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Entertainment, Industry, Re-Cap

Reinventing TV For the Digital Age: Multichannel Networks

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O2L (Our Second Life), a group of young, male YouTubers each with over a million subscribers to their individual channels sold out of $75 VIP tickets to their 17 city  tour sold out in ten minutes. 

In the past decade, a certain type of grassroots creativity has emerged on YouTube and other video platforms. Time magazine once celebrated YouTube for having provided so many amateur creators with the tools to “broadcast themselves.”

YouTube’s creator-partner system and their infusion of $200M in their original channel initiative contributed to the increased commercialization of this democratic space, for better or for worse.

Recognizing an opportunity to advance a new culture industry, a group of web-based, tech-savvy, para-industrial start-ups have emerged with distinctive approaches to monetizing YouTube’s 100 million hours of video uploaded every minute to its billion unique monthly users. They are the multi-channel networks (MCNs), also known as YouTube networks, online video studios, and simply networks. Among the big three are Fullscreen, Machinima, and Maker Studios. “YouTube is all about audience development. It’s about how many subscribers can you get on your channel so you can monetize it. These creators are little television affiliates,” says Larry Shapiro, head of talent at Fullscreen.

Multichannel networks have aggregated thousands of YouTube creators in order to amass tens of thousands of online users. Most MCNs pursued this new business model shortly after YouTube started investing $100 million to augment the production budgets of a hundred or so YouTube talent partners.

“On YouTube, you have super-targeted channels that would never exist in a television model, and that they have super-high engagement,” says Machinima chairman, CEO and founder, Allen Debevoise. “MCNs aggregate these particular channels across different categories. From a monetization perspective, you have a large com score number, you have a large nielsen number, but you have high engagement, which is very unique.”

To serve this growing group of YouTubers with significant user counts, the MCNs inserted themselves as business allies, taking a percentage of the advertising dollars offered by YouTube and up to 50% of the IP, in exchange for providing amateur creators with these added services.

Some find these relationships troubling. Thousands of YouTube creators have signed contracts with most earning little or no profits for their considerable efforts; in contrast, the small handful of creators, who have been able to secure a living despite YouTube’s restrictive terms, are resentful of the MCNs for profiting from their creative labor.

YouTube/Google are eager to work with MCNs because they help amass a large online audience and their consumer information is shared with advertisers as “big data.” As it turns out, there is a big demand for big data in Hollywood.

The more traditional Hollywood companies don’t always immediately understand the benefit of the YouTube audience, but when it gets broken down for them, it clicks. Shapiro recalls a conversation with a TV exec that illustrates this point: “In television they talk about L3s and L7s, so when I was talking to a network exec about devinsupertramp and he said, ‘I just don’t understand these views, I get it but I don’t see how it’s important for television.’ I say, ‘I’ll tell you what. On an L7, devinsupertramp will reach a million people between the ages of 17 and 25 every week.’ And it clicks for him—‘that’s like a 1 share. Can I meet him?’

devinsupertramp’s channel has more than 400 million views.

Several Hollywood media companies have recently recognized their inability to access YouTube’s growing audience of online users, and MCNs are their perfect way in. Notably, Disney recently acquired Maker Studios for $500 million, while Warner Bros. continues to kick the tires at Machinima.

For Shapiro, this isn’t surprising, and it signals the strength and wisdom of this new generation of creators, and, regardless of the controversy surrounding them, the MCNs as well. “That’s the importance of a devinsupertramp or a lohanthony or an O2L, or some of the mine craft creators on Machinima,” says Shapiro. “They’re tapping into our emotional connection to entertainment now, and they’re going to shape it down the road.”

View the rest of Transforming Hollywood 5 panel “Creators Who are Reinventing TV for the Digital Future” below, or by heading to our Vimeo page.

Industry, Re-Cap

5 Big Ideas From TH5 Panel 1: Creators Reinventing TV for the Digital Age

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If you don’t have time to re-watch TH5 Panel 1, “Creators Who are Reinventing TV for the Digital Future,” catch our run-down of 5 big ideas from that conversation.

