The company has fewer than 200 employees after the layoffs, which hit staff members in the production and operations departments, among others.
"We had to lay off positions that were redundant, and we also had to lay off people who didn't want to move away from the old plan to the new plans," said Jeanne Meyer, senior vice president for Pseudo.com.
Pseudo's reorganization follows the collapse of online entertainment pioneers including Digital Entertainment Network. Such failures highlight the risks of moving first into a market dependent on high-speed Internet connections, which so far have not been widely implemented.
Only 6 percent of the online population is accessing the Internet at high speeds, according to analyst Peter Clemente of customer relations firm Cyber Dialogue. But Clemente said that spells as much opportunity as it does risk.
"The Web will represent a clearly viable alternative distribution channel for film and video and a host of other forms of entertainment," Clemente said. "So the real challenge is building your brand today in the broadband world."