Talk about your precocious toddlers.
At the tender age of 16 months, Santa Monica-based Fandom Inc. has purchased Glendale fan club and convention company Creation Entertainment. The move completes a trifecta of acquisitions in 2000 that officials of the fledgling multimedia business say will make it a national force in the area of “expanded reality entertainment.”
Translation: Fandom aims to be the industry leader in all things horror, science fiction and fantasy.
In little more than a year, the company has made a splash in the new-media realm by tapping into the apparently insatiable appetite of fans of those genres for news, chat, games and limited-edition merchandise. For Fandom, Creation Entertainment represents the latest piece in what company officials insist will be a synergistic puzzle.
This fall, Fandom purchased Chicago-based Cinescape magazine and Cinescape.com, considered the print and online destinations of choice for horror buffs. Earlier in the year, Fandom snatched up AnotherUniverse.com, a leading Internet retailer of comics and science-fiction-related products. Those enterprises join Fandom.com, the company’s flagship Web site, as well as a Fandom print catalog.
When Fandom’s puzzle is complete and the buying spree might not be over co-founder and CEO Mark Young said the company will be poised to command a significant chunk of an industry that, in games alone, generates billions of dollars in sales each year.
“Our goal is to provide the customer what they want,” Young said. “They want to consume these products in multiple platforms and we want to be there with them.”
As with its earlier acquisitions, Fandom declined to disclose financial details of the Creation deal. Young said the company has not received a new influx of investment capital since a second round of financing in February raised $16 million, bringing the total venture investment in Fandom to $25 million. Investors include Redpoint Ventures, RRE Ventures, Wasserstein Adelson Ventures and Entertainment Media Ventures.
Convention connection
Established in 1971 in New York, Creation Entertainment has been in Glendale for 10 years. Starting with comic conventions and retail outlets, Creation now produces about 60 events a year and is the industry leader in staging conventions tied to the horror and science fiction genres.
“Thirty years of conventions speaks for itself,” Young said. “We want to take that broad consumer franchise they have and combine it with our network to take it to the next level.”
The management team that has been with Creation since its inception will remain intact. The company has about 30 employees and is led by co-founders Adam Malin and Gary Berman.
Malin said the Fandom deal is a good fit for his company.
“When we saw the breadth of their business vision, we quickly became believers,” Malin said. “(The merger) allows us to reach this huge, aggregated audience. There are obvious and immediate synergies between the different parts of Fandom that we can take advantage of.
Although Fandom’s aggressive acquisition mode runs the risk of over extending the young business in an environment that has not been kind to online companies in recent months, Brad Jones, a partner at Redpoint Ventures, said the company is making its selections wisely. Instead of putting all its eggs in the online basket, Fandom is branching out to established companies that deal with similar content in both online and offline media, giving it multiple avenues to reach the same customers, he said.
“I think the people who go to the conventions will be very interested in visiting the Web site and purchasing Fandom products,” said Jones, whose company has invested $8 million in Fandom.
Evolving business plan
Earlier this year, before the dot-com meltdown, Young and his brother-in-law and Fandom co-founder Chip Meyers were preparing to take Fandom public. When the market went south, Young and Meyers decided to switch gears.
“Going public is something you have to do right because you can only do it once,” Young said. “You have to do it when the market is ready and the revenue is sustainable.”
A future IPO remains a strong possibility. In the interim, Fandom is bolstering its customer base with companies that have a proven track record of earning profits.
“With Creation, not only is there the gate, but there’s a lot of exclusive merchandise auctioned off at the events and licensed merchandise for sale,” Young said. “These are luxury items that have high fan-passion associated with them.”
Jones said Fandom, by focusing on a multimedia strategy, is demonstrating that it is not a typical dot-com. The company is dedicated to reaching its customer base of horror, sci-fi and fantasy aficionados any way it can, he said.
“We believe all these businesses can perform better based on what they give and what they bring to the Fandom network,” Jones said.
