''How-to" may be the next hot niche in the world of online videos, with a Santa Monica startup company launching how-to video Web sites during the first three months of this year.

When it comes to most how-to searches, 95 percent are directed toward Web sites that provide only text, with the remaining 5 percent being video searches. And most of those are directed toward YouTube, according to Hitwise, a New York online audience research firm

But WonderHowTo.com among other companies diving into the niche believes the how-to video space is where it's at. WonderHowTo doesn't host videos, but functions as a search engine for them.

"Some things you just have to see to learn," said Stephen Chao, chief executive of WonderHowTo.

It's a sector with potential. Want to learn how to tie a tie, solve a Rubik's cube or learn to kiss passionately? About 1.8 million people viewed the how-to kiss video, with an equal number viewing the Rubik's cube video. More than 600,000 people clicked to learn how to tie a tie, according Hitwise stats.

Chao, a former executive with Fox Television who helped develop popular shows such as "America's Most Wanted" and "Cops," launched his online how-to video Internet site early this year with the help of venture capital firm General Catalyst Partners.

WonderHowTo online site traffic of merely 200,000 views a month may be small by comparison to online video behemoth YouTube, but Chao believes his business plan sets him apart from hosting sites like YouTube and MySpace.

Santa Monica-based WonderHowTo doesn't host videos. It links viewers to how-to videos on more than 400 topics, such as fitness, self-help, dancing, languages, auto repair and gardening. By acting purely as a how-to video search engine the company eliminates copyright infringement issues.

"Plus, we monitor the content to make sure that there is nothing offensive or pornographic in our index," Chao said. "That's important for advertisers."

Scripps Networks has a partnership with WonderHowTo, and the chain's networks, including Food, HGTV and DIY, have links on the site. Scripps handles advertising sales.

Chao said that he expects the company to begin generating profits from advertising with the next two years.

Mandalay Calling

With a perception that the mobile phone advertising and entertainment business might become the next California gold rush, more companies are reaching out to touch someone talented in Los Angeles.

Mandalay Media Inc. recently hired video game and media veteran Bruce Stein to lead the newly formed investment company in bringing together entertainment talent with business acumen.

Stein, who was instrumental in Mandalay's recent acquisition of mobile networking company Twistbox, has experience in the video game industry as an executive at Mattel and Sony Interactive Entertainment, among others. Most recently Stein co-founded Hatcher, a company specializing in cartoons, games and family TV shows.

"Now that consumers are comfortable with doing more than just talking on their mobile phones, it's time to develop more social networking and casual gaming content," Stein said.

Newly formed Mandalay Media, chaired by entertainment industry veteran Peter Guber and venture capitalist Rob Ellin, has the goal of using Twistbox as a launch pad for future business development, specifically in the MySpace and Playstation type mobile venues.

Stein is charged with leading the day-to-day operations of Mandalay Media, while Ian Aaron does the same for Sherman Oaks-based Twistbox.

Faces of Finance

First, the William Morris Agency launched its investment arm, now Saban Capital Group Inc. is getting in the game of funding new media entertainment projects.

Saban recently hired Craig Cooper as managing director and head of the company's newly formed digital media investments group based in Los Angeles. Saban Capital Chief Executive Haim Saban said that Cooper will focus on new media, wireless and consumer Internet investment opportunities, as well as overseeing the digital media strategies of Saban Capital's domestic and international portfolio of new media and consumer Internet investments.

Cooper, former director of PureVideo Networks and founding partner in the SoftBank Capital Technology Fund, will oversee Saban Capital's new digital media investment strategy, which spans everything from angel type investing to later stage, private equity styled investments.

Southern California has experienced a twentyfold increase in venture capital investment over the past two years, recently prompting the William Morris Agency to team up with Silicon Valley venture capital firms Accel Partners and Venrock, as well as communications giant AT & T;, creating a fund to supply local online start-ups with seed money.

Documentary Deal

Despite being embroiled in a dispute with Thinkfilms, Chatsworth-based Image Entertainment Inc. has acquired the domestic DVD and digital distribution rights to the production company's Academy Award winning documentary "Taxi to the Dark Side," directed by Alex Gibney. The documentary investigates the homicide of a taxi driver at the Bagram Air Force Base in Afghanistan and is an expose of U.S. military detention and interrogation techniques. Gibney also directed and produced "Enron: The Smartest Guys in the Room," a documentary about the energy company's exploitation of California's deregulated electricity market as well as its own employees and investors.

Image has been named along with Thinkfilms and others in a legal dispute that's in arbitration over the DVD distribution rights involving a Lions Gate film, "Before the Devil Knows You're Dead." Lions Gate is arguing that Thinkfilm handed over the DVD distribution rights to "Before the Devil Knows You're Dead" to Image in breach of its contract.

Staff Reporter Brett Sporich can be reached at bsporich@labusinessjournal.com , or at (323) 549-5225, ext. 226.

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