Groupon buying in groups

Contact: Jarrett Streebin

While Groupon’s critics continue to roar about its ‘easily replicable’ model, the Chicago-based startup is busy working on something that won’t be so easy to replicate: market share. The coupons Giant is buying up ‘Groupon clones’ all over the world, further strengthening its foothold in the coupons market. Just this week it bought Twangoo, Grouper and SoSasta. As of its latest three buys, the company is in South Africa, India, Israel, Singapore, Russia, Japan, China (Hong Kong) and Germany (we won’t count Brazil since the acquired site proved to have bogus deals and fake profiles). The startup is also in the midst of a lawsuit in Australia over the URL and should be setting up shop there soon.

At this clip, it will be in all of the major markets by the end of this year. Groupon is also in the midst of raising a mammoth $950m funding round from investors such as Digital Sky Technologies, Andreessen Horowitz and T. Rowe Price (the valuation of which was certainly helped by its recent talks with Google). According to the filing, $345m of that will be for founders’ and executives’ stock. That still leaves $600m for international expansion, much of which is rumored to be going toward Groupon China.

Groupon’s nearest competitor, LivingSocial, isn’t taking this lying down. On Wednesday it bought Let’s Bonus, a 200-person coupons startup with offices in Spain, Portugal, Italy, Argentina and Mexico. And in November it invested $5m in Australian coupon site Jump On It. The Washington DC-based startup just raised $200m so it shows no signs of slowing down, either. This will be a busy year for these two and the clones.

Tapping online TV ad revenues

After running up an M&A bill of more than $10bn on advertising deals last year, Internet titans are now taking the wraps off some of the platforms built on those acquisitions. This week, for instance, Google struck a content distribution deal with Family Guy founder Seth MacFarlane. Google will distribute a new Internet-exclusive cartoon series using the AdSense platform it picked up through its $280m acquisition of Applied Semantics back in 2003. Additionally, Google launched its Google Affiliate Network, which is essentially a re-branding of DoubleClick’s affiliate marketing product, Performics.

Through the AdSense deal, Google will syndicate two-minute ‘webisodes’ with accompanying advertisements to thousands of demographically chosen websites. Of course, other sites already offer Web video streaming. However, few of them have found a way to offer the content in a profitable way. Consider the online TV network Hulu, a $100m joint venture of NBC and News Corp that streams videos from its stand-alone website. Although it consistently sells out its ad inventories, Hulu still struggles to get viewers to its site, much less run profitably.

One boost to the flagging revenue outlook for this market may well come from online video advertising markets, particularly mobile video markets. While the top players, including Google, keep busy monetizing on previous acquisitions, we expect the scores of smaller players to get snapped up. Among those that might find themselves on a shopping list: VC-backed Qik, which streams live TV and video to mobile phones and enables users to upload content to social networking websites; a similar startup, Myframe’s Flixwagon, which has partnered with MTV Israel; and finally,’s, based in San Francisco, is streaming video on the iPhone. If any of the big online advertising platforms want to go wireless, we expect they will probably take a close look at one or more of these startups.

Selected Google online advertising deals

Date announced Target Deal value Company description
April 13, 2007 DoubleClick $3.1bn Online advertising and marketing services
April 23, 2003 Applied Semantics $281m Online advertising and analytics platform

Source: The 451 M&A KnowledgeBase

Macrovision makes small buy for big ambitions

In spite of a 40% drop in its stock since plunking down $2.8bn for Gemstar-TV Guide in December 2007, Macrovision continued its push into online TV distribution markets with the asset purchase of ThoughtWorthy Media last Friday. Without giving too many details on its plans, the digital content protection company said the deal will provide its property with a more advanced search and metadata platform. It also vaguely hinted that the technology acquired would improve its current mobile search, which is rather limited. Macrovision also launched a new video search widget earlier this month.

Macrovision (now known as Macrovision Solutions Corporation) has been busy repositioning itself as an online media company since the beginning of 2007. In this time, it has shelled out $3bn on five deals for online content and the technology to deliver it. The company has also been selling off units unrelated to this online strategy. This year, it sold off its software business to Thoma Cressey Bravo for $200m, as well as its digital rights management assets for disk-related games from its Trymedia unit to RealNetworks for $4m (Macrovision paid $31m for the company three years ago).

Even though the online content provider has seen an increase of users and Wall Street is becoming less skeptical of the Gemstar combination, shareholders still need to be sold on the company’s current strategies. Through its acquisition of ThoughtWorthy’s metadata platform, Macrovision plans to create a video tagging service that will allow users to find and buy songs from within TV shows. Although small, the addition of this potential revenue stream to its current advertising-based business model could nonetheless bump up the standing of Macrovision on Wall Street.