Young Hollywood, a digital media company that describes itself as “the source for exclusive celebrity video,” is increasing its focus on revenue beyond ad-supported video, according to CEO and founder R.J. Williams.
The company, which launched an OTT service in 2015, says it now reaches 150 million people per month — a significant increase from 2015, when it took the company an entire year to reach 150 million viewers. But for Williams, the path to revenue isn’t through video alone, but through a mix of video, licensing, e- commerce, tours, apparel and live events that he said has helped to double YH’s overall revenue in the last four years. (He declined to provide figures.)
About 20 percent of Young Hollywood’s revenue comes from non-video ventures, Williams told TheWrap. But he anticipates that in the next three years more than half will be generated outside of the medium. One new revenue stream: the company’s recently launched Hollywood bus tour business, which takes passengers across Hollywood in search of stars and restaurant hot spots for the price of a $55 ticket.
We caught up with Williams to discuss his company’s new push beyond video. The CEO also touched on what he’s learned about OTT and the biggest challenge currently facing the digital video landscape.
1. It’s been about five years since Young Hollywood launched its OTT service. What are three things you’ve learned from the experience?
We were fortunate that during the very early stages of OTT, Apple invited us to be part of their select and curated ecosystem of channel apps that were already built into their original Apple TV devices, so that definitely gave us a head start and a first-mover advantage.
I would say the first learning is that connecting with your audience is key, and in order to connect with your audience on any platform anywhere, you have to have enough compelling content that tells stories in a unique way that hasn’t been told elsewhere.
Second is that a 24/7 linear stream is still favored over VOD. Consumers who have discontinued traditional television viewing for connected TV viewing actually still seem to prefer that similar lean-back viewing experience, just in a new environment. An on-demand component is still necessary, but linear outperforms.
The third learning is that the technology constantly evolves, so you have to spend just as much time learning and understanding the tech side of things as you do on the content. The worst thing you can do is think that OTT is all about building an app and then it just becomes “set it and forget it.”
Viewing habits constantly change and you need to be able to adapt to the viewer. Young Hollywood has been able to form direct and powerful bonds with young audiences around the world across the media platforms that matter to them.
2. What was the most challenging about launching an OTT service?
Creating the right content. We already had an extensive library of 5,000-plus hours of celebrity and lifestyle content, which allowed us to launch with a very robust offering. That being said, we also realized that we couldn’t only repurpose our existing content, so we created programming specifically for our OTT offering.
We launched with more than a dozen long-form series that were created specifically for these platforms. OTT is considerably different than social, mobile and other digital platforms, and therefore needs to be programmed as such. We developed an economically efficient infrastructure that allows for the creation of content at a fraction of the cost of traditional television programming.
Another big challenge was breaking through the current disruption in a relatable way. You have to really focus and define your audience and know the ins and outs of what they want to see and who they want to engage with.
Traditional media is struggling to adapt to the changes in the industry because they are trying to take what they have already created and just put it online, but they’ve been undermined by digital disruptors.
Digital natives, like Young Hollywood, are already financing, producing and distributing our content directly to consumers, placing us in a prime position to establish the next generation of brands. We’re far more nimble and understand the passions of youth culture better than many of these legacy brands that appeal to an older audience and no longer resonate.
We figured out how to provide a relatable voice that understands and speaks directly to the youth market in a truly authentic way, and one that evolves simultaneously with their ever-changing viewing habits.
3. You’ve said in the past that over the past three years Young Hollywood’s revenue has grown 150 percent. How did you pull that off?
Our growth is directly related to our ability to successfully create multiple revenue streams. When we first launched, our only revenue stream was traditional media sold against our videos.
About three years ago, we created a robust customized programmatic ad stack to consistently generate revenue, and we created several proprietary workflow and analytics platforms that help manage the process. And then, over the past couple of years, we expanded by creating several new revenue streams including: subscriptions, content licensing, brand licensing and content integrations.
We think there was an opportunity in tourism, so a few months ago we launched a partnership with Starline Tours, and we now have 10 customized Young Hollywood tour buses throughout L.A. on a daily basis. These not only act as traveling billboards for the brand, but generate revenue as well. In 2019, we plan to continue expanding and diversifying the brand further by adding live experiential events, consumer products and e-commerce to create one-of-a-kind entertainment experiences for our audience.
4. How important are social platforms like Facebook and Snapchat to YH’s video strategy?
Social platforms have obviously continued to be a huge marketing vehicle for us when it comes to reaching the masses for content promotion, sharing and viewer engagement, so it’s very beneficial to tap into those audiences to help scale viewership and drive to our owned and operated channels. At the end of the day, though, they play a very specific role for us.
In today’s media landscape, it’s nearly impossible to build a sustainable business solely relying on someone else’s distribution platform. We are big believers in owning both the content and the distribution, so we made sure to build our own pipes in order to stay in control of our destiny and not be at the mercy of the big conglomerates’ algorithms, which as we all know can and do change at any given time.
5. What do you believe is the biggest challenge facing those trying to compete in the digital video landscape?
Monetization. With the media landscape constantly in flux, it’s particularly important to understand how to maximize the monetization of content in this environment and to constantly evolve your revenue strategies. For years media companies have been focusing on building audience and growing their viewership numbers, likes, followers and so forth, and while that’s of course necessary and vital to scale, monetization remains a challenge for many in the space. Many have also wildly overspent without having a long term sustainable business model to support their expenditures.
We’ve always tried to be very disciplined and efficient with how we’ve operated the company. It’s what we needed to do in order to get this point, and to be able to thrive for over a decade. So my advice is for digital companies to try and diversify their revenue streams as much as possible.
If you are solely advertiser-supported and the ad market hits a downturn, your chances of survival are slim. That’s why my goal from the outset was to build more of a lifestyle brand. Similar to what Branson created with Virgin or what Disney created, that’s what I envision creating with Young Hollywood.