Sony Buys Social Networking Site

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Sony Pictures Entertainment has bought Sausalito, CA-based social networking web company Grouper Networks Inc. for $65 million, becoming the latest in a stampede of traditional media to online video.

Sony's Grouper acquisition illustrates the studio's bid to capitalize on the burgeoning world of user-created online video.

The site lets viewers watch streaming video, download video to mobile devices using peer-to-peer technology, create video by editing together content of their own and others, and post that video to third-party sites. Sony can partner with the site to either promote its movies and TV shows or let viewers use its content to create videos of their own.

According to traffic tracker comScore Media Metrix, Grouper recorded 542,000 unique visitors last month. That compares to viral video powerhouse, YouTube, which received about 16 million visitors. YouTube also has traditional media players trying to ride its wave of online surfers. Fox said yesterday it was part of the first group of advertisers placing video ads on the site.

Sony's potential plans for Grouper include developing ad-supported and pay-to-view content for the site, as well as using it to scout creative talent for its movies and TV shows, says SPE Chairman and Chief Executive Officer Michael Lynton.

The studio follows other major entertainment companies in buying online social spaces. Most notably: News Corp. bought MySpace.com last year for $1.3 billion; NBC Universal bought iVillage Inc. in March for $600 million; and Viacom's MTV Networks bought Atom Entertainment, Inc. earlier this month for $200 million.

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