We've been talking about the coming plunge by media and entertainment companies into the emerging internet media arena. The latest company to enter into the mix is Sony Pictures Entertainment which bought Grouper, an internet user-generated video site, for $65 million.
Grouper, is basically a smaller version of YouTube, with 8 million unique users. The potential is there though as in March it only had about 1 million unique users. Something else that may have attracted Sony is the video-sharing technology that enables videos created by Grouper 
to be posted on sites like MySpace and others; which allows the company to leverage its base.
Michael Lynton, chief executive of Sony Pictures, said “Consumers are spending more and more time on sites such as Grouper, and as one of the world’s largest creators of entertainment, we want to be where the audiences are.”
While the stories of deals like this are going to increase in frequency, my thoughts are that all of these companies are joining in a "feeding frenzy," without knowing if there's any food to be eaten: Others are doing it, so they have to have one too.
The amount of traffic generated by these sites can be huge, but other than MySpace, there really isn't anyone that is figuring out how to profitably monetize these acquisitions. The recent deal by MySpace with Google (GOOG) has already made the News Corp. (NWS) purchase profitable.
For this demographic though, one of the benefits of having this as part of a company is that it immediately adds the "cool" factor to the business with young users.
This is a story we'll continually follow as media companies make their plays to enter the internet world.
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