During my recent tour of Machinima, I got a chance to talk to a lot of great people, including company CEO Allen DeBevoise. One of the topics we spent some time discussing is video advertising and video monetization--how Machinima makes money from their videos and how the future of "content as marketing" is very bright indeed.
Here's a pretty powerful quote from the interview that illustrates the Machinima philosophy pretty well:
Yeah we see – clearly all of the pre-roll units really work in this TrueView video format on YouTube is really doing very well. And I think the movie business and gaming business specifically is really interested in. But you know the value we bring to the table is you can buy these traditional ad units, but then we do custom content, we have our influencers deal with a topic so if it's a movie or it's technology or it's a game or whatever the case might be, we can add a lot of value to the actual campaign when someone's trying to introduce a new game into the market or you know a new phone or whatever the case might be.
Mark: What’s the monetization model? What’s the main thrust of the revenues for Machinima?
Allen: Well today it’s mostly advertising and it’s very focused on different categories, gaming, movies, technology. Areas sort of the lifestyle where they care about young males that you know these are the ones that tend to go to all the big movies like the Harry Potters and Mission Impossibles and those kinds of films. They you know they obviously buy the big games. And as you know, for example Modern Warfare 3 again is the biggest entertainment event in all history. They did $400 million in two countries in one day. So this is an audience that’s really interesting because they love what they do, they have a lot of passion but they spend a lot of money on retail as you can see from Modern Warfare 3, they are the audience that does online subscriptions. That’s Xbox Live Gold’s main business. World of Warcraft, etc.
So it’s an audience that’s really engaged and passionate about what it does.
Mark: Have you seen a move from advertisers more towards you know, in-stream video advertising or sponsorship or product placement?
Allen: Yeah we see – clearly all of the pre-roll units really work in this TrueView video format on YouTube is really doing very well. And I think the movie business and gaming business specifically is really interested in. But you know the value we bring to the table is you can buy these traditional ad units, but then we do custom content, we have our influencers deal with a topic so if it’s a movie or it’s technology or it’s a game or whatever the case might be, we can add a lot of value to the actual campaign when someone’s trying to introduce a new game into the market or you know a new phone or whatever the case might be.
Mark: So you’re doing everything from custom content for that campaign, to seeding the content to your own consumer facing content.
Allen: Yeah and also like driving views to their official content, whether it’s a trailer or some type of content, so it’s really a combination of activities. But I think when you’re online and you want to run affective powerful campaigns that have high ROI, it’s really a combination of things.
Mark: What are other things you see in the monetization realm and advertising do you see moving forward or that excite you?
Allen: Well I think the one thing that’s interesting is in some categories is this notion that content is better advertising – I mean it’s better marketing than advertising. What I mean by that is, you know for example we did this series called – for Warner Brothers, it was a live action series called Mortal Kombat Legacy and it was an origins story and it was really a 90 minute movie but it was broken up into a 10 episode season if you will for us and you know it was right before the movie came out – I’m sorry the game came out. And if you think about it the cost of that is pretty equivalent to the cost of what some game companies will spend on a 30 second or a 60 second commercial. As marketing it’s way better than a trailer. Way, way better than a trailer. And people are engaged in it, they love it, and we’re told it’s the most successful web series of all time.
So this notion of thinking about content as a way of marketing, as opposed to hype, you know in advertising, I’m going to cut a really quick trailer for you. I mean they do well but I think that ultimately this idea of content as great marketing is a real great opportunity. Especially on a platform like ours and on YouTube because you can drive crazy numbers, right? In our category males, you know, whatever, 14-34, if it fits our demo we can drive just crazy numbers, right? I mean way more than you can ever get on Yahoo, AOL, MSN, Hulu, any of those places. And so there’s a value then to the notion of a kind of a how many views you’re driving, how much reach you’re getting. Like a cost per view model, right? We’re starting to see that emerge like you can drive two million views in 48 hours to this thing, you know, there could be a model that you could pay that way as well.