The
Shockwave.com Of The Future
By Jon
Swartz
04.25.00
Bouncing animatedly in his
Multimedia Gulch office in San Francisco, the next
media mogul gleefully shows off his prime-time lineup
of edgy next-generation programming.
Dressed in blue jeans, T-shirt and
green windbreaker, Shockwave.com leader Rob Burgess
reaches for a computer mouse to show off in-your-face,
politically incorrect material that would bring a
smile to Howard Stern's face and get the PC police up
in arms. Clicking on Shockmachine, a "virtual
consumer device" hooked up to a 34-inch
television, Burgess offers a glimpse into the warped
world of Joe Cartoon, a wise-cracking cartoon
character who is regularly devoured by piranha. Down
the turnstile-like selector is "Like, News,"
where a sexually repressed Attorney General Janet Reno
torments her nose-pierced interviewer, Skeeter.
Haven't seen enough? Then how about a racy ditty
called "Internet killed the video star"?
This isn't exactly Father Knows
Best.
Nope, it's Shockwave.com, an
eye-popping, cultural icon-gouging, PG-13-rated site
for the Web's 18- to 35-year-old demographic.
Shockwave.com was created as an independent company
last year by Macromedia, which makes software for
developing animation and graphics on the Internet.
Macromedia had $216 million in revenue over the past
12 months. Shockwave.com offers free original
programs, games, cartoons and music. And it is about
to take the online market by storm with a little help
from its friends in Hollywood.
"The Internet is not about
watching a live action sitcom on a small box,"
says Burgess, 42, interim chief executive of
Shockwave.com and full-time CEO of Macromedia (nasdaq:
MACR). "We have a great machine for that. It's
called a television. What we bring to the mix is
original, interactive content."
Consider that a warning, Disney (nyse:
DIS),
AOL Time Warner (nyse: AOL),
Viacom (nyse: VIA),
Sony (nyse: SNE)
and Warner Bros. Shockwave.com is putting together a
world-class entertainment company and laying the
groundwork for a monster public stock offering later
this year.
Skeptical? Get a load of this
creative team: James L. Brooks, Oscar-winning director
of Terms of Endearment and producer of The Mary Tyler
Moore Show; Tim Burton, the phantasmagoric director of
Beetlejuice and Batman; David Lynch, Oscar-nominated
director of The Elephant Man and Blue Velvet;
comic-book legend Stan Lee; South Park creators Matt
Stone and Trey Parker; and Joe Shields, whose Web
creations include Joecartoon.com. Last week, the
company signed Ben Stein, host of Comedy Central's Win
Ben Stein's Money game show, to develop an untitled
single- and multiplayer game for release this year.
Users can now even play Tetris, the seminal videogame,
on Shockwave.com's site.
In return for equity stakes in
Shockwave.com, the star-studded contributors have
signed "long-term participation" agreements
with the Web site. If a character catches fire on the
Net, for example, Shockwave.com and the artist will
split licensing revenues--both online and offline.
"Who knows? We could create the next South
Park," Burgess muses.
The all-star lineup underscores the
emergence of the Internet as a bona fide entertainment
medium and is a major reason why heavy-duty investors
are putting their money where their mouse is. Jim
Clark--co-founder of Netscape Communications, Silicon
Graphics (nyse: SGI)
and Healtheon/WebMD (nasdaq: HLTH)--has
invested $10 million in Shockwave.com. Other investors
include venture capitalist Mike Moritz of Sequoia
Capital, which funded Yahoo! (nasdaq: YHOO),
and Robert Daly, CEO of the Los Angeles Dodgers and
former co-CEO of Warner Bros.
More important, the influx of
original content and cash has attracted viewers.
Shockwave.com has 15 million registered members and is
signing up 80,000 new users a day. The blowout numbers
illustrate that an Internet company can make a go of
it in the crowded entertainment market--doubters be
damned.
As a reminder, Shockwave.com
prominently posts a trash-talking billboard in its
lobby as psychological motivation for its 125
employees. "The Web is not going to be an
entertainment medium for a long time, if ever,"
the sign says, quoting analyst Barry Parr. "It is
a news and information and shopping medium."
"When will they ever get
it?" Burgess says, shaking his head. Parr,
director of consumer e-commerce research for
International Data Corp. in Mountain View, Calif.,
counters that with the exception of Hamster Dance and
The Onion, the Web has yet to prove itself as an
effective entertainment vehicle.
