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AtomShockwave Cuts Staff By 2/3s

AtomShockwave has announced that it has laid-off 2/3s of its staff, leaving approximately 150 people without jobs. In addition, the online entertainment company will be shutting down its Los Angeles and New York offices. Moreover, the Netcaster will move away from original content and focus more on advertising and sponsorship from branded companies like Ford as well as syndicating its currently produced content and developing a pay format. However, Romp.com recently attempted a pay format and within a month changed its mind and refunded the subscribers money. The company plans to keep its Shockwave.com site running, but is talking with various suitors for the sale of AtomFilms. The main branch of the company will remain in San Francisco with its offices in Japan and London also staying open. No word on how this move affects the upper echelon of the firm has been announced. Mika Salmi will remain CEO with Rob Burgess staying on as chairman. Former employees will receive eight weeks severance and a chance to buy their computers at a discount price. A spokesman said, "We're scaling down so we're ready to go when the market comes back. It's a step to preserve the company. The climate is bad out there. We're doing what we can do to keep this vision alive and take care of the employees." This move comes only six months after the merger between AtomFilms and Shockwave was completed. In March, AtomShockwave announced that it had secured US$22.9 million from Sequoia Capital, J.P. Morgan Entertainment Partners, former Shockwave parent Macromedia and former Universal Studios boss Frank Biondi's Waterview Partners. In addition, to the bad economy and crumbling Net entertainment market, the cut in staff is also attributed to pressure from investors to reach profitability before the year's end. AtomShockwave was long considered one of the few frontrunners in the industry. This announcement could be the symbolic last nail in the coffin to the lofty dreams of the Internet entertainment industry.

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