Multi-channel network Maker Studios is on a veritable rampage these days. A week after officially purchasing video platform Blip, Maker received an additional $26 million in a recent Series C round of funding.
Late last year, Maker also raised $36 million from a few major investors including Time Warner Investments. While Maker has never officially released their net worth, back in December, Maker was roughly evaluated by investors for $200 million. However, with this latest round of funding and the acquisition of Blip, the MCN should certainly be valued at far more than $200 million one year later.
Historically, significant funding for media companies results in two separate outcomes. Example number one is the most obvious: Investors see great potential in said media company, give it a favorable evaluation, and invest in it. The media company then takes the funding and sets the world on fire with their innovative technology/content/product.
Outcome number two, interestingly enough, is one shared by recent Maker acquisition Blip. Last year, Blip raised $12 million in funding and concurrently got rid of the .tv extension. At the time, Blip COO Steve Brookstein told VentureBeat that the company was going to use the funding to improve producer tools and “further develop its content distribution and advertising platforms.”
With the addition of the $12 million, Blip’s total investments equaled $30.3 million. One year later, Blip was purchased by Maker for a rumored $10 million in Maker stock.
Although Maker and Blip both deal in the web space, the products they “sell” are significantly different. Blip sold a platform that focused on several top-tier web shows. Maker, on the other hand, banks on its wide network of channel partners and subsequently the content they produce. It’s unlikely that Maker will go down the same road as Blip, but that doesn’t mean that the MCN is in the clear.
Maker has its share of troubles in the past including multiple pending lawsuits from former CEO Danny Zappin and ex-partner Ray William Johnson. Legal trouble aside, many are predicting that the MCN ecosystem as a whole is on a crash course. Fruzsina Eördögh for ReadWriteWeb, based off of conversations overheard at YouTube convention VidCon, wrote that many executives spoke about the “unsustainable” nature of MCNs. Saatchi & Saatchi director of digital Peter Bray also spoke about nature of MCNs in the article, saying that networks will inevitably be “swallowed” by traditional media companies looking to acquire assets in the digital community.
Moving back to the idea of “selling products,” with the exception monetizing YouTube views and merchandising, Maker, at this point, doesn’t have many revenue-generating streams.
Of course, that’s where Maker’s acquisition of Blip comes in. According to entrepreneur and Maker Studios investor Mark Suster, the MCN is focusing on far more than YouTube to grow its business. While still hosting content on YouTube, Suster also makes it obvious that Maker’s purchase of Blip, in part, was to have a platform outside of YouTube to upload videos. Suster specifically mentions having more control over the Blip video player, which in turn would allow Maker to hold on to a greater share of revenue.
But will it be enough to make back the incredible amount of money being poured into Maker by its investors? Some are skeptical.
“It’s entirely possible I’m missing something and I hope I’m wrong but unless Madison Avenue has a sudden, measurable change of heart about web video or consumers suddenly decide to open their wallets for content they’ve enjoyed free of charge for years, I can’t understand how Maker’s investors will see a return on their investment,” says Wilson Cleveland, an executive producer on multiple web shows including the Hulu series “Leap Year.”
In reality, Cleveland is dead on. As the semi-disastrous results of YouTube’s pay-to-view channels have proven with blazing clarity, online audiences are not interested in paying for their YouTube content. It also appears they are largely unwilling to move off-platform. According to a study released in June, only two of a dozen analyzed creators reached Comscore’s “minimum threshold” of 50,000 unique visitors at their third-party websites. In other words, audiences following YouTube creators want to stay on YouTube — websites and other platforms just aren’t a big enough draw.
It’s a strange new world out there for MCNs. Investors are throwing around millions and we all can’t stop talking about online video’s many “wins.” But as bright as things seem right now, we can’t forget that the future of online video is anything but clear.