For digital upstarts like Maker Studios, aggregating viewers is the first challenge, and monetizing them is the second.
“Building a sustainable, reoccurring audience online is really, really hard — by far the hardest thing I’ve ever seen in media,” Courtney Holt, chief operating officer of Maker Studios, said Tuesday morning at Variety’s annual Dealmakers breakfast. “But it’s also the most valuable.”
Holt joined Machinima chairman-CEO Allen DeBevoise; Lionsgate co-COO Brian Goldsmith; Joshua Grode, partner and head of corporate for Liner Grode; Scott Koondel, chief corporate content licensing officer for CBS; and Brian Stearns, co-head of the entertainment industries group at Bank of America Merrill Lynch on Tuesday morning to discuss the landscape for big Hollywood transactions.Event, at Soho House, recognized the industry figures profiled in Variety’s Dealmakers issue, a survey of the year’s largest entertainment and media transactions.
Holt, Grode and others highlighted the difficulties of convincing traditional lenders to bank on evolving media platforms, especially ones with little precedent.
“You need to make it look kind of like something (lenders and investors) are familiar with,” Grode said. “We as dealmakers translate that so that … we can bridge the gap between media and finance.”
Original digital content — and how much to spend on it — was a big topic of discussion during the sesh moderated by Variety’s Andrew Wallenstein. Panelists agreed that an appetite exists for serialized content online (like Netflix’s upcoming “House of Cards”), driven in large part by the millions of aggregated eyeballs that companies like Machinima and Maker can draw.
But Stearns pointed out that while companies like Netflix have poured money into developing their own programming, it’s hard to determine how much such programming drives the company’s subscriptions. And not knowing that can pose a problem for potential financiers.
“If you’re talking about production costs in the several millions of dollars, there’s a higher risk that there’s (not going) to be consumer demand,” Grode said.
The business opportunities for blending of traditional and new media was another subject panelists touched on. Koondel pointed to the deal CBS recently struck with Yahoo to rebrand its syndie newsmag “The Insider” as “OMG Insider” as part of a broader news-sharing and distribution partnership. Koondel said CBS went to the market in search of a deal that he likened to a naming-rights licensing pact but the network instead found greater potential in piggybacking on Yahoo’s considerable Web traffic.
Koondel called it an example of “a traditional media company looking to the Web to enhance the existing business.”
DeBevoise pointed to the revival of “Mortal Kombat” as a game and potential film franchise at Warner Bros. based on the buzz generated by the “Mortal Kombat” Web series that ran on Machinima.