LOS ANGELES (AdAge.com) -- Until recently, Next New Networks was known in most web circles as the home of "Obama Girl," the wildly popular series that became one of the most-watched YouTube clips of 2007 and helped give birth to the "midtail" movement in web video. But it turned out there really was only one Obama Girl, and she peaked in 2008.
So, like a lot of web studios in 2010, Next New changed its business model to both survive and find larger swaths of viewers. In addition to a couple of new hits in Auto-Tune The News and Key of Awesome, Next New Networks started looking outside its own walls for existing shows as part of its Next New Creators program, adding 50 new video producers over the past year, bringing in new audience and revenue.
That helped the company has seen viewership increase five-fold in 2010, from an average 30 million views per month in 2009 to over 150 million views in the month of August. It's also on track to rack up 1 billion video views in 2010 alone by year-end, and is averaging 40 million monthly unique viewers.
"There's lots of great talent that are producing really interesting, impactful shows on the web that have yet to really find a growing audience. We can offer the distribution, marketing, sensibility and monetization outside of [Google's] AdSense," Mr. Podell said. "These shows are starting to find an audience. They just needed an extra push to be broken out and seen among the thousands of things that needed to be seen out there."
What they've also seen is a shift in viewer behavior over the past year. Rather than surviving on one-off hits that go "viral," the company is seeing more serial viewing or loyalty to an online brand or themed series. To better understand this, Next New conducted a study with YouTube and Frank N. Magid Associates dubbed "Generation V," polling 4,000 people; 55% web-original video viewers and 45% non-original web video viewers to better quantify the role sites like YouTube play in their regular media consumption.
Not surprisingly, the web-original viewer was found to be young, male, tech-savvy and likely to spend 13% less time watching TV than non-original web video viewers. Those viewers are also more interactive -- over 50% read comments on video clips, nearly half rate them and 40% share them with friends. They're pretty frequent, too –- 15% watch an original clip daily, 25% watch several times a week and 15% watch at least one each week.
"We look at the subscription bases of content creators and see that anecdotally, content partners like Next New Networks, Machinima and Funny or Die are all repeatedly getting placed in people's viewing habits," said Rick Silvestrini, YouTube's product marketing manager. "People are picking shows and the origins of those shows are becoming less essential. If people like a show they favorite it. They are increasingly including this content in their show portfolios on a regular basis."
Over 90% of Next New's videos are ad-supported and revenue-generating, commanding cost-per-thousand viewer rates in the $20 to $22 range. Advertisers like Samsung, Warner Bros., Target and Verizon have signed up for custom campaigns and branded series, and some are spending into the mid-six figures in exchange for offsetting production costs and guaranteed streams.
"The most valuable deals we do are where we take the existing audience and content that has a following, have it supported by an advertiser and create something that's organically produced and fits into the mission of the network already," said Mike Henry, CEO of Outrigger Media, an online video ad sales firm that reps Next New.
All that growth recently prompted Next New Networks' new CEO Fred Seibert to proclaim that the company could be break even within months, echoing a similar promise made by Mr. Podell in 2009.
Next New talent like Auto-Tune the News' the Gregory Brothers have enabled the company to explore revenue streams beyond advertising, including iTunes downloads. The audio version of "Bed Intruder Song," the YouTube hit that received more than 43 million views just in August, has accumulated more than 91,000 paid downloads and even charted on the Billboard Hot 100. Key of Awesome, purveyors of music-video parodies of Lady Gaga, Eminem and Ke$ha, have also brought in incremental revenue through sales of first-season episodes on iTunes.
"Our original goal was to show the web is made up of lots of different kinds of online video, and all of it adds up to a lot," he said. "Web original programming is distinct from UGC, and builds in audiences the way cable does. They share it with friends, they want to hear more about it and become committed to the brand trying to view lots of shows in that network."