When photo slide show sharing service FilmLoop launched one year ago, Michael Arrington said it was going to be a winner. One year later the company will launch a new version this month that lets users add text, picture-in-picture and graphic “tattoos”. Filmloop began as a desktop application only, but last month added the ability to embed image slide shows in web pages and and launch a full page view in any browser with a click. The fact that the company faces competition from Slide, RockYou, BubbleShare and probably others could be a sign that this is a thriving market for slide show sharing. With the release of FilmLoop 2.0 impending, it could be a good time to look at some good news and some bad news about the company.

First, a slide show to demonstrate my personal use of the product.

The Good News

• Filmloop has powerful backing, it’s received more that $7 million in funding from investors like CommVentures and Guy Kawasaki’s Garage.com.
• The fact that multiple users are able to add photos to a shared slide show is an important differentiator.
• It’s easy to link each photo to an action when clicked, so the service is loved by many eBay sellers for example.
• The company reports that 42 million photos have been uploaded to its servers by more than 1 million registered users.
• It’s a very good thing that a desktop client is no longer required for viewing the slide shows.
• The company has distribution partnerships with NASCAR and Photobucket - you couldn’t ask for better partners than that.
• There’s a healthy list of global brand advertisers.
• The Windows desktop slide show builder has basic features that are relatively easy to work with.
• Sliding pictures are intuitively pleasing.

Consider the above before you roll your eyes at the thought of a photo slide show service getting big VC bucks. If YouTube is the poster child for a growing “clip culture,” that culture plus the ubiquity of camera phones and online self publishing all combine to make a slide show service a relatively serious media infrastructure play. Hard as that might have been to believe just a few short years ago.

The Bad News

The desktop client for Version 2.0 caused me a fair amount of pain to use. I wasn’t able to resize or change the color of the text on my captions or delete frames from a saved slide show and it took me some time to figure out how to edit a project I’d already saved. There are little things that bothered me, like that the slide show builder didn’t remember my prefered layout each time I left the display page to make changes to the contents. Hopefully by the time it launches the navigation and functionality can be improved, but the preview I saw of Scrapblog at DEMO was much more powerful and usable, if not as simple. They are different products but I feel like Scrapblog is a more appealing way to tweak and share photos.

It’s not clear why there’s a desktop presence at all, other than to push photos to the desktops of family and customers (for branding use). The company said when it launched that it would offer a Mac version in 2005 and that hasn’t happened.

There’s a catch 22 at work when the new version seeks to enable both embedding into web pages and the addition of relatively small graphic details. As you can see from my example above, the small items added to the basic photos are frustratingly unclear at a certain size. Click on that slide show for a full screen view and they look much better, but I think FilmLoop may be flirting with one of the basic boundaries of the medium. In order to be useful a widget has to be small, but it’s a real challenge to integrate a full frame photo and any number of small elements in such a small space. After working with it for awhile I feel like this is less of a problem than I did at first, but I do want to keep a limit on the space I give any widget on a website.

I think this is a strong company even though the market is crowded with photo slide show services. There’s more good news here than bad by a long shot. Many of the changes in Version 2.0 are much needed, but I hope that the graphics and text adding features come out of the gate at launch stronger than they are today.