"That creator is working in a bedroom in Austin, Texas," former Google exec tells TheWrap
Fullscreen CEO George Strompolos knows more about YouTube than most of the people that work there. As an early architect of the gargantuan video site's partner program, he brought many of the largest and most popular networks onto YouTube, from Smosh to Machinima.
So it should come as no surprise that when Strompolos left Google, he built what now ranks as YouTube's second largest network in the United States, at least according to ComScore.
Fullscreen has never been as sexy as Maker Studios, home to numerous YouTube stars and even traditional celebrities like Snoop Dogg, or Machinima, a paragon of all things geek. Yet Fullscreen has become the network of the moment over the past few months and Strompolos, initially wary of press exposure, is ready to tell his story.
TheWrap talked with Strompolos about how his network became one of YouTube's largest, the challenges of making money overseas and when he'll find the next Seth MacFarlane.
As someone who brought a lot of networks and top talent to YouTube, what would you say is the state of the network business?
Creators today are expected to be their own media companies. That's just really hard to do. Most video creators spend as much time as possible creating video, and they need a third party to provide services in support.
It is the responsibility of networks to continue to reinvest. Any revenues we can generate as a network we reinvest into more sales, more financing of videos and more production staff.
Why are so many of those networks complaining about the money they are seeing?
It all comes down to monetizable views. YouTube and its partners are monetizing on viewership basis as well as many cable networks, but we have to restrict that monetization to the United States.
Often times creators will have tens of millions of views, but find that the vast majority is happening outside of the U.S. in emerging markets on mobile devices that can't be monetized yet.
Why is monetizing those views overseas so difficult?
In the U.S. we're still in the process of helping convert TV dollars to digital media. If you look overseas, digital delivery is already a big thing. Monetization poses a bigger obstacle.
You may have a channel that has 100 million views. If 100 percent of those are from Kazakhstan, or even worse people from mobile phones in Kazakhstan – no network or even YouTube can solve that problem.
Now I understand YouTube's NewFront presentation about it becoming a global network.
While I'm a big proponent of the global format, the ideal format has 100 percent of views happening on a desktop or laptop in the United States on a Saturday. [Laughs]
What's Fullscreen's plan overseas?
We are making good inroads into advertising communities in Brazil, Russia and some other countries. Our goal is to continue to invest wisely and build a presence in those territories
You already have an office in Brazil, yes?
Brazil and Moscow today.
Why are those the first two?
We started to see an explosion in viewership in those territories. Japan is a good example. There are tons of brilliant creators in Japan – heavy internet users – but viewership is not as strong as I would like so we won't overcommit resources.
What does YouTube say?
YouTube is more active in supporting the talent in international territories that are slightly less developed. They know a lot of this begins with talent becoming famous and successful and having a good time.
They want to see the industry emerge in those territories and they alone cannot scale it. They want to see networks and financing – signs of maturity. They tend to be very helpful as far as entrance into those regions – not in a way that favors Fullscreen.
How close are you to seeing real money switch over to YouTube?
Online video used to be part of the experimental budget for a lot of brands and TV agencies – the bottom of the barrel budgets were allocated to online video.
Spending with Fullscreen or online video is no longer part of the experimental budget but the main budget. We're still nowhere near multimillion dollar upfront commitments, but we're part of the plan on a regular basis.
How has Fullscreen become the biggest network (excluding VEVO) on YouTube?
We've made a large investment in technology over the past two years, which has helped us scale the business. We've also used that technology to create a community of creators. We are able to support and add value to tens of thousands of creators around the world.
Some networks are built around one or two stars – huge networks. Are you doomed to fail unless you offer services?
We put talent and emerging creators in two buckets. There are the emerging ones, the one still honing who they are and how to make a living. Tools and services and things that are more scalable become very important and having a partner or manager is very important.
Once someone has "made it," they have other needs. They want to do bigger projects and want more representation, sponsorship deals and help negotiating big deals.
Are you wary about spending too much on production?
We have an interest in financing or co-producing content that is strategic for the company over the long term. We have no intention of becoming a facilities business – a studio for hire or a production team for hire. Becoming a factory for creators is not our future.
But you still want to own as many of your channels and videos as possible?
Yes. Fullscreen has a vested interest in incubating, owning and exploiting intellectual property.
The next Seth MacFarlane is not actually working in a Hollywood studio. That creator is working in a bedroom in Austin, Texas. Our goal is to help identify, incubate and profit with that creator.
Do you identify those people using technology? You just hired someone, Larry Shapiro, whose background is in identifying talent the more traditional, Hollywood way.
Data signals are incredibly important — creators accelerating in viewership or shares per view. We see these things pretty early on and they help us know at an early stage where to invest capital and time and resources. But we still have a staff of over 100 people who spend all their time geeking out on YouTube. There is room for gut feelings.
Are you interested in long-form content?
The vast majority of what we do is short-form, but there is room for long form online.
Given economics, short-form is just more attractive. It drives more sharing. An episode of 22 to 24 minutes can be very cool, but it's not built on sharing or marketing.
Are short-form videos and premium videos mutually exclusive?
No. You build subscribers, audience, affinity towards a brand or creator based on short-form because it allows for experimentation. Then you bring something special or of higher value to an audience on a quarterly basis — whether it's a tentpole films or a short-film series.
In the early days of Fullscreen we did some experimentation with Ryan Higa. He's notorious for sketches shot in his bedroom. We brought the audience a film called "Age of Secret Stuff." It was 44 minutes long and it was most successful piece of long-form content on YouTube at the time. At the end of the day, Ryan went back to short-form, but he delighted audiences with something out of the blue.
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