1. “To a certain degree, YouTube is program television. Their fans know exactly when, what time, the creators are uploading content.” LARRY SHAPIRO, HEAD OF TALENT, FULLSCREEN

 

2. “Geek and Sundry has always seen the digital space as separate from television because we are able to tell stories that are not being told on television. What’s happened in the last couple years is they’re really not that separate and they’re starting to converge.” SHERI BRYANT, PRODUCER & CO-FOUNDER, GEEK & SUNDRY

 

3. “Because short-form content works so well on YouTube, you can start to think about short-form content incubating other types of content where the focus isn’t how do we monetize this on YouTube, but are we using this to create a brand, or reinvigorate a brand, which then a traditional media company can take out.” ALLEN DEBEVOISE, CHAIRMAN & CO-FOUNDER, MACHINIMA

 

4. “I was in a meeting at WME with a 16 year old and a 19 year old who make Vines. I won’t go into the deal points, but when I went home I made sure my 12 year old downloaded Vine and starting Vining. When you add up all of the content one of these Viners has made in his entire life, it totals 22 minutes. These kids are so powerful. They’re commanding an extreme amount of money. Madison Avenue is just throwing money at them.” LARRY SHAPIRO, HEAD OF TALENT, FULLSCREEN


5. “The economics are the barrier moving forward. The technology is there. The creativity is there. But if I were in the television industry…the question of how we are paying for it is really starting to raise its head here.” AMANDA LOTZ, ASSOCIATE PROFESSOR, UNIVERSITY OF MICHIGAN

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Industry, News, Re-Cap, Workshops

Creators Who are Reinventing TV for the Digital Future

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In Fall 2011, Google announced plans to invest $100 million dollars to forge original content partnerships with a number of talented YouTube creators in order to enhance the production value of their work and their value to brands.

The result was a slate of channels from production companies, actors, athletes, comedians, musicians, self-help gurus. Many of the channels have stopped producing new content now that the Google money has run out, but for those that built an audience, the move was influential in strengthening two types of virtual entrepreneurs—web creators and the CEOs of multi-channel networks providing support to those very creators.

Those that rose to the top give us a glimpse at the ways in which the very idea of TV is being reinvented in keeping with advances in digital technology. The multi-channel network Fullscreen is one such company vying for a space in the new entertainment landscape, led by founder and CEO George Strompolos. “I think any time you have a major shift in technology or distribution, new companies are born, and they look a little different. And if they make it, they become quite valuable, and they help bring great ideas and great creativity to the world,” Strompolos said in a recent interview with TH5 co-director and UCLA associate professor Denise Mann.

It’s certainly true in the history of film and television, and as a generation raised on Facebook, YouTube, Instagram, Twitter and Snapchat comes of age, it’s likely to be true of online video. It’s a generation that “can easily transition from consumer to creator,” as Strompolos says, so Fullscreen has “built a media company in partnership with tens of thousands of content providers from the connected generation. And the internet is our primary distribution source.”

It’s not just a younger generation raised with new technology that is creating content, however. Veteran writers, producers, comedians, and actors are thriving as they rewrite the rules for what constitutes television. Sheri Bryant—producer and co-founder of the successful Geek & Sundry YouTube channel—is one such creator. Not only has Geek & Sundry produced several hit series on YouTube, later this month they will release “Spooked,” a new series on Hulu.

“Spooked” is a co-production with Bad Hat Harry, Bryan Singer’s production company, a sign that Hollywood heavy hitters are paying attention to the corners of digital world beyond the next big Netflix series. “Spooked” also signals the ability of successful YouTube companies to chase other platforms like Hulu and Netflix, and even networks and studios. This doesn’t come at the expense of the YouTube content, as Bryant points out: “The YouTube platform is important to us in the overall growth of our company because so many of our fans live there and it’s a great place for growth.” Of course it also serves as a testing ground for new content that can grow a fan base and then be pitched to and developed for other platforms.

That relationship between new and old is exciting and provides new opportunities, but TH5 co-director and UCLA associate professor Denise Mann suggests there’s more than meets the eye. “By acquiring the big MCNs, the studios hope to access the millions of users and creators that have been amassed by these web networks. In doing so, Hollywood is letting the proverbial [digital] fox into the [analog] chicken-coop, inviting these surveillance-driven marketing strategies to co-exist with their aging, premium content business.”

Join us on April 4 as Denise and Sheri—as well as Larry Shapiro (Head of Talent, Fullscreen), Allen DeBevoise (chairman and CEO, Machinima, Inc.), and Amanda Lotz (associate professor, University of Michigan)—debate the viability of these new creative and business models, asking whether they represent a radical rethinking of entertainment that puts power back into the hands of creators or if they are transitional systems that will eventually be absorbed by Hollywood’s big media groups.