Peerflix

Peerflix Hits the Replay Button (Again)—Wants to Become an Ad Network

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Diamond-encrusted gadgets get their comeuppance

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Poor Peerflix. It can’t quite seem to figure out what business it wants to be in. The DVD trading site, which already tried to rethink its business last December, has decided that maybe an online swap meet for DVDs isn’t such a great idea after all. Now it wants to become an ad network for movie-related sites. Oh, and it also bought a blog today, TheMovieBlog, for an undisclosed amount.

Peerflix will continue to operate its DVD-trading business, which pretty much runs itself on autopilot, says CEO Billy McNair. But today it is launching the Peerflix Media Network, which will be an ad network targeted at movie lovers. movieblog.pngPeerflix ads will run across more than 40 partner sites, including Peerflix, TheMovieBlog, Pajiba.com, ComicBookMovie.com, BadMovies.org, ScreenRant.com, and AnimeMojo.com. All together, this collection of niche movie sites attracts about one million visitors a month. TheMovieBlog represents the biggest chunk of that, with visitors fluctuating between 300,000 and 650,000 per month, and Peerflix attracts about 100,000 visitors a month. The rest come from the other sites.

McNair clearly sees a bigger opportunity in advertising than in e-commerce. He explains the reasoning behind his shift in strategy:

We have a very loyal audience, but it is unclear to me today whether the trading side becomes part of the arsenal of the average consumer to acquire content, or whether it remains a niche play. We could extend the trading platform or extend the movie experience. We felt the smarter play was to extend the movie experience.

Swapping DVDs always seemed like more hassle than it was worth to me. But Peerflix has been able to gather 300,000 registered users, with about 10 to 20 percent of those active in any given month, according to McNair. The problem is that there is not much growth there.

McNair says he was able to finance the blog acquisition and the new ad network from operations, and that he has not yet burned through the $10 million in capital he’s raised so far from Battery Ventures, 3i, and BV Capital. (The last round was in October, 2005). And he does not rule out more blog acquisitions.

But he may find that swapping DVDs is easier than swapping business models.

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