Sony buys Grouper

From Techcrunch: Sony has acquired P2P-app-turned-video-sharing-site Grouper for [gasp!] $65 million. This is an interesting move into unexplored terrain for Sony, but so far, it is unclear how the acquisition will affect Grouper’s private P2P and video sharing functionality. More from Techcrunch:

Sony says they will use Grouper’s technology to share lower quality Sony videos online, distribute DVD quality video by P2P and allow users to create mashups of select Sony media properties.

Combine this with what is written in the press release:

This acquisition demonstrates the breadth of involvement of Sony Corporation in the field of digital online entertainment. Many people in the Grouper community use Sony cameras to create videos and Sony VAIO computers and mobile devices to store and view them. It makes sense to complete the circle by having Grouper be a part of Sony Pictures Entertainment, which itself creates so much content for people around the world.

Why all this hammering on Sony content and equipment? Does Sony want to turn Grouper into a Sony only site? Or is it just jumping on the user-generated content bandwagon? Techcrunch commenter Joseph Hunkins suggests Sony might be just interested in the technology behind Grouper, and not especially in the service’s traffic. I suppose the future will tell us what this is all about — I’m curious to see how Sony will integrate P2P and video sharing with its current offering and strategy (without killing the service).

Update 2006-09-06: Umair Haque (previously Furled items) also seems to have his doubts. He writes:

The real story here is how much Sony doesn’t get edge strategy – how this acquisition is likely to destroy, rather than create, value.


Vertical integration is the kiss of death in an atomizing value chain – unless it is done to multiply and create market space at the edges, rather than focus on controlling a decaying core.

And if that sounds too exotic, the simple summary:

Sony has decided to get 2.0, by buying a community — only to forget about the economics of the edge that are letting communities revolutionize moribund industries.

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