Warner Bros. Puts More Money into Machinima

/ Feb 19, 2015

Machinima keeps revamping its leadership team

Machinima has secured $24 million in a new funding round led by Warner Bros. Entertainment, nearly a year after the studio spearheaded an $18 million investment in the gaming- and fanboy-focused YouTube network.

Existing investors Redpoint Ventures, MK Capital, Coffin Capital, and Allen DeBevoise* also participated in the current round. Google Ventures, another existing investor, sat this one out.

The investment comes as Machinima is actively rebuilding its business following a couple of rounds of layoffs and a change in leadership. Since Warner Bros. first invested in the company in March 2014, the company has named a new CEO — former Ovation executive Chad Gutstein — and has repositioned itself as a “many-2-many” programming service, with a focus on content creation and distribution to its audience of gamers and fanboys.

According to Machinima, the rebrand has been working. The company says its monthly viewership is up 70% and its US unique viewers have tripled since last March. Its YouTube network currently boasts more than 430 million subscribers, and per internal YouTube data, it’s averaging 170 million unique viewers and 3.7 billion monthly video views per month.

“With its enormous fan base, Machinima is an important exhibition partner, providing content creators, including Warner Bros., multiple platforms for distributing and monetizing digital content and programming brands,” said Craig Hunegs, president of business and strategy at Warner Bros. Television Group.

Of course, Warner Bros. has had a long-standing content and marketing relationship with Machinima, making the YouTube network a valuable resource for the studio as it uses the web to grow some of its biggest properties.

Justice LeagueFor instance, Machinima was instrumental in reviving the “Mortal Kombat” franchise with multiple seasons of the live-action “Mortal Kombat: Legacy” series. Soon the network will also be home to “Justice League: Gods and Monsters Chronicles,” an animated limited series from DC Comics and Warner Bros. new digital studio Blue Ribbon Content.

For Machinima, the new investment will help grow its presence beyond YouTube. Its making a “concerted effort” to join new distribution platforms, and has already secured partnerships with the likes of Samsung (for its Milk Video service) and Vessel, the company said.

Said Gutstein: “This additional funding will enable Machinima to accelerate our growth through increased investments in content and technology that better serves our audiences, advertisers, creators, and distributors.”

As for the possibility that Warner Bros. outright buys Machinima? Maybe, not but soon. Speaking at the Code Media conference earlier this week, Warner Bros. CEO Kevin Tsujihara said “we haven’t been able to figure out the right model and how to, frankly, make money from owning one of these networks at this point in time.” That said, he recognizes how the millennial audience — including young males — are increasingly watching content online. The studio is going to have to “own some of these platforms” at some point, he admitted.

* Allen DeBevoise is an investor in VideoInk

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