In the latest sign of consolidation in online video, two major online video networks and production companies, Alloy Digital and Break Media will merge to form Defy Media, a spokesperson confirmed on Tuesday morning.
The deal combines a video production and distribution company (Break) with a stable of YouTube channels (Alloy) in a bid to create enough scale to register as a digital alternative to TV networks in the eyes of advertisers.
The six-months-in-the-making deal is a straight merger -- no money changed hands -- and will result in a profitable company projected to generate more than $100 million in annual revenue. Post-merger Alloy Digital CEO Matthew Diamond will run the new company as CEO, with Break Media CEO Keith Richman serving as president.
Defy Media will span more than 50 million unique visitors for its owned-and-operated properties and more than 30 million subscribers of its YouTube channels, which combine to total more than 400 million video views a month.
Tuesday's news comes a month after one of the biggest so-called multi-channel networks Maker Studios closed its acquisition of online video site Blip. In August 29.6 million people watched more than 521,000 videos on Maker's YouTube channels, according to comScore.
The merger is expected to result in some layoffs to eliminate duplications between the combined employee bases, but sales teams will be relatively safe because they'll need to secure revenue for a company that more or less doubled in size. Alloy and Break also bring together unique sales teams. While the two independent companies' audiences each skewed young, Alloy attracted a heavy female viewership while Break skewed male. The argument for their merger is that Defy Media will provide advertisers a wide swath of male and female consumers aged 12 to 34 years old.
While Alloy Digital and Break Media each also run traditional editorial sites -- such as Gurl.com, Teen.com, Made Man -- Defy Media will be primarily focused on video content with those editorial domains serving complementary roles.
Alloy Digital is considered to have a larger YouTube viewership than Break, while Break is thought to have a stronger off-YouTube audience. Alloy Digital's biggest talent is comedy duo Smosh, which has garnered one of the largest YouTube followings at 12.7 million subscribers. Break Media's YouTube channel has accrued 1.2 million subscribers, roughly as many as that of Alloy Digital's Shut Up! Cartoons. Break's AWE me YouTube channel has more than 917,000 subscribers.
Defy Media will invest in creating new intellectual property as well as new means to distribute it. Both Alloy Digital and Break Media had been in discussions with Microsoft about making their content available on the Xbox gaming console.