Machinima Cuts 42 Jobs, In YouTube Network’s Latest Round of Layoffs

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Struggling digital entertainment firm Machinima continues to shrink, announcing it will lay off 42 employees, or about 30% of its remaining staff, in a restructuring of its sales group.

The cuts are the biggest to date for Machinima — whose investors include Google — coming after the YouTube multichannel network let go 22 employees last fall and a made a similar reduction in force in December 2012.

The layoffs are part of “an effort to create greater focus internally on selling creative ad solutions and branded entertainment, while better leveraging its longstanding partnership with YouTube to drive media sales,” the company said in a statement.

Machinima targets young male auds with original content including scripted series, animated shows and gameplay videos.

The L.A.-based company raised $35 million in a round of funding in May 2012, with Google leading investors that also include returning backers Redpoint Ventures and MK Capital.

With its financial difficulties, Machinima has been trying to either obtain new sources of funding — or sell the company. Warner Bros. is considering investing up to $15 million into the company and has an option to acquire Machinima outright, the Wall Street Journal reported last week, citing anonymous sources. According to a source familiar with the company, the latest layoffs are completely unrelated to the prospective investment activity.

Meanwhile, Machinima remains in search of a CEO: Co-founder Allen DeBevoise in November gave up the chief executive role.