Shellshocked Web survivors lie low. (Digital Hollywood-Picking up the Pieces).

MENTION the words "entertainment Web site" and David Bartis of Hypnotic won't return the call. Adam Frank of iFilm would be happy to talk about his company's netcasting efforts -- sometime in the fourth quarter.

Following the demise of so many online entertainment providers, the survivors are lying low. The dot-coin implosion has revealed an underlying truth: being innovative doesn't guarantee success. Today, the once sought-after content sites are merging with larger operations and looking for new revenue streams in order to stay alive.

They don't have much of choice. Investors have shut their once wide-open wallets. Advertisers have lost much of their faith in the Internet and aren't about to start pouring dollars into it in the middle of a recession. And most online users haven't gotten to the point where they're willing to pony up for entertainment content or the broadband access needed to view it.

"People went too fast," said Mika Salmi, chief executive of San Francisco-based AtomShockWave Corp., owner of netcaster AtomFilms and one of the few Web survivors. "The entertainment is actually good but the hype got ahead of the reality a bit."

These days, no preferred content niche or business model has emerged from the fallout. It's all over the map.

"There was a lot of hope that you could create new content and take it straight to the consumers," said Victor Hwang, chief operating officer of Larta, an L.A.-based technology research and consulting firm. "A lot of folks have found out that it's just not that easy."

There was no official date for the end of the brief, much-hyped period known as Digital Hollywood, but Sept. 1, 2000 is as good as any benchmark. That's when Pop.com, founded by the likes of Jeffrey Katzenberg and Ron Howard and arguably the most eagerly-awaited of the Hollywood Web sites, pulled the plug after its investors poured millions into the venture and couldn't even save face by merging with another site.

The failure was especially ignominious--and public--because so much had been riding on Pop.com. In the beginning, Katzenberg heralded the venture as having "the capability not only to offer a variety of entertainment options, but to tap into an as yet undiscovered talent pool that is as global as the Internet itself."

Big words. Even after Pop.com's failure, as a growing number of Hollywood Web sites either bit the dust or were about to, Katzenberg couldn't admit defeat. At an Aspen, Colo., technology summit in the spring of 2001, he said: "I do believe there's going to be a valid place for cyber storytelling that is not in our language today," he said.

Realities at play

Maybe, but here it is 2002 and there's no indication that the much ballyhooed Digital Hollywood--trumpeted with extravagant technology conferences, presumptuous rhetoric and, of course, lots of cash--is anywhere close to re-establishing itself. Whether it's content sites providing streams of cartoons and full-length features, or video-on-demand services that bring users movies and TV shows at the press of a button, the revolutionary talk has been replaced by real-world realities.

Reality Number 1: Not nearly enough consumers have the high-speed broadband pipe required to accommodate digitally distributed content.

Reality Number 2: No economic model has been devised that would assure a consistent revenue stream.

Reality Number 3: Consumers, already bombarded by several hundreds TV channels, plus DVD titles, are showing limited interest in yet another distribution channel, especially one that often requires extra equipment and is sometimes bogged down by lengthy timeouts.

These are not new issues. Going back five years, any number of skeptical analysts and investors questioned whether iFilm, Icebox.com, Pseudo.com and other entertainment-related sites could live up to the Hollywood-induced hype. The mania reached its peak in 1999 when Creative Artists Agency was receiving 100 proposals each day for various video series on the Web.

Success centered on projections of when a critical mass of consumers would have access to high-speed data distribution. Would it happen in two years? Five? Twenty?

It takes time to build an audience and it has taken longer than expected for online entertainment. While the broadband market has grown fairly quickly, only about 12 million of the 46 million wired households in the U.S. have high-speed Internet access, according to Arthur Gruen, president of media consulting firm Wilofsky Gruen Associates Inc.

Plus, the cost to provide broadband access to every cable home is likely to cost $26 billion--a hefty price tag at a time of already heavy debt.

Getting people hooked on broadband isn't the only concern. The sites have to offer appealing content that can't be found elsewhere.

The Internet is "a world of a billion niches" and you have to find the "big niches" in order to be successful, said Erik Flannigan, vice president of programming for RealNetworks Inc., which provides platforms for digital media delivery. The company last year launched its Superpass subscription service with sports, news and entertainment content from iFilm, ABC.com, FoxSports.com and others.

Superpass has attracted paying subscribers by offering users something not available on conventional television. For example, fans of the reality series "Big Brother," can click on any camera in the house and watch contestants 24 hours a day. Nascar fans can log on and listen to drivers talking to their pit crews.

For now, the betting is away from large audiences and more towards niches that advertisers might seek out. "The advertising market didn't pan out. It sort of collapsed," Gruen said. "The same people who may be receptive to advertising at other times, when they're online, they're doing something," he said. "They don't want to be bothered."

