From Multi-Channel to Multi-Platform Networks: Content Moves beyond YouTube
Over the past few years, multi-channel networks (MCNs) have shifted from native digital companies into corporate assets for traditional media conglomerates. Following a series of VC investments from major media players like Time Warner Investments (*Maker Studios), Comcast Ventures (*Fullscreen), and Warner Bros. (*Machinima), some of the biggest MCNs were taken off the market. In a virtual land grab, DreamWorks closed with Awesomeness TV for $35 million, Disney acquired Maker Studios for a deal initially worth $950 million, and Otter Media, a joint venture of the Chernin Group and At&T, took majority control of Fullscreen.
This convergence was driven by two particular factors: audience and distribution. The core value of MCNs lies in their ability to reach millennial audiences on digital platforms. By aggregating tens of thousands of channels, MCNs have scaled an extensive talent and content network. This network functions as a direct-to-consumer pipeline for media companies and brands on YouTube.
However, YouTube has effectively lost its monopoly on digital content and talent in the wake of Facebook’s rising video operations. At the same time, digital publishers like Buzzfeed and Vice have upped their investments in video. Even social influencers who launched their careers on YouTube and micro-platforms have now migrated to Facebook and other native digital platforms in order to scale their video views. Media and entertainment is no longer a multi-channel environment. It is a multi-platform ecosystem.
Dr. Denise Mann, head of the UCLA Producer’s Program and Professor of Cinema and Media Studies, observes that the industry is in a state of transition: “Most MCNs know that the best (possibly only) way to stop treading water on YouTube is by jumping out of Google’s vast digital ecosystem and into several, smaller, content-friendly ponds, such as Vine and Snapchat.”
While MCNs have significantly increased their value through audience aggregation and access, their revenue potential in the YouTube economy has remained limited. The majority of MCNs ultimately did not prove profitable beyond their strategic value in audience access and platform distribution. In order to scale their business model, MCNs have thus gone beyond YouTube, expanding their content across platforms, including video-sharing platforms, digital publishers, and websites.
As MCNs have become more integrated into the traditional media and entertainment industry, there is more pressure to scale user growth and revenue in order to meet the demands of shareholders. In this regard, cross-platform development works as a new monetization stream that supports the core YouTube business. As a result, the overall MCN business model seemingly remains the same. But the potential profit margins can be much higher.
Nevertheless, the question is if MCNs can seamlessly migrate their content across platforms. YouTube content, in general, has not performed well outside of its native ecosystem, especially videos designed for a broader audience. Video platforms are distinctive community environments that function by different rules. Therefore, cross-platform broadcasting, while desirable, may prove difficult to most MCNs.
However, MCNs with a strong vertical focus have shown successful development of cross-platform content. Tastemade, which specializes in high-quality food and travel storytelling, is a notable use case. The MCN has built a multi-platform network beyond YouTube, integrating Facebook video with a customizable mobile app and over-the-top (OTT) content, available on Apple TV. The vertical focus, along with an agile audience size, give Tastemade more control over the content strategy.
MCNs leveraged YouTube’s central positioning to scale quickly and consistently. But in a time where social influencers drive audience engagement, the old channel structure may no longer work. The online video landscape is a new world that requires a strategic development of vertical content to ensure viability.
Zealot Networks, the new company of Maker Studios founder Danny Zappin, is a case in point. Zealot is a digital-first multimedia company that integrates multiple verticals to redefine the way content is produced, distributed, and monetized. It is building an agile network of creators, producers, publishers, brands, and entrepreneurs to create multi-platform, multi-stage content experiences. An online video, for example, is not just shared across media platforms. It becomes the driving force for vertical IP extensions such as articles, social media posts, concerts, branded content, licensing, and community building. This is the new stage of multi-platform development.
UCLA’s Denise Mann sees control over IP as the key issue at hand: “If the MCNs are able to control part or all of the IP generated by their YouTube content partners, turning it into premium content, they could turn around and license it to Hulu or Netflix, or to one of the Hollywood studios to reap additional profits. In other words, the MCNS are eager to control content as a means of achieving access to the whole monopoly board of entertainment: the traditional Hollywood “publishing” model AND Silicon Valley’s newfangled “platform” system. If they succeed, the MCNs will have grasped the ultimate brass ring of entertainment’s future: streaming, internet television, accessible primarily through our mobile devices.”
This is where the multi-platform economy opens up an incredible wealth of strategic opportunities beyond the standard YouTube model, especially in terms of content licensing, M&As, and brand integration. The revolution of MCNs is under way.
For more information on the evolving media landscape, see our reports on The Power of IP: New Developments in Advertising and The Online Video Shaking Value Chain. Additionally, together with Professor Denise Mann from UCLA and the Digital Incubator and Think Tank (DIT), we are working on the Future of Storytelling, a long-term research project that analyzes the latest trends in the converging media and entertainment industry.
Written by Thomas Jorion and Matthias Stork
We kindly thank Professor Denise Mann from our academic partner UCLA for her contribution to this essay.
