Multi-channel networks (MCNs) are a hot commodity in Hollywood right now.
If you’re unfamiliar with the term MCN, essentially they’re companies that work with multiple YouTube channels that assist creators in producing and funding content, management, along with audience development.
Last year, DreamWorks Animation paid $US33 million for YouTube channel AwesomenessTV. In March, Warner Bros. invested $18 million in YouTube video game channel Machinima.
Most recently, Disney purchased Maker Studios for $500 million.
At this point, it’s only a matter of time until another big studio announces its investing in another MCN.
We spoke with George Strompolos, the CEO of another multi-channel network Fullscreen, to find out why studios are so interested in scooping up these companies.
Previously, Strompolos was at YouTube, where he helped create the YouTube partnership program which allows creators to make money off their original content.
Strompolos laid out a few reasons studios may be inclined to invest in a multi-channel network like Maker.
1. Ability to reach a younger demo that TV can’t.
“They tend to speak to a demographic that is increasingly spending less time on cable television and traditional media outlets. They’re spending their time online and when it comes to video, they’re watching YouTube and they’re building strong connections with the stars on YouTube. Companies like Fullscreen, Maker, and others in the space are incubating and developing content with those next-generation stars. These stars are a source of content and they’re a source of ideas and talent. They have real star power.”
2. Real-time data visuals of audience reception.
“We get a lot of data around the creators that we work with. We see which of their videos are working, when they’re working. We see how they’re being amplified across the web. That kind of data is really valuable when making larger bets and bigger programming decisions.”
3. It’s a big revenue opportunity.
“You think about what’s grown in the last 5 to 10 years, and basically you have video being widely available online and on mobile as well. Now, watching video online is just a normal thing,” says Strompolos. “Pretty much every young person today has a smartphone and the cameras on those phones are as powerful as some television cameras were about only two decades ago.”
Strompolos says the growth of online video in the past 5-10 years combined with a younger generation having easy access to smartphones with cameras is worth paying attention.
“The combination of widespread video and widespread inexpensive production tools really help the youth become professional creators, and it’s not just in Hollywood. It’s happening all over the world,” Strompolos tells Business Insider. “When media changes so much like that you have a new class of companies, you have a new class of stars. If you program properly you connect with a really valuable audience. That’s what we’re doing at Fullscreen. That’s what some of our peers in the MCN space are doing. A lot of people from the outside looking in are saying, “Oh, short videos.” Yeah, there’s a lot of short-form videos, but it’s really a massive generational shift — almost like what we saw with MTV in the early cable days. It was a movement. That’s happening now as well.”
“I can’t speak for Maker, but Fullscreen is a strong business,” adds Strompolos. “Disney recognises that and they want to get ahead of it and there’s certainly going to be a revenue opportunity there for them.”