Machinima CEO Chad Gutstein runs one of the biggest YouTube multichannel networks. But he shuns the MCN label — insisting that his company’s focus on videogamer and tech-fanboy audiences makes it look and feel more like a TV network.
Gutstein, hired this spring to turn things around at the struggling company, previously spent seven years at arts-focused cable channel Ovation. To describe Machinima, he’s coined a new term: It’s a “many-to-many programming service” (“M2M” in his stylized shorthand), built around a lineup of thematically aligned content from a range of partners.
“We’re programming Machinima as one programming service,” Gutstein said. “It’s not just random that it’s the same theme — we’re taking specific strategies that television uses and applying it to digital video.”
For Machinima to grow, it needs to bring top creators in its categories into the fold. The company recently signed deals with two YouTubers who trade in popular gameplay videos: JeromeASF (3.1 million subscribers and 30 million views per month), a New Jersey-based dude whose passion is Minecraft; and Blitzwinger (400,000 subscribers and 20 million views per month), who puts up as many as six clips per day. Both were also being aggressively pursued by another major MCN, according to Machinima.
After Gutstein joined Machinima in March, “we very quickly made talent partnerships the No. 1 priority,” he said, which fundamentally involves striving to deliver support and services that “are the best they can get from anyone in the business.”
Machinima now has 22,000 programming partners, up from 12,000 at the end of 2013 — but the goal is to on-board talent that appeals to the company’s fanboy and gamer target, not just any YouTuber with a huge following, according to Gutstein. He describes Machinima’s content strategy as a three-layer pyramid: original programming (like “Realm,” “Inside Gaming,” and 25 premium scripted series to date, including “Mortal Kombat: Legacy” and “Street Fighter: Assassin’s Fist”); commissioned programming produced with top Machinima creators; and “network” programming created by talent on their own.
Machinima has fewer unique users (15.1 million in the U.S. in June, per comScore) than bigger MCNs like Maker Studios (36.8 million) and Fullscreen (32.9 million). However, its viewers spend more time watching Machinima content on average. That audience engagement was a key reason Warner Bros. led an $18 million round of funding in West Hollywood-based Machinima earlier this year.
Moreover, Machinima is home to several of the biggest draws on YouTube, including VanossGaming (8.2 million subs, 92 million monthly views); SkyDoesMinecraft (10.3 million subs, 66 million monthly views) and HolaSoyGerman (18.7 million subs, 45 million monthly views).
Gutstein still faces challenges in righting the ship. The company has suffered several rounds of layoffs over the past two years amid revenue shortfalls, with the most recent staff cuts in March before he joined as CEO. (Privately held Machinima does not disclose financials.)
Machinima says it’s now on a hiring spree. Last month, Gutstein hired Tricia White, previously VP of human resources at the parent company of restaurant chains IHOP and Applebee’s, as chief people officer overseeing human resources. But at the same time, the company has lost some senior execs, including EVP of strategy and business development Sanjay Sharma (who joined Russell Simmons’ All Def Digital) and VP of sales operations Jeff Mayo (now with Latino-focused MCN MiTú).
With a strategy that starts with nurturing digital talent, and with partners like Warner Bros. and Google, Gutstein believes Machinima is positioned to succeed.
“We think compensation (for digital talent) is going to be driven mostly by monetization,” he said. “So, yes, we are the best place to monetize the content they create.”