A New Breed of Media Tycoons (Part 1)

After Machinima, Maker Studios and other home-grown video web content producers, it was the turn of two other leading web brands – BalconyTv and AwesomenessTV – to lock in their first instalment of private funding a few days ago.

Venture capital firms like Greycroft Partners, MK Capital, New World Ventures and Polaris Venture Partners are banking on these web-based producer brands, broadcasting content on YouTube channels, their own platforms and social media outlets, quickly becoming full-fledged media partners that offer diversified content tailored to an engaged, loyal and global audience.

In this post and the one to follow we will present and analyze the story of the four brands listed above. Even though they differ in the type of content offered and how long they’ve been established, these four successful companies are alike in the fact that they are all prime examples of what venture capital analysts are now calling the “third wave” of content programming.

“This is the third wave of programming from broadcast to cable to YouTube,” said Mark Terbeek, a partner at MK Capital which led AwesomenessTV’s $3.5 million Series A round. “The cost effectiveness of YouTube is so much cheaper with essentially free distribution.” (source)

Machinima, Maker Studios, BalconyTV and AwesomenessTV are also similar because their venture capital comes from Hollywood and Silicon Valley. And therein lies this phenomenon’s novelty factor: “tech” capital is invested in content and “content” capital is interested in techies.

When YouTube started rolling out its strategy of having channels dedicated to presenting original content for its platform and announced the first $100 million advance towards this initiative, many feared channels hosted by celebrities, sports stars and popular music artists would take over. Now many exist. But seasoned players who were once YouTube partners are taking the upper hand.

So does the fact that these content producers attract investors looking for the same level of innovation, results orientation and “lean start-up” tech company mentality mean we’re headed for a culture change? Or are we witnessing the migration of a certain type of Hollywood talent and investor towards a techie culture that truly understands the web instead? Will this blend of sources and skills strengthen these successes?

Machinima

Machinima is a huge network of video game enthusiasts as well as kinematics and game designers/hackers/tinkerers led by Allen and Philip DeBevoise since 2005. The site’s 191 million monthly visitors have access to targeted content, apps and tools as well as a highly effective community hosting platform. The brand holds the top spot among all YouTube entertainment channels with a monthly average of 2.1 billion viewings. The story of the Machinima movement – born in the early 2000s under the leadership of Hugh Hancock – its mutation into a brand and finally into today’s Machinima Inc. was documented in two instalments (instalment 1 and instalment 2) by fan David Silverberg.

A fourth round of financing led by Google with the help of MK Capital and Redpoint Ventures – who were partners for the three other rounds as well – has been finalized from the time the two video documentaries were launched in August 2011. The DeBevoises have explained their strategy more than once: even if the quality of certain contributions left a lot to be desired the company only focused on one portal, making “Machinima 2012” the poster child for YouTube partners. Today Allen DeBevoise invests in video platform content besides his own such as AwesomenessTV, which we’ll discuss in our next post.

At the moment, here’s what Philip DeBevoise plans for the future:

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