The other complication is the slumping economy, which has discouraged investment over the past 12 months, especially among the major media conglomerates that, many believe, eventually will take control of the nascent digital marketplace. With the deepening troubles at AOL Time Warner -- once considered the kingpin in converging old and new media -- and Vivendi Universal likely to be spun off with the departure of Jean-Marie Messier, the once-presumed notion of media convergence is now in question. And if convergence fails to develop, what will happen to the fledgling Internet businesses lacking the distribution firepower of a Viacom or Fox?

In order to stay alive, some companies have changed the way they do business or gone after new sources of revenue.

One example is Santa Monica-based Nibblebox.com, started by former NBC executive Bartis, "Swingers" director Doug Liman and entrepreneur Elizabeth Hamburg.

Nibblebox, whose backers included Michael Milken and former Warmer Bros. executive Terry Semel, mined college campuses for both content and customers. Students would get assistance in creating their shows and a small payment, while Nibblebox would keep the rights.

But the model didn't pan out and Nibblebox ended up merging with Hypnotic in 2001. While Hypnotic continues to offer online content, the company is focused on entertainment production.

IFilm, which was originally developed as an entertainment portal and backed by the likes of Eastman Kodak and Sony Pictures, also has focused on film production. In addition, the site promotes films for several studios, including Disney, Miramax and Warner Bros. Expanding its influence in the entertainment industry, iFilm, which has moved to Los Angeles from San Francisco, acquired the publisher of the Hollywood Creative Directory, the Yellow Pages of studios and networks.

Project Greenlight is yet another site looking to capitalize on the dreams of young filmmakers. The online venture was launched by actors Matt Damon and Ben Affleck, along with Miramax and HBO. Among the most notable projects is "Project Greenlight," a 12-part documentary about a young director who makes a movie with Miramax money that aired on HBO last year. Plans for a second installment were announced last week.

Yet many of the stories are like those of Culver City-based Intertainer Inc. Despite a wealth of movies, videos and other content from such partners as Disney, Warner Bros. And Dream-Works SKG, Intertainer has straggled to find users for its video-on-demand service. Last month, the firm sold off a minority stake to Freedomland and entered into a joint venture with the Italian media company in order to pursue the broadband market in Europe.

Digital Hollywood may still happen. The convenience and limitless choice offered by the Web has always been appealing and consumers are becoming increasingly dependent on online services, such as e-mail and online banking. As more households get hooked up with high-speed pipe and more accessible applications become available, some sort of business model will emerge.

The question is what -- and when.

"These may all be transition times," Hwang said. "The thing they've learned is ordinary people change their habits slowly."

RELATED ARTICLE: Where Are They Now

Entertainment Web site pioneers

Pop.com

Founded: 1999

Strategy: The creative power of DreamWorks SKG partner Steven Spielberg and Imagine Entertainment's Ron Howard and Brian Grazer was to generate original content, backed by as much as $50 million from Microsoft co-founder and DreamWorks' partner Paul Allen.

Status: Selling mugs and Tee shirts wouldn't finance the delivery of content. After failing to negotiate a pre-launch sale to film and others, project was shuttered in 2000.

VRL: Pop.com registered to DreamWorks, defaults to countingdown.com, a fan site acquired in June 2000

iFilm

Founded: February 1999

Strategy: To act as a portal for other's content. Streams advertisements, film trailers and some original content and serves as a link to Yahoo. Co-founded by Kevin Wendle, a co-founder of CNET. Has branched out into print media by acquiring the Hollywood Creative Directory. Backed by Vulcan Ventures, Eastman Kodak Co. and Sony Pictures Entertainment, among others.

Status: Still operating.

URI: iFilm.com still active.

Digital Entertainment Network

Founded: 1998

Strategy: With $60 million in venture backing and executives lured from Walt Disney Co. and other traditional media giants, DEN was avenue for original entertainment programming aimed at the MTV generation.

Status: Closed in 2000 after lavish spending on salaries and other overheard helped DEN burn through its cash in two years. Its implosion was further aided by a sex scandal that solidified it as a poster-child for Internet excess. Filed for Chapter 11 protection, its content assets are still being shopped.

URL: Den.com registered to Telepathy Inc., a Washington D.C. firm publishing online regional guides.

Nibblebox

Founded: 2000

Strategy: Learn from other's mistakes and generate entertainment for the college crowd on the cheap. Backed in part by luminaries Michael Milken, Terry Semel, Sandy Climan and Esther Dyson, and under the creative direction of Doug Liman, director of "Swingers."

Status: Sufficient cash flow never materialized, and the business was acquired and rolled up into Hypnotic in June 2001. Internet emphasis has given way to production for movies, television and commercials.

URL: Nibblebox.com belongs to Enigma Media, which holds Hypnotic. URL still active.

Jonathan Diamond

Icebox Pares Down

IT'S one of those rare Internet entertainment ventures able to write a second chapter.

Born in October 1999 to deliver original short animated content, Icebox.com's creative lineage was unmatched. Its five co-founders had written and produced for "The Simpsons," "Frasier" and "The X-Files."

