What: Machinima has a second round of layoffs in nine months, now letting go 10 percent of its current staff.
Why is it important: This may raise some questions about the viability of the multi-channel networks’ business model.
Several sources (AllThingsD, TubeFilter, PandoDaily) report that yesterday, gaming and media streaming website Machinima announced it will let go 22 of its 206 employees (10 percent of its staff), as a part of its growth plan, and in order to make “an increased commitment to premium programming, its’ YouTube affiliate network, and multi-platform distribution”, as the company’s official statement read.
This is the second time in nine months that Machinima shortens its staff (last December, 23 of then 200 employees, mostly from the company’s editorial, programming, and productions departments were cut off).
The company is planning to invest more heavily in original content and build up revenue sources outside of Google’s website. Cutting off 22 positions will allow it reallocate resources towards new ventures.
It was also reported that, as a part of its efforts to raise funds, since last spring Machinima has been talking to potential “strategic” investors, like film studios (Warner Bros. and Paramount, the CBS TV network, private equity firm Guggenheim Digital Media, and publisher Adweek, among others), and it may be contemplating a sale, as well, although this has not been officially acknowledged by the company. Machinima –as well as other content aggregators– has struggled to monetize its meaningful success in terms of content and audience (over 2.2 billion monthly video views and 200 million monthly unique viewers as of June, says PandoDaily’s Michael Carney), so actually it hasn’t got any substantial ROI.
Carney also says that this may be due to the low value of online video advertising rates, compared to those of TV, and YouTube’s less than favorable revenue sharing terms (it is said that the Google-owned video network keeps 45 percent of all ad revenue), so the answer might be to invest in owned and operated websites and original programming. Therefore, YouTube would act as an audience-acquisition funnel, but multi-channel networks and content creators would have to look for alternative ways to generate income.
Machinima’s statement also said that “over the next several months, [it] will announce new programming and distribution initiatives that will advance the next phase of this strategic plan.”
We would like to mention that Machinima’s Seth Bardelas will speak at Portada’s 7th Annual Hispanic Advertising and Media Conference in NYC, next Thursday.
Join us at PORTADA Mexico!