What YouTube's Biggest Networks Want: A Little Space From YouTube

What YouTube's Biggest Networks Want: A Little Space From YouTube

Maker Studios is one of a few networks that will pitch advertisers on their value outside of the world's largest video site

The last time Maker Studios descended upon New York during springtime, it threw a hotel party. This year it's pitching advertisers.

Maker will host its own event for Madison Ave. during the NewFronts, an annual confab similar to the Upfronts, when television companies court advertisers with their upcoming shows. Maker talent has been featured at YouTube's presentation in the past, but has not held its own event to show off its stars, series, video player or website until this April.

Maker is one of a few multi-channel networks — the umbrella term for a diverse group of media and tech companies that operate numerous YouTube channels — eager to prove the strength of their brands outside YouTube. Fullscreen, a network more focused on providing artists with tools to grow their audience, is also contemplating hosting its own event this year, following in the path of other YouTube dependent companies.

“It is important for MCNs to demonstrate to brands and agencies that they are more than just big aggregators of YouTube inventory,” Greycroft Partners’ Mark Terbeek, who has invested in or sits on the board of companies like Maker, Machinima and ZEFR, told TheWrap“They are big enough now to interest relevant brands and agencies (rather than just indirectly through the YouTube brandcast).”

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The decision to hold an event independent of YouTube is not a rejection of the world's largest video site. Rather, it reflects the maturation of an industry eager to prove they provide value on their own. YouTube is still the place most people watch Maker's videos, but it's not the only one: Advertisers who buy from YouTube buy across large verticals. The MCNs want them to buy ads against specific channels and shows — and on their owned and operated websites.

These networks want to convert the millions of view they generate every month into stacks of cash. The networks spent much of last year bemoaning the revenue they see from YouTube as insufficient. YouTube generated $5.6 billion in revenue in 2013 according to a recent report, but the networks providing many of the most popular shows see a fraction of that sum.

The MCNs have struggled to provide must-see programming — shows and channels advertisers feel compelled to advertise in front of while paying a hefty sum to do so. Plenty of creators make money from YouTube, but they often make even more selling merchandising and signing sponsorship deals.

“While our business is deeply rooted in the success of YouTube – and we'd love to have a ton of talent in the YouTube event – we want to give the marketer community a full portfolio of programming and talent,” Maker Studios COO Courtney Holt told TheWrap. “We have to define our brand in addition to what we do with YouTube.”

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A few networks have already braved the NewFront stage on their own, including Vevo, a purveyor of music videos, and Alloy Digital, the owner of Smosh that has since merged with Break Media to form Defy Media. Machinima held its own event as well to hock its gamer-friendly videos.

But Defy will not be back this year, president Keith Richman told TheWrap. 

“A lot of these shows never get made,” Richman told TheWrap. “If there's a NewFronts where everyone presents stuff they'd make that year, we'd be more interested in participating. We might as well sell it as we make it.”

Richman was not the only one to question the efficacy of the NewFronts. Other individuals familiar with the online video industry dubbed the NewFronts a stunt that has not had much impact for the participants.

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The Upfronts work because of scarcity and supply and demand, they point out. There are only so many advertisements during a new season of “The Walking Dead,” so advertisers that want to get in front of those viewers — and there are many — must buy ads when they can.

Online video has the opposite problem. The number of videos grows every day, and advertiser demand has yet to catch up.

Companies like Crackle, Yahoo, AOL and YouTube have tried to change that at the NewFronts, and now a few MCNs have joined the fight. While Vevo, Machinima and Defy sell defined brands, Maker and Fullscreen are behemoths with myriad channels and no singular identity. They have spent the past couple of years trying to remedy that, honing their programming into more defined verticals like gaming and comedy. They can then present advertisers something tangible, something they in which they want to invest.

Maker has also been building the infrastructure needed to extend some of their most popular brands, like Epic Rap Battles of History and PewDiePie, beyond YouTube. Maker bought Blip for its video player and advertising expertise, developed its own website, and welcomed several high-profile executives, including executive chairman Ynon Kreiz and chief content officer Erin McPherson. 

Fullscreen will make several splashy announcements later this year, thought it remains to be seen what those are.

Regardless, all of these networks will bring more firepower to New York this April whether it's on stage or off.

“This shows the space is maturing,” Terbeek said. “The most successful shows will be the largest players with unique programming.”