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.