BuddyTV Rising Fast, Looking for New Revenue Streams in a Changed Media Landscape

This Seattle-based website draws some 6 million visitors a month. It has been seeing annual traffic growth of about 300 percent, and was recently named the #2 fastest-growing website in the U.S., according to comScore.

Yes, I’m talking about BuddyTV, the social site for television fans led by prominent entrepreneur and investor Andy Liu. Fans go to BuddyTV.com to get news about their favorite shows, play TV-related games, and gossip with other fans. I stopped by the company’s office in Lower Queen Anne yesterday for a Seattle Lunch 2.0 meeting (thanks to Josh Maher for organizing it). Very nearby are some other notable startups, including Cheezburger Network and BigDoor Media. It’s an intriguing little pocket of Internet entrepreneurship in Seattle.

Neal Freeland, BuddyTV’s head of marketing (and a former Microsoft and Zango veteran), gave an informal update on the company to a packed room of about 80 entrepreneurs and tech-business types. My take is that 2009 hit everybody hard, especially consumer tech and Web 2.0 startups. And although BuddyTV is doing well—its revenues roughly follow its traffic, Freeland says—the company has been looking beyond its bread-and-butter revenue model of Web advertising to figure out how it can make more money.

The entire medium of television is going through big changes. From broadcast to niche, analog to digital, scheduled to anytime, and—crucially—from advertising-supported to “nobody really knows,” Freeland says. Nevertheless, it’s clear that TV still matters a lot. And online, he says, “Ads are good, but not enough.” The key is that nobody has figured out how to make banner ads really work on the Web, in order to create the kind of demand for advertising you see (or at least used to see) in print, radio, and TV.

Freeland didn’t offer any magic bullets. But he says BuddyTV has been looking at other options besides subscriptions, like virtual currencies—including micropayments, decorative benefits (dressing up your avatar online), and virtual gifts (e-cards, for example)—and lead-generation models. One problem with lead generation and “offer” models, which typically ask consumers to take surveys or sign up for subscriptions to other products, is that they sometimes include hidden fees, or have very low retention rates for subscribers. (People will sign up for Netflix in order to keep playing a game online, say, but then they might immediately cancel their subscription.)

But the virtual currency model has picked up steam, Freeland says, with Café World (from social gaming company Zynga) raking in more than $100 million a year, virtual world IMVU making $25 million a year, and Facebook Gifts hauling in some $50 million annually.

“We’re in a revolution which is changing media consumption and marketing,” Freeland says. I took this to mean, consumer Internet companies beware—but get ready to seize new revenue opportunities in 2010 and beyond.

BuddyTV is still running lean with about 20 employees, including six writers who crank out hundreds of articles a week for the site. The company was founded in 2005 and is backed by Madrona Venture Group, Gemstar-TV Guide, and Charles River Ventures.

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