Gregg and Evan Spiridellis were pinching themselves Thursday night when "The Tonight Show with Jay Leno" aired a new online animated satire from their company, JibJab Media.
The late-night TV film debut of "2-0-5" was the fifth for the JibJab brothers since their online short film "This Land," skewering the 2004 presidential candidates, became a huge Internet hit last year.
"This Land," viewed on the Web more than 80 million times, launched JibJab out of obscurity and landed the Spiridellis duo on Jay Leno and in partnerships with Yahoo and MSN. It also led to projects with the Sundance Film Festival and beer maker Anheuser-Busch.
Yet JibJab, which recently added its eighth employee, is not exactly a raging commercial success--at least not yet. "My brother and I still rent our apartments, and we don't drive fancy cars," said Gregg Spiridellis, 34. "We're profitable because we pinch pennies."
That's partly by choice. The Spiridellis brothers said they've turned down work in order to stay true to their artistic vision and manage growth. But it's also because producing online entertainment, particularly video, supported by advertising is "still a very shaky business model," according to Spiridellis.
JibJab is something of a pioneer in this area and a creative force to watch as video emerges in a big way on the Web and mobile gadgets, including Apple Computer's new video iPod. In search of revenue, the company has enlisted MSN and Yahoo to help it sell "preroll video" ads, short clips that play before each online viewing of its animated productions. Major brand name advertisers, including Sprint, have signed on.
The company is also working with MSN to sell product placements, an avenue the video game industry is pioneering in the digital world. But the Spiridellis are cautious about it. "We won't risk the integrity of our brand by putting a can of soda in the foreground," Spiridellis said. "But we're working on ideas. I think it's going to happen."
Business prospects for online video also just got a lot more interesting since NBC and Disney began selling episodes of prime-time series, music videos and movie trailers through Apple's iTunes store. After people unwrap all of their shiny, new video-capable iPods and Sony PlayStation Portable devices next week, the Spiridellises are hoping that paid video downloading will skyrocket.
You won't find "This Land" or other JibJab productions on iTunes, but JibJab just introduced $1.99 iPod-compatible downloads of its movies, available on its Web site. Through a partnership with a Seattle company called Mobliss, the brothers' start-up is also working to deliver its movies to mobile phones.
But one media expert said JibJab should focus on tapping the booming online-advertising market instead of trying to charge viewers for videos. "Even getting people to pay for the most premium of content is a difficult task," said Michael Gartenberg, an analyst at JupiterResearch. "Look how long it took to get people to pay for music."
It may be wise advice. The U.S. online-video ad market is set to triple by 2007, from $225 million to $640 million, online-research aggregator eMarketer projected recently. That's for all Internet video ads though, not just ones that support online-video content.
"The ad market for online-video sites and content is just blowing up," said Scott Roesch, vice president and general manager of AtomFilms, an online-film distributor in San Francisco and a JibJab partner. "We sell to dozens and hundreds of the biggest brands out there."
Still, the Spiridellis brothers seem happy to try numerous approaches to build their business in a way that lets them maintain their particular brand of humor, which Evan Spiridellis, 31, describes as "a little bit naughty but never quite R-rated."
The brothers return to a familiar theme with "2-0-5," their latest animated short. The 2-minute spoof, available on MSN after airing on "The Tonight Show," takes another stab at presidential politics, specifically the travails of George Bush in his second term. The title refers to a verbal blunder by the star of the piece, an animated cut-out of Bush.
He'll be joined by an animated cast of characters that made the news this year, including indicted Bush advisor Lewis "Scooter" Libby Jr., indicted Congressman Tom DeLay and North Korean leader Kim Jong-il, in a rowdy musical set to "Auld Lang Syne" and other holiday classics, according to JibJab.
For the Spiridellis brothers, who grew up with a wise-cracking father and a keen interest in world events, political humor seems to come naturally. "Anyone who pays attention to it has to form a point of view," Evan Spiridellis said. "For us, satire is how we cope with all the craziness in the world."