Two Heads Are Better Than One: Alloy Digital and Break Media Merge

/ Oct 8, 2013

Merg

In what many are already calling the beginning of consolidation in the online video industry, Alloy Digital and Break Media, two top programmers both on and off YouTube, are merging to create a new company called Defy Media.

As first reported by the New York Times, Defy Media will be a 50-50 partnership between the two companies. Per the deal, Alloy Digital chief executive Matt Diamond will become the CEO of Defy Media and Break Media chief Keith Richman will become president of the new venture, which will look to target 12- to 34-year-olds.

The merger comes at a time when the issue of making money on and off of YouTube continues to hover over the industry. As numerous online content businesses struggle to make money, industry insiders have wondered privately and publicly if it’s going to take a series of mergers and acquisitions (or murders and executions?) for some of the businesses to turn a profit.

When Maker Studios acquired Blip earlier this summer, people began to speculate if the long-rumored Consolidation was finally happening.

For Alloy and Break, both of which are successful in reaching younger demos online, this deal makes a lot of sense.

Alloy and Break are among two of the top programmers on the world’s biggest video site, with Alloy operating several mini-networks like Smosh and Clevver Media, and Break running successful channels like AWE me and Honest Trailers.

The two also have robust presences away YouTube: Alloy has built owned destinations for Smosh and other properties, and Break runs the popular male humor site, Break.com, and film site ScreenJunkies.com. Together, the companies reach 50 million monthly uniques across all of their sites, so neither is exactly struggling to reach audiences away from YouTube.

But by teaming up, the companies are launching a venture which will begin with over $100 million in revenues.

According to The Times, the merger will allow Alloy and Break to cross-promote each other’s content, as well as continue to develop monetizable ancillary businesses, from apps to merchandising.

So if the point of entertainment is to always go bigger, it seems Defy Media is designed to do exactly that — turn two relatively successful online businesses into a bigger conglomerate, and in doing so, get more of that ad money that people say keeps shifting from traditional to digital.

The deal is expected to be formally announced later today.

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