Video: Cutbacks healthy for growing Net companies, analyst says

Forrester Research analyst Eric Scheirer sees the layoffs and cutbacks by online entertainment sites as part of a healthy business model. Watch video

BOSTON--The wave of cutbacks in the online entertainment industry are merely signs of healthy business models as companies evolve to become successful, according to Forrester Research analyst Eric Scheirer. The analyst said he doesn't think Shockwave.com's staff cuts, announced late yesterday, are a sign that the company is in trouble. "They make very important, very powerful technology," Scheirer said in an interview. He added, however, that Pop.com, which plans to lay off most of its 80 employees by the end of this week, emphasizes the difficulties offline companies face as they attempt to attract customers online. The online entertainment company, backed by Hollywood heavyweights Steven Spielberg and Ron Howard, decided to shutter its doors before even launching its site.