MCNs in Hot Pursuit of Brands (Second Feature Article)

In the second  article on Multichannel Networks (MCNs), Portada Digital Media Correspondent Susan Kuchinskas looks at  how MCNs gather the best of independent video programming, often being distributed via YouTube channels, and then play matchmaker between brands and individual content creators.

Steve Minichini, Assembly

Steve Minichini, Assembly

Agencies have long relied on YouTube for its huge reach. It serves a very specific purpose within the online video advertising realm, according to Steve Minichini, managing partner at  MDC Partners-owned Assembly. "At Assembly, our digital video philosophy centers around a specific approach which blends top-tier video sponsorships coupled with a mix of second- and third-tier video providers to ensure we have the right balance of targeting, reach and efficiency," Minchini says. Right now, he adds, his agency sees YouTube as a reach play for that second- and third-tier video content.

But the MCNs aim to change that. Multichannel networks are similar to the blog ad networks of yore. They try to gather the best of independent video programming, often being distributed via YouTube channels, and then play matchmaker between brands and individual content creators, while providing varying levels of business development advice to the YouTube celebrities. Brands appreciate MCNs because they enable them to work with one business-minded point of contact.

A "frenemy" called YouTube

MCNs are looking to expand beyond the YouTube platform for a couple of reasons. First, they hope to increase profits. Google takes a reported 45 percent cut of YouTube ad revenue, although individual creators or networks may negotiate better deals. Second, there's not enough flexibility in YouTube's ad formats.

Today's online video stars have huge audiences that definitely would watch a few prerolls to get the content.

Today's online video stars have huge audiences that definitely would watch a few prerolls to get the content, says Iddo Shai, director of product marketing for Kaltura, a new end-to-end, over-the-top video platform that provides monetization, social interaction and personalization. "So the online inventory is actually very significant. On YouTube at this time, prerolls are very hard to do." He notes that YouTube has been making some changes in order to become more flexible in what they allow the upper tiers of talent to do. "But they will never give full access -- and rightfully so. They are a strong platform and want to control much of the revenue and the content," Shai says.

xyrtec casa linda MiTuNow, MCNs are pitching custom, branded content deals, product placements, spokespeople – you name it – for the producers in their stables. New Buzz TV CEO Nicholas Buzzell points out that online distribution platforms enable things like clicking through a video ad to buy a product or download a coupon.

MiTú, an MCN targeting the Hispanic and Latin American realm,  has created a sizzle reel pitching branded entertainment, original content, programming by MiTú's top influencers, and "influencer clip seeding." As an example of branded content, a demonstration of flower arranging on the YouTube channel Casa Linda is sponsored by allergy medicine brand Zyrtec and includes a shot of the product on-set.

You can't buy a YouTube channel, but you can buy the networks that manage them.

Acquisition targets

There's also huge demand for MCNs on the part of established entertainment companies. You can't buy a YouTube channel, but you can buy the networks that manage them. The same week that New Buzz launched, AT&T and The Chernin Group announced that their subsidiary, Otter Media, would buy Fullscreen, the not-quite-four-year-old MCN that manages more than 50,000 content creators with a collective range of 450 million subscribers and 4 billion monthly views. The Chernin Group also has invested in MiTú. Last year, Dreamworks bought AwesomenessTV, and earlier this year, Disney acquired Maker Studios, while Warner Bros. made a strategic investment in Machinima.

These companies are buying access to eyeballs and talent, according to Shai – at least for now. Down the road, he thinks Disney et alia could take an MCN star's shtick and spin it off into a TV series or feature film. He says, "Once you're in business with a guy who has 30 million followers, you can really do something with it."

Amy Pham of Maker

Amy Pham of Maker

It remains to be seen, he adds, how the very independent YouTube sensations will take to working with a control-freaking behemoth like Disney. "This different breed of talent who are used to doing whatever they want to do, and turning down a deal if they don’t feel it's right for them … how will they fit into a huge entity like Disney?"

Multichannel networks are similar to the blog ad networks of yore. They try to gather the best of independent video programming, often being distributed via YouTube channels, and then play matchmaker between brands and individual content creators.

That's where the MCNs can prove that those multi-million-dollar acquisitions were worthwhile. Meanwhile, Shai thinks the MCNs will try to build their own brands away from YouTube. While video personalities have a fair number of what he calls "soft fans" who probably only would watch on YouTube, there's definitely a significant chunk of those 30 or whatever millions of fans who will pay to get more access to their favorite talent. He thinks Maker will slowly but surely start to promote its own brand, build some apps and eventually have its own channel on Roku or other connected TV platforms. Shai says, "They will definitely have a strong enough distribution platform that they fully control, keep all the ad revenue and can do sponsorships. They can do more than what YouTube gives them."

In a world where cable and the web are fragmented, we would become a tile in this digital universe.

This is the vision that Buzzell of NBTV Studios shares. He says, "The MCN model we're seeing today is the first iteration of what this space will become." Ultimately, he sees New Buzz being an equal player with NBC or Fox and accessible from any device. He says, "In a world where cable and the web are fragmented, we would become a tile in this digital universe."

This is the second of two articles exploring how Multichannel Networks (MCNs) work and their role in the emerging online video ecosystem. The first article is "Are Multichannel Networks the future of TV?"


Susan Kuchinskas @susankuchinskas

Susan has been covering digital media since they were invented. She began her career as a design writer and then became a senior reporter for Adweek, covering the launches of Google, Amazon, Overture and DoubleClick, among many others. She was a senior writer covering marketing for Business 2.0, and then helped found M-Business, a magazine about the mobile industry that, in 2001, was way before its time. Since 1993, she's reported on the internet, digital culture, technology and science. Her work has appeared in Mediapost, ClickZ and other digital publications, and she consults on content strategy for technology and financial clients from a home office in the San Francisco Bay Area.
Susan reside en la Bahía de San Francisco, muy cerca de Silicon Valley y ha cubierto los medios digitales desde que se inventaron. Empezó su carrera como reportera de diseño y luego ocupó la posición de reportera senior de Adweek, cubriendo los lanzamientos de Google, Amazon, Overture y Doubleclick, entre muchos otros. También fue reportera de mercadotecnia en la revista Business 2.0 y luego ayudó a fundar la revista M Business, una publicación sobre el Mercado del móvil que se lanzo antes de que llegara el auge de ese vehículo. Desde 1993 ha reporteado sobre Internet, cultura digital, tecnología y ciencia. Su trabajo ha aparecido en Mediapost, ClickZ y otras publicaciones digitales.

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