Its $17 million in backing came from Bessemer Ventures, eCompanies and Jump Investors, as well as Hollywood power brokers Terry Semel, Ron Meyer and Norman Lear.

Irreverent short films like "Mr. Wong," a foulmouthed butler, and "Zombie College," about flesh-eating co-eds, developed a large following and attracted interest from Fox and Showtime, which talked about taking Icebox's characters offline to television or a feature film.

But something didn't click.

Initially, revenue was expected through three channels, says Tal Vigderson, a co-founder of the site: advertising, licensing fees and revenues from feature films and television shows based on the site's content.

"The ad revenue never panned out," Vigderson says. A handful of licensing deals didn't produce enough cash to make up the lack of ad dollars.

Without a steady revenue stream, Icebox.com was unable to pay its staff or sustain its production of animated shorts, which ranged from $3,000 to $40,000 to make, and closed in February 2001.

But three of its founders felt there was still a market for Icebox's brand of content. That fall, Jonathan Collier, Howard Gordon and Rob LaZebnik acquired Icebox's assets from its creditors for more than $500,000. The site was re-launched, this time with a different revenue model and a different set of expectations.

For 25 cents, viewers get day-long access to existing "Webisodes" in the Icebox library.

"We've been able to maintain half of our original viewer base," says Vigderson. "But it's paying for the site in itself--it's not a huge revenue model."

Icebox also changed its focus to become a more traditional production company. "We do production and animation for hire," says co-founder and co-president Collier, who was a writer on "The Simpsons" and producer on "King of the Hill."

The slimmed-down operation--there are two employees--reflects another change from the days of Icebox One, when there were 100 people on staff.

Vigderson, the head of business and creative affairs in the first iteration, is managing director. Scott Rupp, Icebox's original head of business development, is the other full time employee. Both work from their respective homes.

Chapter Two hasn't generated the necessary funds to produce new content, which at one time was added daily. Instead, the focus is on offline work, with the "goal of generating a pilot for a series" says Vigderson.

Until then, the company continues breathing. "The money that we have is to keep the site going," says Collier. "We can't go into production on a deficit."

Which means the original model is gone forever. "It's a great way to get the our message out.," says Collier of the site's former free-access approach. "But we haven't been able to make it work for us."

Samantha Lee

The Romp Takes New Tack

MAYBE old media didn't have it wrong after all. After bursting onto the Web with a raunchy, frat boy site called TheRomp.com in May 2000, Eric Eisner is trying again--this time in a more traditional mode.

The company is in the process of wrapping a feature film based on one of its Web-based characters, as well as developing television and record businesses. "We're now focusing on what we think is going to hit," said Eisner.

The operations fall under the umbrella of The Romp Inc., which initially created tons of hype for its Howard Stern-type humor and the fact that its co-founder is son of Michael Eisner, Walt Disney Co.'s chairman and chief executive.

Romp.com quickly caught on with the college set, which held a moment of silence when a character from one of its animated series died. Eisner and partner Bruce Forman, a former Goldman Sachs executive, at one time had an office of 60-plus employees.

Behind the site was a three-pronged business model relying heavily on ad revenue. When those revenues didn't materialize, TheRomp.com switched gears to a fee-based subscription model. Users had their choice of a $4.95 monthly payment or $34.95 per year.

Some fans clung to the site, but not enough to sustain its monthly bandwidth bills, which ranged from a $250,000 to $500,000. "Consumers just aren't ready to pay for Web sites," Eisner said.

In May 2001, the online incarnation retrenched (it is still up, but there is no new content being posted) and the company concentrated on its third potential revenue maker, its "ancillary properties."

One, a quarterly lifestyle magazine in partnership with H&S Media Inc. that was supposed to appear on racks early this year, was scratched after H&S filed for bankruptcy protection.

Romp, with offices in Hollywood, now resembles a more traditional production studio. Gone are the programmers and business development staff. There is a core staff of eight, with artists and animators working mostly on a freelance basis. Eisner now runs the company with best friend and co-writer Julian Metter and head of production Chad Hammes. Eisner says the site still receives 50,000 downloads a day, although that's a fraction of the traffic it generated two years ago.

The company is focusing on mining its "Booty Call" serials, which revolve around the amorous pursuits of a kid named Jake. Plans to create fresh content are on hold until more cash comes in. "If we make this movie and it works then everything will come back," he said.

As for Jake--whose voice is provided by Metter--Eisner has taken the character offline and says he's a month away from completing a feature film, "When Booty Calls." Backed by funds from private investors he wouldn't name, Eisner says he put the picture together for under $10 million. Hoping for a March 2003 release, the film has not yet been picked up by a studio:

The company is also pitching "Jake" as a TV series.

"We think we're creating the next 'Simpsons"' says Eisner. "We hatched the egg with Romp.com and Romp Films and are maturing into adolescence with Romp TV," he says. "We'll have to see what happens after that."

Samantha Lee