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Machinima Ceases Operations, Lays Off Virtually Entire Staff After Merging With AT&T’s Otter Media (EXCLUSIVE)

UPDATED: Machinima may not be officially 100% dead, but that might just be a matter of semantics.

The nearly 20-year-old digital-media brand dedicated to gamer and sci-fi culture — which once operated one of the biggest channels on YouTube — laid off 81 staffers two weeks ago at its Burbank, Calif., headquarters, according to documents obtained from California’s Employment Development Department. That represents the majority of the team that was left at Machinima, which last reported having about 100 employees.

A “select number of Machinima employees” remain with the company, and Machinima is now “actively providing services to supercharge the combined portfolio of Otter Media,” a spokeswoman for Machinima said in a statement to Variety. “Machinima has ceased its remaining operations, which includes layoffs.”

Russell Arons, who was named GM of Machinima in early 2017, is among the staffers who are still currently employed at Otter. Arons “remains with Machinima and is assisting with transitional activities as she explores new opportunities,” the company rep said.

Machinima’s massive job cuts came after WarnerMedia’s reorganization in December at Otter Media, the digital-video venture that is now fully owned by AT&T. The changes included shifting Machinima from Warner Bros.’s aegis to Otter Media. At the time, Otter Media said the restructuring would result in a 10% staff reduction across the organization.

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Otter Media is insisting that Machinima hasn’t shut down. “Otter has brought over valuable parts of the Machinima business that we believe amplify our focus on the gaming and anime community,” it said in a statement.

Otter Media in January migrated the independent creators who had been affiliated with Machinima’s network under Fullscreen’s creator services team, led by GM Beau Bryant. In addition, Machinima’s premium-content team joined Otter Media’s Rooster Teeth “as a catalyst for strategic expansion into a premium studio, and their social team supports Rooster Teeth’s existing news brand ‘The Know’ and gaming groups ‘Achievement Hunter’ and ‘Funhaus,'” the representative said.

For all practical purposes, Machinima will no longer be a consumer-facing brand. The cuts come as Machinima — without warning — last month changed all of the videos on its YouTube channel private, rendering them inaccessible, as first reported by Kotaku. Machinima had once boasted 2 billion video views monthly, reaching more than 200 million unique viewers.

The latest layoffs gutted the group, which once had more than 200 employees. Machinima permanently laid off a total of 81 employees, with a termination date of March 16, according to a notice filed under California’s Worker Adjustment and Retraining Notification (WARN) Act, which requires at least 60-day advance notice of mass layoffs. A source familiar with the situation said the mandate for the Machinima cuts came from WarnerMedia’s top brass.

Founded in 2000 — five years before YouTube first appeared — Machinima had adapted over the years to the evolving digital-video landscape, with varying degrees of success. It was one of the first YouTube-centric multichannel networks, aggregating content from multiple creator partners. At one point, Machinima had content partnerships with a range of companies, including Amazon Prime Direct, Xumo, Sony PlayStation Vue, Facebook Watch, and Twitch  in the U.S. and others internationally.

Warner Bros. acquired full control of Machinima in November 2016, and put Machinima under its Warner Bros. Digital Networks group. AT&T closed its $85 billion deal for Time Warner in June 2018 and since then has consolidated or killed off several digital businesses. Under AT&T’s ownership, WarnerMedia shut down FilmStruck, from Turner and Warner Bros. Digital Networks, and WBDN’s DramaFever. In addition, Turner shuttered its Super Deluxe studio.

The effective dissolution of Machinima and the shutdowns of other digital initiatives come as WarnerMedia is concentrating investments into a company-wide direct-to-consumer subscription service. Pegged for a fourth-quarter 2019 launch, the yet-to-be-named SVOD service will encompass content from Warner Bros., HBO and Turner as well as third-party suppliers. WarnerMedia’s streaming service will be available in three tiers and will include some advertising, AT&T execs have said.

Janko Roettgers contributed to this report.

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