"Certainly for us in the short run, the focus is on creating new
content franchises that'll be born on YouTube and have a huge
branding and audience on YouTube but might flourish off YouTube,"
said Machinima CEO Allen DeBevoise.
As part of its investment, Warner Bros. will look for
opportunities for Machinima outside YouTube, such as TV. "That's
not our expertise," Mr. DeBevoise said."Certainly for us in the
short run, the focus is on creating new content franchises that'll
be born on YouTube and have a huge branding and audience on YouTube
but might flourish off YouTube."
A number of online video networks have seen their growth stunted
by YouTube's 45-55 ad-revenue split and have looked elsewhere for
more generous terms. Internet entrepreneur Jason Calacanis summed
up the complaints last summer in a
But cutting out the sales staff doesn't mean Machinima is out of
the ad business. On the contrary, Mr. DeBevoise said the company
plans to more aggressively build customized, branded content for
Warner Bros.' involvement could open up a new revenue source for
Machinima by helping to license and distribute its content. Mr.
DeBevoise said the company would like to have that second revenue
stream but added that advertising will remain a "fundamental."
Last year Machinima had been
reportedly looking to raise up to $70 million. A year later it
only pulled a quarter of that, which could signal less than
enthusiastic investor interest. That hesitation wouldn't be
surprising in light of online video networks complaining about how
hard it is to build a sustainable business dependent on
At the time, Machinima was looking to fund a flagship TV
franchise -- something like HBO's "Game of Thrones" -- but scaled
back those ambitions over the past year.
"We were really having a lot of strategic conversations last
year with a number of companies -- some in the media space and some
not -- about what's next for Machinima," Mr. DeBevoise said. "Some
examples were to raise [money] to do a lot of premium content and
there were different models we played around with."
In the end, Machinima went with existing content and
distribution partner Warner Bros., which produced the series
"Mortal Kombat: Legacy II" that streamed on Machinima's YouTube
channel last fall.