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November 13, 2007

Peerflix Hits the Replay Button (Again)—Wants to Become an Ad Network

Erick Schonfeld

22 comments »

peerflix-logo-2.png

Poor Peerflix. It can’t quite seem to figure out what business it wants to be in. The DVD trading site, which already tried to rethink its business last December, has decided that maybe an online swap meet for DVDs isn’t such a great idea after all. Now it wants to become an ad network for movie-related sites. Oh, and it also bought a blog today, TheMovieBlog, for an undisclosed amount.

Peerflix will continue to operate its DVD-trading business, which pretty much runs itself on autopilot, says CEO Billy McNair. But today it is launching the Peerflix Media Network, which will be an ad network targeted at movie lovers. movieblog.pngPeerflix ads will run across more than 40 partner sites, including Peerflix, TheMovieBlog, Pajiba.com, ComicBookMovie.com, BadMovies.org, ScreenRant.com, and AnimeMojo.com. All together, this collection of niche movie sites attracts about one million visitors a month. TheMovieBlog represents the biggest chunk of that, with visitors fluctuating between 300,000 and 650,000 per month, and Peerflix attracts about 100,000 visitors a month. The rest come from the other sites.

McNair clearly sees a bigger opportunity in advertising than in e-commerce. He explains the reasoning behind his shift in strategy:

We have a very loyal audience, but it is unclear to me today whether the trading side becomes part of the arsenal of the average consumer to acquire content, or whether it remains a niche play. We could extend the trading platform or extend the movie experience. We felt the smarter play was to extend the movie experience.

Swapping DVDs always seemed like more hassle than it was worth to me. But Peerflix has been able to gather 300,000 registered users, with about 10 to 20 percent of those active in any given month, according to McNair. The problem is that there is not much growth there.

McNair says he was able to finance the blog acquisition and the new ad network from operations, and that he has not yet burned through the $10 million in capital he’s raised so far from Battery Ventures, 3i, and BV Capital. (The last round was in October, 2005). And he does not rule out more blog acquisitions.

But he may find that swapping DVDs is easier than swapping business models.

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This entry was posted on Tuesday, November 13th, 2007 at 4:33 pm and is filed under Company & Product Profiles. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

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  1. Movie Marketing Madness » MMM joins the Peerflix Media Network

    November 16th, 2007 at 9:41 am

  2. Peerflix To Close DVD Business, Continue As Ad Seller Only

    March 25th, 2008 at 6:42 am

  3. Terbaik.Net » Blog Archive » Peerflix To Close DVD Business, Continue As Ad Seller Only

    March 26th, 2008 at 4:28 am

Comments

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  1. LN

    November 13th, 2007 at 5:05 pm

    Maybe I’m not thinking this through, - but what would Peerflix’s business model be called if instead of swapping physical DVDs, the members just swapped the digital content instead…?

  2. AnonTroll

    November 13th, 2007 at 5:19 pm

    Swapping digital contents? Yikes, I shudder at the thought of potential copyright issues.

    As for Peerflix ever changing business model, a VC from Kleiner Perkins said this a couple of months ago, “… there is no need for a business plan when it comes to Web 2.0 business, it’s all about iteration.” However it’s nice though to be able to change directions multiple times at someone else’s dime. Sweet.

  3. SwitchPlanet.com

    November 13th, 2007 at 5:20 pm

    I like the trading model just fine! :)

  4. Andy

    November 13th, 2007 at 5:21 pm

    The movieblog logo links to an image.

  5. SuperBatman

    November 13th, 2007 at 5:32 pm

    I’ve been a Peerflix member for some time now, and while I think that the idea of swapping DVDs is one that can work, Peerflix just really messed up the implementation. The site actually used to be pretty decent. First of all, they had “Peerbux”, which was an onsite currency which workable but was kind of a pain in the ass. Then they converting everything into cash and allowed people to buy and sell movies and cash out their Peerbux and that really tanked the site. Throw in a couple of site redesigns over the years where the site got slower each time AND more confusing, and its obvious that Peerflix doesn’t have a clue what they are doing. I know a lot of users that I used to trade with finally just gave up waiting for things to improve.

    A couple of months ago, I started to use swaptree http://www.swaptree.com, and I’m enjoying trading DVDs again- I even get the DVD case and artwork, which was always a drawback of peerflix. I don’t work for swaptree or know anyone there, I just think they offer a pretty decent service.

    Everything is about ads these days, so I guess it was just a matter of time that companies would give up dealing with transactions which generate revenue and just try to push bits around. :)

  6. SuperBatman

    November 13th, 2007 at 5:43 pm

    Whoops, here’s the link without the comma: http://www.swaptree.com

  7. Danny Robinson

    November 13th, 2007 at 5:44 pm

    Anyone who can aggregate ad dollars into vertical channels is going to be able to get market acceptance from those publishers. Boutique niche ad-channel aggregators wont be allowed to exist independently because of all the contention in the internet ad industry. When Peerflix gets more traction, MSN, Google, or Yahoo will probably take a run at them. - From a business point of view, this is a smart move.

