Benjamin Kuo’s Blog

Wondering where the venture capital is going right now? It appears, at least this week, it’s moving towards video game related companies.

Today, Burbank-based Steamboat Ventures just re-invested in an in-game, mobile advertising firm, Greystripe; and  Pasadena-based California Technology Ventures invested in video game engine developer Blade Games.

Yesterday, Los Angeles-based Rotohog.com, which develops fantasy sports games, just snagged $2M in funding for the firm. Just last month, Calabasas-based  Emergent Game Technologies–another game engine developer–raised $12.5M.

For anyone here in Southern California who follows technology and Hollywood, there’s an awareness that technology is drastically changing the way that Hollywood is operating. It’s upset distribution, production, and many other parts of the business in a major way, and people haven’t yet figured out how or when it will settle out. Jonathan Handel is an entertainment and technology attorney at TroyGould in Los Angeles, and regularly blogs at Digital Media Law and the Huffington Post, and always offers keen insight into the intersection of the two industries.

In Hollywood Under Siege–just posted to our Insights & Opinions section today– Jonathan very effectively spells out the issues facing Hollywood and the content business today. It’s well worth a read.

California’s economy is at war with itself. Like the Civil War almost 150 years ago, the factions are split geographically, but this time, the two sides are Northern California and Southern California—more particularly, Silicon Valley and Los Angeles. This battle turns on whether it’s true that “content is king,” as many people believe, or whether content is becoming a mere commoner while the technologies that distribute it become ever more valuable. The outcome of this struggle may determine the future of the entertainment industry.

One of the interesting stories I gathered from this week’s AlwaysOn OnHollywood conference in Beverly Hills came from a off-the-beaten path session focused on what it takes to launch yourself as a “branded web personality.” The panel — which included an eclectic mix of “web celebrities,” including Hooman Khalili, a Bay Area DJ who runs the web site Hooman.tv; Spooky Dan, the pierced-death-goth host of Bloody-Disgusting.com (focused on reviewing horror movies); Carrie Keegan, the bad-mouthed host of NGTV (btw, best not watched at work due to profanity and nudity), and Metal Sanaz, a “Myspace celebrity” focused on death metal.

Aside from the amusing sight of folks in khakis and blue blazers chatting with pierced/tattooed Web celebrities, the panel was very interesting because it became abundantly clear that in the day and age of the Internet, it’s very easy to find celebrity and fame — but not necessarily the fortune which used to go hand in hand with fame.

Case in point might be Metal Sanaz, who — despite apparently having nearly 700,000 friends (well, according to her profile, 655,582), is “user number 1001″ on MySpace, and apparently huge in getting metal bands signed and exposed to fans and music studios — apparently isn’t actually making any money from being an Internet celebrity. Sanaz told the audience her tale of being extremely popular, but being completely unable to make any money, sell advertising, or find sponsors because she can’t due to MySpace rules on advertising. And, how she’s (finally) working on a new web site in hopes of actually being able to cash in on her Internet celebrity and pay her rent. One gets the sense that she’s living hand to mouth (at one point she mentions wishing she could “actually pay my crew for all their hard work” and even thinking “about killing myself” over the stress). The others also echoed that thought, talking about how advertising wasn’t quite paying for their edit-and-video intensive sites (Keegan amusingly saying though that it didn’t matter because the company had a number of investors who were bankrolling the effort anyway, even though they weren’t actually making any money).

It appears that the new world of Internet social networks, video, and other innovations — which make it easy to get the distribution you once had to get a record contract for in the music business, or the promotional efforts of a movie studio–has created a new class of celebrities. Those celebrities, although they have a measure of “fame” in a sense that lots of people know who they are, are fans, and follow their every move–haven’t got an established way to convert that celebrity into hard dollars. At the same time (by coincidence, the LA Times had an article on Ed McMahon’s fame-but-not-fortune), regular celebrities are starting to feel the pressure of the Internet on their traditional path to fortune. It seems like, while the Internet now provides the tools for anyone to become a celebrity with “fame”, someone still needs to figure out the “fortune” part.

The William Morris Agency and venture capital firms Venrock and Accel are reportedly creating a new, digital media fund to invest specifically in startups in Southern California, according to the New York Times. The new fund is going to be overseen by former RealNetworks executive Richard Wolpert. (Wolpert is a Southern California resident, and was previously commuting between Westlake Village and Seattle).