Fullscreen, Fine Bros. Deal: Production Financing

Wanna sign a top YouTube channel? That deal better come with production financing

Given the thousands of performers affiliated with YouTube’s leading multichannel networks, getting a deal with one them isn’t something necessarily worth bragging about. But a new pact between top-ranked MCN Fullscreen and veteran YouTuber act the Fine Bros. points to an interesting sign of maturation in an otherwise nascent category.

In the old days of the chaotic MCN world–meaning, like early 2013–all it took an MCN to bring a channel into its network was help with promotion, advertising sales and tech support. But that’s becoming just table stakes for a handful of top acts like the Fine Bros., which are seeing companies like Fullscreen now ponying up to invest in content production as the race to sign talent gets even more competitive.

The deal with the Fine Bros. calls for Fullscreen to allot an unspecified fund toward producing new content with an eye on migrating formats off of the YouTube platform.

“We look at the Fine Bros. as top-tier showrunners of the YouTube generation,” said George Strompolos, CEO and founder of Fullscreen. “They have the audience, the fan base and the proven track record, so we’re ver much interested in developing programming with them for the Internet and TV.”

Previously based at Discovery Networks-owned Revision3, Ben and Rafi Fine are best known on YouTube for their unscripted “React” franchise, which shows people reacting to viral Internet videos. They have garnered more than 1.1 billion views to date on YouTube. Their main channel has nearly 6.5 million subscribers, putting it among the 25 most popular YouTube channels. Fine Bros. will be among the five biggest attractions in the Fullscreen stable, depending on the metric. (Tubefilter first reported on Fine Bros. departing Revision3 yesterday.)

Funding production is typically done for some in the MCN space via advances or guarantees against sponsorship deals. Production financing in a blind commitment, not contingent on any specific project, is a whole different story.

“A handful of us have found these type of deals but they are very hard to come by, and not all of Fullscreen’s competitors are trying to make those type of deals,” said Rafi Fine. “Some were open to it.”

While the TV industry may scoff at what sources indicate is likely a sum in the six figures, they may not be laughing when Fullscreen and Fine Bros. take their intellectual property upstream and that content becomes a TV show with a built-in audience along with trove of data on how best to program it. Not that everything derived from the deal will be TV-bound; some could be fine to stay on YouTube or other over-the-top TV services or straddle the two worlds in transmedia form.

Without content funding, Ben Rafi believes it’s impossible for YouTubers to take a shot at TV, which is still a far more lucrative market than digital. “The economics aren’t there to make these bigger projects, which is why it’s exciting that companies like Fullscreen can empower us,” he said. “We don’t want to be forced into a box.”

It’s not the first deal of its kind, but is certainly the biggest Fullscreen has done. Strompolos probably couldn’t have made such a pact prior to since June, when Comcast Ventures and global ad agency WPP joined original investor Chernin Group in a Series A investment round that has been pegged to be worth $30 million.  Strompolos is open to doing more such deals provided the talent merits the extra love.

The Fine Bros. signed with WME last week and are managed by Max Benator.

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