  8. SwitchPlanet.com

    November 13th, 2007 at 5:46 pm

    Come on SwapTree you’ve already been featured on TechCrunch. If that didn’t help you blow up, which it looks like it didn’t, i doubt comment posting will help.

    Leave that for us guys who have not been featured yet. :)

  9. SuperBatman

    November 13th, 2007 at 6:14 pm

    @7:
    Yeah, I would agree with you, but in order to “get traction” in the movie advertising space it seems to they would have to get either IMDB, RottenTomatoes, or Flixster on board, since I’m sure that 10% of the traffic at any one of those sites would dwarf any network of movie sites that Peerflix could put together. And any of those sites could cut their own advertising deals directly with advertisers, so I don’t see why they would want to deal with Peerflix. Unless there is something that I’m not seeing…

    @8 I checked out your site, but Switchbucs sounds too much like Peerbux to me. And although I was able to cash out my balance out at Peerflix, I don’t feel like going through that again.

  10. Rob L.

    November 13th, 2007 at 10:39 pm

    Yay, yet another vertically-focused ad network! How original, it seems like the business everybody wants to be in. Several companies are also repositioning themselves to be “ad network creators” or providers, like Pulse360 was discussing at ad:tech in New York last week.

    So it may make a bit of sense if they’ve already cultivated good relationships with studios and other big movie-related advertisers and just need to expand ad inventory… but unfortunately, in an increasingly competitive ad space, they will be quite limited in how big they can get and will be fighting shrinking margins. The plain vanilla ad network is not going to be sustainable for much beyond the next 12-18 months in our view.

  11. Tom Carpentier

    November 14th, 2007 at 6:34 am

    I think Peerflix was doomed from the start as a trading company. Not many people own DVDs, and if they do, they one a few of their favorite ones that they don’t want to trade. The movie industry has always been a rental one anyway.

    I, too, use Swaptree and love it. This is not a commercial so I don’t care if you bash. The things I like about the Swaptree model is that I can do cross media trades (people probably own more books than anything else, followed by CDs, DVDs, and video games), so I can get a lot more from my DaVinci Code hardcover. In addition, they have three and four way trading which (to my knowledge) no one else has, which also dramatically increases the amount of goods I can get. Try it yourself and you will see what I mean.

    Anyway, I wonder how much money Peerflix has burned - their business model has been like a merry-go-round. Hope they have deep pocketed VCs because they (the VCs) obviously don’t want to let go.

  12. Poor Peerflix

    November 14th, 2007 at 9:11 am

    Peerflix had poor execution, and still do not know what its doing. In their vertical, they should just copy Flixster who seems to do very well. An ad network? Just like the DVD trading business, these guys don’t know what this business is all about.

    They should return the money to the VCs and call it quits. Looks like another layoffs coming in January.

  13. ScreenRant.com

    November 14th, 2007 at 10:44 am

    I think niche ad networks are of benefit to both publishers and advertisers. Since my site is all about movies, I like the idea of delivering movie-related ads to my readers instead of blinking ads promoting “zwinkys,” shampoo or auto insurance.

    Plus I’ve found that at least for me, the CPM model pays FAR better than the CPC.

    Vic

  14. ScreenRant.com

    November 14th, 2007 at 10:46 am

    BTW, I appreciate the site mention but it would have been nice if you provided some link-love. :-)

    Vic

  15. Fred Peters

    November 15th, 2007 at 4:20 pm

    Guys - you are all missing the point about peerflix, swaptree, switchplanet etc - none of these properties can really aggregate traffic - I did a quick search on alexa and the only swapsite that has a top 100,000 type ranking is SaySwap for video Games

  16. Roy Simpson

    November 15th, 2007 at 4:30 pm

    The reason why a site like SaySwap has been so successful is because of the high prices of videogames. Since DVDs are much cheaper with their replay value minimal when compared to videogames, its no surprise that a trading community for gamers such as sayswap would make so much sencse and get alot more traffic and users. I mean if i could rent a movie which i’d only watch once anyways, why would i bother with a movie trading site. Video games on the other hand are somethings which I play more than once and am sick of the high retail prices.

  17. Trade Games

    November 16th, 2007 at 8:34 am

    Hey SaySwap,

    SwitchPlanet is WAY ahead of you in traffic. I don’t need Alexa to prove it but even they have us at 47,000 and SaySwap at 85,000.

    I get new members coming over from SaySwap everyday because once they hear about us they no longer care to pay the $5 a trade that SaySwap charges…not to mention you’re only allowed to trade the disc there.

    We’re not even a year old and we got some awesome stuff planned for early 2008!

  18. Fred Peters

    November 16th, 2007 at 8:29 pm

    Hey SwitchPlanet - ya I guess you are right that Alexa is really a very poor way to measure traffic - Isn’t comscore / mediametrix the industry standard? I think Comscore only measures that top 15,000 sites in the USA, however Switchplanet did not even appear in the top 15,000 in the USA whilte SaySwap is tracked within the top 15,000. Thoughts?

  19. Fred Peters

    November 16th, 2007 at 8:32 pm

    Actually check out this link - looks like SaySwap is 4x the size of switchplanet and 3x the size of swaptree: http://siteanalytics.compete.c.....?metric=uv

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