Apple, Amazon and Comcast’s video-on-demand channels. CEO Rick Allen says that by the end of the year, revenue from transactions will eclipse the company’s ad dollars.

The interesting question for SnagFilms — and a whole lot of digital video companies right now — is whether there’s a way to get consumers to identify and value what distributors do. If they do, then these guys can build lots of value, as consumers learn to trust them as a good source for small, quirky films the big guys missed.

(Image courtesy of Shutterstock/James Steidl)


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