Wetpaint, a digital publisher that focused on churning out entertainment and celebrity news distributed over social media, has been acquired by “second screen” TV app maker Viggle for $30 million in cash and stock.
The deal will be a disappointment for Wetpaint’s investors, who poured about $40 million into the company—venture firms DAG Ventures, Accel Partners, Trinity Ventures, and Frazier Technology Ventures.
But Wetpaint’s nearly 50 employees, including CEO and co-founder Ben Elowitz, will reportedly get jobs at Viggle. It also sounds like Wetpaint will continue publishing TV gossip news for its audience, which it says is about 12 million unique visitors per month.
The two companies are part of a wave of digital startups that followed the explosion of social media, hoping to capitalize on those new distribution platforms and “sharing” behaviors to build a significant audience.
Viggle, a publicly traded “penny stock” company, is one of several startups that has been trying to corral an audience of TV watchers by enticing them to “check in” when they sit down for a favorite show. Users of the free Viggle app can accumulate points, which can be redeemed for coupons and other goodies. One of its competitors is Seattle-based BuddyTV, which recently raised a scaled-down investment round and retooled its offerings with a new app.
Wetpaint had a couple of incarnations, starting out as a way for users to publish their own wiki sites on various topics. It then spun into an entertainment publisher after raising its VC bankroll, betting the company on the idea that publishers could ride the huge growth and interactivity of Facebook. Wetpaint also sought to license its publishing technology to other companies.
Today, the clear winner of the social media digital publishing race—with some 130 million monthly unique visitors—is BuzzFeed, famous (and infamous) for its clickbait lists and moneymaking dive into “sponsored content” (aka advertorials), which it has used to hire actual journalists. Copycats like Upworthy have followed in its footsteps, trying to recreate the same kind of lighthearted content.
Elowitz—also a co-founder of online jewelry company Blue Nile—spent a lot of time studying the media business and was pretty well-versed in the challenges of the new publishing world, writing guest columns for Xconomy along with several other outlets.
In one of my interviews with him, Elowitz tellingly lamented the difficulty of getting advertisers to shell out big bucks for a smaller audience that spent lots of time with a site, as opposed to huge grab-bag Web properties that deliver millions more eyeballs—however fleeting those eyeballs may be.
“It has so many layers with different incentives that it’s not a clean system, and yet you have all these enmeshed interests,” he said at the time. “It’ll take decades, I think, to change.”
As Peter Kafka notes on AllThingsD, this is an enormous deal for Viggle—the acquisition price represents a big chunk of the company’s roughly $50 million market cap. For his part, Elowitz writes on his blog that “combining real-time entertainment with great editorial content is a winning formula in all kinds of new areas that our teams have been dreaming about.”
