Veoh's Back: Assets Bought by Startup Qlipso

The Video Site, Once Backed by Michael Eisner, Gets a New Lease on Life

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NEW YORK (AdAge.com) -- Veoh, the video site once backed by former Disney chief Michael Eisner, is getting a new lease on life.

Qlipso plans to relaunch Veoh along with its own tools that allow viewers simultaneous web viewing.
Qlipso plans to relaunch Veoh along with its own tools that allow viewers simultaneous web viewing.
Israeli social-video startup Qlipso bought the assets at the 11th hour before a planned bankruptcy filing in February; the startup plans to relaunch the site along with its own tools that allow viewers simultaneous web viewing.

The acquisition, which closed March 19, marks a new chapter in Veoh's short, loud history; the company was backed by Mr. Eisner, Time Warner Ventures and Goldman Sachs, and burned through $70 million and several business models before it ran out of gas in February. Veoh was also hobbled by a copyright suit from Universal Music Group, a suit Veoh finally won last fall after spending millions to litigate.

Along the way, Veoh actually became a viable business, especially in its last year, and people close to the talks said Mr. Eisner seriously considered restructuring his investment and putting more money in. But he was convinced by attorneys that the legal overhang would remain.

Veoh's assets were sold by an administrator under an Assignment for the Benefit of Creditors, an alternative to Chapter 7.

Qlipso CEO Jon Goldman, co-founder and former CEO of gaming studio Foundation 9 Entertainment, will be CEO of the combined company. In an interview, he said it's unclear whether they'll run the whole business under the Veoh name. He did say the company will seek to license the social-viewing technology to other sites, as well as embed the functionality in Veoh.

Mr. Goldman did not disclose a price but people close to the talks said Veoh sold for less than $10 million. The deal was financed by Qlipso's VC backer, Jerusalem Venture Partners.

Veoh's former sales operation, a company spun out as Outrigger Media, will continue to represent the ad inventory on the site, which never shut down and has 7 million unique visitors a month, according to internal logs.

"There is still a substantial audience; they haven't gone away," Mr. Goldman said.

There were other bidders in the Veoh auction; Drew Massey, founder of ManiaTV told MediaWeek that he planned to bid for Veoh. Mr. Goldman said he'd never considered such a deal, but a VC friend alerted him to the opportunity. "They were literally going to file that paperwork," said Mr. Goldman, who will run the company from New York. "Everyone thought the company was dead."

Since there was a change in ownership, Mr. Goldman has to renegotiate Veoh's programming deals, and he said talks with Veoh's original content partners such as CBS, Warner Bros. and Sony Pictures Television are under way. Talks with Viacom, another early Veoh partner, could prove more difficult given its ongoing suit against YouTube and that it just pulled shows off another web distributor, Hulu.

Mr. Goldman is not renegotiating with Playboy Channel, and said he's discontinuing Veoh's "sexy" video category. "It's hard to sell advertising against that," he said. "It sends the wrong message to women and doesn't really lead to a social community."

Mr. Goldman believes that in addition to video ads targeted demographically -- Veoh's current model -- Qlipso can layer in social tools and some of the monetization techniques from gaming.

"Whenever you create an experience that requires you invite other people to it, that is going to be a huge benefit," he said. "You are going to have audience growth. When you look at Veoh that has an advertising model on it already -- we are just applying a new way to bring audience."

Qlipso is a startup with technology but little revenue. Prior to the Veoh deal, it had a free software offering and a "premium" subscription service. Acquiring Veoh, a company with revenue, will make Qlipso an operating company.

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