Warner Bros. Might Join Machinima’s New Financing Round

/ Feb 27, 2014

machinima4

Warner Bros. is considering an investment in Machinima, the YouTube-based entertainment multi-channel network focusing on gamers and “fanboys.” The news comes from The Wall Street Journal, which reports that Warner Bros. might invest $10-15 million into the company. A source at Machinima confirms to us that Warner Bros. has been mulling an investment. If the studio follows through with it, it would contribute to a new financing round in the $20-30 million range, says the source.

That number is much less than what Machinima initially envisioned for its new financing round. All Things D reported last year that Machinima was seeking $70 million. Reuters later reported that the number could be as high as $80 million. Previously, the company raised roughly $50 million from investors like Google Ventures, Redpoint Ventures, and MK Capital.

All indications were that this new financing would be earmarked to help build an OTT/SVOD platform for Machinima, which has had its eye on becoming a Netflix/HBO-like network for the gamer/fanboy culture. It’s unclear where those plans currently stand.

It’s not been the easiest 12 months at Machinima. In addition to what appears to be a smaller funding round, the company has gone through two rounds of layoffs, nixed ties with top executives like Philip and Aaron DeBevoise, and saw a high-profile partnership with Ridley Scott’s RSA Productions fall apart.

A search for a new CEO to replace current chief Allen DeBevoise* is also underway.

That said, an investment from Warner Bros. makes a whole lot of sense for Machinima. As I’ve said before, Machinima needs a major media company in its next financing round. If the company hopes to build a premium video network, it needs access to the kind of IP that a media company such as Warner Bros. can provide.

The studio has an existing relationship with Machinima. The two famously partnered on multiple seasons of the “Mortal Kombat: Legacy” live-action web series.

WSJ’s report also suggests that Warner Bros. might retain the option to buy Machinima outright, which would certainly be an interesting exit for the company.

* Allen DeBevoise, who also serves as Machinima’s chairman, is an investor in VideoInk.

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