Viral comedy website opens up business frontiers

Funny Or Die, the comedy website founded by Will Ferrell, is pointing the way for web-based entertainment companies by combining the scrappiness of an Internet startup with A-list talent that attracts viewers. What started as a lark for Ferrell and writing partner Adam McKay has become a profitable company, with revenue approaching $30 million (Dh110 million) this year, according to a person with knowledge of the business. "Somebody is going to figure out the strategy of marrying traditional media to this new-media model, to the way people are now consuming content, on a massive scale," Funny Or Die chief executive officer Dick Glover said. "We're doing it in our little world. We're doing OK." Funny Or Die's ethos was established with its first Internet video, The Landlord. The two-minute sketch featured McKay's two-year-old daughter Pearl as a foul-mouthed landlady who intimidates a tenant played by Ferrell. Shot with no budget in 60 minutes at Ferrell's house, The Landlord attracted 78 million views. Article continues below The success-generating traffic enticed stars willing to work for free for the exposure Funny Or Die gave them with young, web-savvy audiences. The money came later, as marketers bought ads on the site and film studios hired Funny Or Die to create videos for the stars of upcoming films. Capital backing Funny Or Die is backed by Sequoia Capital, the California-based venture capital firm that has put $15 million into the company. Owners also include Ferrell and McKay's production company, Gary Sanchez Productions, director Judd Apatow, Time Warner Inc.'s HBO and Creative Artists Agency. The Landlord remains the website's most-watched, followed by a Justin Bieber sketch that drew 40.8 million views, according to rankings on FunnyOrDie.com. "We walked into Funny Or Die looking at it as a clubhouse for our friends," McKay said. "The quality didn't have to be that high, it could be goofing around. What we didn't anticipate was how much people would like that approach." Website ads account for about two-thirds of revenue. The rest comes from so-called branded entertainment, 50 or so videos the company is hired to make each year to promote movies and products. The site has kept its credibility with fans by maintaining tight control over the creative process. Typically, the only reference to the product being promoted is made at the tail end, after the sketch is over. Tim and Eric's Billion Dollar Movie, the first feature film under the Funny Or Die brand, stars Tim Heidecker and Eric Wareheim. In the picture, two friends get a billion dollars to make a film, the biggest budget in history, only to see the project fall apart. Ferrell also appears, and Gary Sanchez Productions and Mark Cuban's 2929 Entertainment are among the backers. Funny or Die can charge $100,000 or more for custom-made videos and promotional campaigns, fees that include salaries for staff and payment to the stars, said the person, who declined to be named. "There's an idea that young people reject advertising," Glover said. "That's not true. They reject bad advertising. They love advertising that talks to them in a certain way." Appeal Since the dawn of the internet, entertainment companies have struggled to make money on the web. Walt Disney Co.'s interactive unit has lost money for 12 consecutive quarters. The company said on November 7 that it had formed a partnership with Google Inc.'s YouTube to create short, family-friendly videos. YouTube is investing about $100 million to add channels in collaboration with celebrities like Amy Poehler, Ashton Kutcher and ex-basketball star Shaquille O'Neal.