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"Brian Wallace is a social media consultant. He authors a blog at nowsourcing.com/blog.\nWith the economy showing no signs of bouncing back in 2009, consumers will inevitably be searching for channels of escapism, means to momentarily forget their everyday woes, financial and otherwise. Although most e-businesses are bracing for the worst, herein lies a tremendous opportunity for growth in the online entertainment industry. Admittedly, the concept of a singular online entertainment industry is a bit overwhelming, for its segments are diverse and sprawling: websites ranging from e-production companies to video aggregators to web 2.0 entertainment news portals can all be classified under the industry\u2019s umbrella. But despite the industry\u2019s breadth, which is evolving at this very moment and in need of constant re-definition, there\u2019s still a formula for success moving forward in a rocky economy.  \nInnovation\nCompetition in the industry is unquestionably fierce. Dozens of new websites are popping up every week, and traditionally brick and mortar companies are expanding to the online space. In regards to video, a November Neilson report concluded that in the third quarter 2008, TV, online, and mobile viewership were, across the board, at all time highs. In order to break away from the masses and grab the greatest marketshare possible, innovation is absolutely critical. \n\n\n\nIn 2008, Hollywood innovated traditional online efforts with virtual environments for projects such as Lost and The Dark Knight and energized their fan bases. Youtube changed gears and started streaming HD and offering full movie clips. And some ventures, such as Seth MacFarlane\u2019s Cavalcade of Comedy, turned traditional ad models for online entertainment on their head. In this highly spectated deal, Macfarlane is creating 50 shows for Google, all sponsored by Burger King, and distributed through AdWords.\nIn a climate where consumers and advertisers are clinging to their wallets, how do you create something that\u2019s simply too appealing to ignore? \nConservative Scaling\nEven with increased traffic and engagement, the online entertainment industry isn\u2019t exactly a piggy bank \u2013 and meaningful monetization won\u2019t be a reality for many years. Meanwhile, EMarketer\u2019s prediction that online video advertisements would shoot from $500 million in 2008 to more than $5 billion by 2013 stands in dramatic need of readjustment. Companies like Brightcove, Netflix, Revision3, and Veoh are tallying significant job cuts. These cuts are appropriate, and wise industry players will scale at a conservative pace. The entertainment and celebrity news segment vividly illustrate the importance of conservative scaling. Take, for example, News Corps\u2019 Page Six website, which launched in December of 2007 with over 16 employees. Operating independently of the NY Post\u2019s Page Six print column, it was shut down citing inopportune market conditions. \n\n\n\n\nMeanwhile, most successful entertainment and celebrity news sites in 2008 have flourished on the backs of only a handful, or fewer, full-time employees  \u2013 and grown at exponential rates.  Perhaps most impressively, the Cleveland, OH based Gossip Girls recorded approximately 6000% growth in traffic and a jump from $67k to over $700k in revenues in 2008 (according to my phone conversation with CEO Brad Mendall), all with less than 10 full-time staffers. PerezHilton, meanwhile, was operated by a staff of one, Perez himself, until recently.\nKnowing when to take on more personnel, and how many, is particularly critical in economic downturns. Sure, job and payroll cuts are options, but they hurt both team morale and forward momentum. \nConsumer Focus\nThe ability to connect with consumers provides web-based businesses its most powerful advantage over brick and mortars. And the application of this ability for the online entertainment industry is far-reaching: providing consumers with an intuitive and user-friendly interface, creating a mechanism for discussion and feedback, responding to consumers with both crowd-sourced proposals and solutions. \nPlus, there\u2019s the need to communicate without any pedestal involved, from an honest, sometimes peer-to-peer perspective. As the average consumer has become increasingly conscious of where he/she is allocating his/her money, companies that establish respectful relationships with their user bases will be at a considerable advantage.\nHulu, commonly praised as 2008\u2019s preeminent online entertainment success, tallied 12 million monthly users and 145 million monthly video streams just 8 months after its launch. But what makes the site truly unique, and ultimately head and shoulders above competitors like Joost, is that it seems to truly connect with its users: a simple yet sleek interface, easily navigable content, and a strong brand image of providing (or at least earnestly trying to provide) the best and most demographically relevant content. \n\n\n\n\nSimilarly, there exist a handful of video portals, such as Funny Or Die and Spike\u2019s PG Porn, which produce content that demonstrates a real kindred spirit with audiences. Collaborative projects like Massify and MeDeploy also fall into this category. Picking up on pop culture trends, incorporating relevant and niche lingo, and even leveraging the success of other relevant sites for jokes/storylines creates a lasting impression suited to spread from one community to the next.\nEven though online entertainment doesn\u2019t inherently seem like a collaborative process, the more a company can make their users feel valued, the more value they will bring to the company. Our economic recession means a greater number people will be spending an increased amount of time online and open to new means of diversion. This will inevitably be a time for many online entertainment companies to throw in the towel, but for some, it will be a springboard to capture wider, more engaged audiences and maximize financial growth.\nJeffrey Appelbaum contributed to this report.\nBrian Wallace is a social media consultant - get in touch with him on his blog, or follow him on Twitter, Plurk, and LinkedIn.\nInterested in more resources? Check Out:\n- HOW TO: Market a Web Company in a Down Economy- HOW TO: Raise Money in a Down Economy- HOW TO 2008: How to Do Almost Anything With Social Media\nImage courtesy of iStockphoto, ktsimage"^^<http://www.w3.org/2001/XMLSchema#string>
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