The combination of two online video companies is a response to the growing marketplace.
Online video companies Break Media and Alloy Digital will merge, uniting two successful companies that want to get bigger to compete in a crowded marketplace, several individuals with knowledge of the deal told TheWrap. The deal should close in the next 24 to 48 hours.
The new company will be named Defy Media and will operate sites reaching more than 50 million unique visitors each month and YouTube channels with more than 30 million subscribers. Alloy Digital CEO Matt Diamond will be its CEO, and Break Media CEO Keith Richman will serve as president.
Diamond will remain in New York, home of the joint company's advertising sales division. Richman will remain in Los Angeles overseeing production.
“This moves the needle for advertisers,” an individuals with knowledge of both of their businesses told TheWrap. “They can offer campaigns big enough to further advertisers’ objectives.”
The combined company will boast annual revenue north of $100 million, reflecting the success both companies have had turning online video into a real business. Alloy Digital's top channel, SMOSH, stands out from others because its creators, Anthony Padilla and Ian Hecox, built a popular site of their own.
That helped them make more money than channels that must share most of their revenue with YouTube, and they have since launched other popular channels like Shut Up! Cartoons.
Break began by hosting user-generated videos on its own sites, but as other video portals have popped up, none bigger than YouTube, it has shifted into content creation. Break will make more than 30 shows of its own this year, including a movie with Lorenzo Di Bonaventura.
Individuals with knowledge of both companies said that they joint venture will produce even more original content.
Both companies face a great deal of competition from the other companies in the space, all of whom need to make more money both on and off YouTube to fund continued growth. As viewership has ballooned, revenue has yet to catch up.
Many of these companies, Break and Alloy included, also target the same demographic — viewers between 12 and 34 years old.
Bringing them together may ease some of these problems, creating greater efficiency by uniting two companies with strong ad sales teams in the same cities, proprietary websites and popular brands like SMOSH and Break.com.
“Despite the fact that they are both in the 12-34 demo, they are complementary,” the individual said. “Both deliver owned and operated channels. Both have significant presences on YouTube and off.”