Rotten Tomatoes gets fresh

July 2, 2010: 1:34 PM ET

The Internet's crankiest brand goes mainstream in a bid to turn "fresh/rotten" into the "two thumbs" of film criticism

By John Patrick Pullen

It's a plot for what can only be described as an "unlikely buddy picture." In January 2010, when the upstart movie social network Flixster managed to wrestle film criticism aggregator Rotten Tomatoes away from Fox Interactive Media, the two websites -- formerly competitors -- were suddenly on the same team.

For Shannon Ludovissy, who's been the general manager of Rotten Tomatoes for the past three years, the deal couldn't get inked fast enough. Since its founding in 2005, Flixster had fast become a major player by being the first to market with Facebook and mobile apps. "We were thinking, 'Wow, here's a group of people who are not missing a beat,' " says Ludovissy. "All the portals -- Yahoo!, Moviefone, IMDB, MSN -- we were all weighed down with legacy technology issues that Flixster didn't have to deal with."

But now it's time for Rotten Tomatoes' close-up. In recent months the website -- one of the Internet's longest-tenured brands -- has partnered with several well-known outlets in an effort to extend its reach and gain more notoriety for the 12-year-old Tomatometer, Rotten Tomatoes' proprietary ratings system that evaluates films based on professional critics' reviews.

Prior to the acquisition, Flixster had actually licensed the Tomatometer for use on its own site, as had MSNBC and video-on-demand service Vudu. Netflix (NFLIX) also has a partnership with Rotten Tomatoes, though the subscription service doesn't use their scores. But Rotten Tomatoes' biggest deal came last month, when Apple (APPL) plumbed the Tomatometer directly into the iTunes Store (sidebar: How Rotten Tomatoes got the Tomatometer into iTunes).

"Our partners, such as Apple, get a very deep database of reviews and a brand they trust. We get extended reach, and get to be introduced to potential users who may never had heard of Rotten Tomatoes," says Ludovissy. "Ultimately our goal … is to become the new 'two thumbs' rating in the movie category, and our licensing of the Tomatometer is our tool to get us there."

Launched in 1998, Rotten Tomatoes is one of the web's longest-running communities, and its user-supplied content was a precursor to the Web 2.0 technology the site was slow to embrace. "It's hard to say the tools were 1.0 -- Rotten Tomatoes was one of the first vertical social networks around movies," says Ludovissy. But, "sites like Flixster, Facebook, and Myspace came along and changed what social networking meant, and Rotten Tomatoes just never reinvested in the tools to upgrade to the new standards."

IGN Entertainment bought Rotten Tomatoes in 2004, looking to augment their web traffic with the film site's established readership of around 10 million unique users per month, and then the next year Fox Interactive Media purchased IGN. But Rotten Tomatoes was an awkward fit with the rest of Fox's online portfolio, and after several inquiries Flixster convinced News Corp. (NWSA) to sell the criticism aggregator in a stock-only deal valued by the SEC at $12.5 million.

In short time, the union of Flixster and Rotten Tomatoes has become an influential one-two punch in the Hollywood numbers game. In addition to Rotten Tomatoes' 10 million users, Flixster has 20 million people using its website and Facebook app. In addition, 17 million people have downloaded Flixster's mobile app, which scored big in Apple's App Store by being the first to nab the name "Movies," and which is also one of the most popular free downloads on Android. "We have 2.2 billion movie ratings, and over 2 million people use our app on a typical Saturday," says Flixster co-founder and CEO Joe Greenstein. "Assuming those people are going to see a movie, we're influencing $15 million to $20 million of box office on a Saturday."

Both websites operate by commodifying the criticism created by others (for Rotten Tomatoes it's the opinions of professional critics and for Flixster it's user reviews), and each function on an editorial revenue model, selling ad space based on page views with ads targeted against user demographics. The licensing deals they have with Apple and other partners are a negligible portion of their income, and are primarily aimed at extending the brand's reach, says Greenstein. For example, 60% to 70% of the traffic to Rotten Tomatoes is direct, and the hope is that links from partners like iTunes will attract more new users.

Flixster/Rotten Tomatoes: A New Hope

As attractive as 30 million well-defined users are, the rich data that Flixster and Rotten Tomatoes produce looms like a loaded gun in the first scene of a movie. For example, a study of 2007's box office and reviews by Slate demonstrated that movies rated  "fresh" on Rotten Tomatoes (meaning they scored 60% or greater on the Tomatometer) earned, on average, $1,000 more per screen than those that were "rotten" (under 60%).

Also, this spring Flixster started feeding The Hollywood Reporter predictive data to help the industry publication forecast box office activity with impressive accuracy. The results make you wonder what Flixster and Rotten Tomatoes could do with this information if they opted to charge for it. "I could absolutely see us leveraging our database of critics and user reviews in other interesting ways, but today that's not our business," says Ludovissy -- a statement that Greenstein echoes for Flixster's consumer-based data.

Lately the sites have been looking into partnerships to further extend their reach and increase their user base. The company recently announced a partnership with BuddyTV, a website that covers television similarly to the way Rotten Tomatoes and Flixster blankets the film industry. The deal, which places ads across all three sites, gives Flixster/Rotten Tomatoes wider exposure with the 8 million monthly users that BuddyTV brings to the deal. "From an audience perspective on both sites, there's a lot of room for cross pollination," says Steve Polsky, Flixster's president. But don't expect a Tomatometer for TV anytime soon, says Polsky. Though some users have requested Rotten Tomatoes to cover the small screen as well, a repositioning that distanced Rotten Tomatoes from its film-based focus could risk alienating loyal users.

So instead of aggregating criticism for other media or selling predictive data, Greenstein says it's more likely that Flixster/Rotten Tomatoes will grow by getting in on the movie-purchasing transaction. "We would love to be a movie store or a movie subscription service someday," he says. Though Greenstein acknowledges how complex the digital download industry already is, it's clear he's intrigued by the incremental revenue to be had by delivering movies directly to his 20 million users. "Certainly we see ourselves at the beginning of a user experience that ends in someone watching a movie -- so that's certainly a natural place for us to grow."

But for now Greenstein seems content selling ads in a destination where people go to decide what to rent, view, or buy. "In a digital world, tools that help people decide what they want to buy and consume are very valuable things," he says. "Google captures so much money because they are the place that people go to start their decision-making." And though he doesn't view his sites as the Google (GOOG) of movies, he does see them at the top of the movie-purchase funnel.

"The vision we have for the company is to be the comprehensive and unbiased resource for movies, everywhere users want it," says Greenstein. But can they remain unbiased if they start pushing products? It's possible. Apple is posting all the Tomatometer scores and reviews on iTunes -- even when they're scathing.

Ultimately it will be up to loyal users to rate changes made to Rotten Tomatoes, and web traffic will be their Tomatometer. Forget about thumbs up or thumbs down; it's going to be either fresh or rotten.

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About This Author
JP Mangalindan
JP Mangalindan
Writer, Fortune

JP Mangalindan is a San Francisco-based writer at Fortune, covering Silicon Valley. Since joining in 2010, he has written on a wide array of topics, from the turnaround of eBay to the evolution of net neutrality. A graduate of Fordham University, Mangalindan has also written for GQ, Popular Science, and Entertainment Weekly.

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