Shockwave.com is attempting to prove
Parr and others wrong. It was initially designed to
show off Macromedia's software--namely, Shockwave and
Flash--which deliver crystal-clear illustrations over
slow Internet connections. But as the site's
popularity and audience grew, Burgess decided to spike
traffic by offering a slate of interactive games and
animated shorts on the site. Eventually, he took a
more active role at the company, which he runs
simultaneously with Macromedia.
Burgess--an affable, angular Toronto
native who turned around Macromedia and Alias
Research, a pair of multimedia software shops--smiles
at the comparison to another famous CEO in charge of
two successful companies at once, Steve Jobs. "I
suppose I have the opposite situation of Steve: He
spent less time at an entertainment company [Pixar
Animation Studios] that was doing great to join an
underperforming software company [Apple
Computer]," Burgess says. "I devoted less
time at a stable company in Macromedia [$20 million
profit last year] to take over day-to-day operations
at Shockwave, and I'm loving it."
Burgess clearly relishes the chance
to rub shoulders with Oscar-winning celebrities, but
insists he isn't starstruck and ignoring Macromedia.
He says he is merely shepherding Shockwave.com until a
management team is in place. Once that's accomplished,
he will devote his full energies to Macromedia, which
is located down the street.
Still, the prospect of brainstorming
with the likes of Lynch, Brooks and Burton brings a
huge grin to Burgess' face. And make no mistake: The
feeling is mutual among Shockwave.com's high-profile
partners.
"Shockwave.com is going to be
the CBS of this era," gushes Stein, a former
speechwriter for President Nixon. "The whole
world will be playing our game, laughing at the
creations of the South Park guys and being scared at
Stan Lee's cartoon characters."
Stein, Lee, Burton and a growing
number of Tinseltown artists are using Shockwave.com--and
the Web in general--as a canvas for creating
counterculture programming that could later appear on
the big screen or television. Many see it as a
liberating opportunity, free of meddling corporate
suits, to inexpensively sketch out ideas and try them
out on a potential Internet audience of 150 million.
"It's the content, stupid, and
the brand," says Lee, who co-created Spider-Man,
X-Men and The Fantastic Four, among others. His latest
fantastical conception, The 7th Portal, is playing on
Shockwave.com in animated segments, or "Webisodes."
"We have the freedom to best
tell a story," he says. "There are no
restrictions on length or art shots. In a few years,
animation on the Internet will be better than movies.
The key is coming up with story lines that attract a
big audience."
"[The] AOL Time Warner [merger]
proved our legitimacy. It opened the eyes of folks in
Silicon Valley and Hollywood to the combined power of
the Internet and entertainment."
"It's a great way to try out
organic, spontaneous ideas," says Burton, who
will develop short cartoons for Shockwave.com. "I
don't think of it as a big Broadway show, but as a
cool way to float characters and see what technology
can do." Burton likens his cyber-creations,
including the peripatetic Stain Boy, to working in a
virtual lab.
Still, skepticism abounds over
entertainment portals. Critics question whether a
mainstream audience has the patience to view small
images on computer screens. What's more, they voice
concerns over extravagant production costs, a
sparseness in quality programs and limitations in
bandwidth.
Then there is the issue of
competition. The online-entertainment industry is
teeming with deep-pocketed conglomerates. Hollywood
studios, the TV networks, AOL Time Warner, Sony,
Disney, Viacom, and Pop.com are among Shockwave.com's
rivals for consumer eyeballs.
Retorts Burgess: "[The] AOL
Time Warner [merger] proved our legitimacy. It opened
the eyes of folks in Silicon Valley and Hollywood to
the combined power of the Internet and
entertainment." Indeed, Shockwave.com reported
$3.5 million in revenue for the three-month period
ended Dec. 31, 1999, up 84% from the previous quarter.
Besides, all of Shockwave.com's
rivals use its technology. About 225 million people
have installed the free Flash player, making it the
most widely distributed media software in the world,
ahead of Java, according to Shockwave.com.
"Shockwave.com is in the
enviable position of providing de facto technology for
the industry. To be a serious player in the
online-entertainment field, you simply have to log on
to Shockwave.com and download the software," says
Frank Creer, managing director of Zone Ventures in Los
Angeles. "With enough good programming and
branding, Shockwave.com is in the best position of
anyone."
The normally taciturn Stein agrees.
In addition to a virtual game show, he is lending his
droll voice to greeting cards on Shockwave.com.
"I'm going to monetize my wildly crazy
persona," he deadpans. "That way, I can pay
my mortgage."
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