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AtomShockwave puts on a new face

Surviving the ill fate of many of its rivals, the company is staging a turnaround by relaunching its two entertainment Web sites and selling traditional advertisers on its TV-like commercials.

Surviving the ill fate of many of its rivals, AtomShockwave is staging a turnaround by relaunching its two entertainment Web sites and selling traditional advertisers on its new TV-like commercials.

On Wednesday, the company plans to unveil updated versions of AtomFilms and, as well as a technology partnership to deliver streaming advertisements that play before every game, film or animated series on the two sites.

The newly polished Web sites are the seemingly unmerged product of a union between AtomFilms and in January., which spun off from software company Macromedia in 1999, features sleek, interactive games. AtomFilms, founded in Seattle in 1999, hosts short films and animations.

The two companies came together intending to build an online playground for entertainment content--a business plan that quickly became unfashionable and difficult to support after the dot-com bust.

Many rivals with similarly heady plans have gone dark in the past year. Online-entertainment company iCast was shut down in November by parent company CMGI. Time Warner's Entertaindom, the Steven Spielberg-backed, Digital Entertainment Network, Pseudo Programs and Icebox suffered a similar fate.

"There was a glut of content in this area, and that devalued it," said Aram Sinnreich, senior analyst at Jupiter Media Metrix. The AtomFilms-Shockwave merger "came at a time when there was no way to create good business numbers based on an Internet strategy. But if the merger hadn't taken place, it would be highly possible that AtomFilms would have ceased to exist along with its contemporaries."

AtomShockwave has been working to prevent that outcome. Earlier this year, it cut most of its staff, going from 180 to 30 employees, and closed AtomFilms' Seattle office.

In an effort to diversify revenue, the company announced in May a pay-to-play initiative featuring two online games packages, one priced at $19.95 and the other at $29.95.

Now it is relaunching its sites to take advantage of both brand names and lure traditional advertisers. It's also cutting expensive features such as personalized Web pages for visitors.

Rolling film on ads
AtomShockwave has signed deals with iBeam and DoubleClick to provide ad-insertion technology for interstitials, or "pre-roll advertisements," which play for about 15 seconds at the beginning of a short film or game. iBeam also became an exclusive partner to provide streaming services to AtomFilms. Financial terms of the deals were not disclosed.

Interstitials, typically created with Macromedia's Flash technology, are becoming increasingly popular with mainstream publishers, which are looking to link online advertising with traditional formats from television and print to draw more old-school marketers. Unicast's Superstitials, or pop-up ads that play with TV-commercial quality, have also pulled a bevy of traditional advertisers online.

"Interstitials--it's an old concept whose day is about to arrive," Sinnreich said. "AtomShockwave is trying to counter the diminishing value of the Internet banner ad, and this is one of the more promising means of creating a valuable ad buy."

AtomShockwave has signed on such blue-chip advertisers as Ford Motor, Levi Strauss, Sony and Absolut. It says test runs of the ads have received click-through rates of between 5 percent and 30 percent, meaning about 5 to 30 out of 100 people click on the ads compared with industry averages of less than 1.

Since the coupling, the company found that the sites' audiences were vastly different, prompting it to retain separate identities with strong cross-promotion.

"We decided we could have the best of both worlds," said Scott Roesch, AtomShockwave's general manager and executive producer. "We decided to play the strengths of both brands and continue to serve and grow those respective audiences."

Roesch added that combined, the sites have about 24 million monthly visitors.

Despite the adverse market, the company raised $22.9 million in March from investors including Macromedia, Sequoia Capital, JPMorgan Entertainment Partners, Arts Alliance, Intel Capital, Waterview Partners and affiliates.

"We're doing things on our sites that others have done and failed. We're doing these things that are not in vogue right now and are surviving," Roesch said.