YouTube channels AwesomenessTV and Balcony TV recently received funding from venture capital firms. In a Wall Street Journal story, VCs are betting that these and other popular YouTube channels have the potential to eventually become global media companies: “This is the third wave of programming,” the story said.
Remember, Google’s YouTube has invested some $100 million of its own money into new content channels and partnerships, so there is likely a method to all of this, more than just gaining more ad dollars.
Excerpts from the story:
Producer and director Brian Robbins started AwesomenessTV six months ago to provide streaming shows ranging from a version of “The View” for teenage girls to a program featuring sports highlights and bloopers hosted by NBA star Blake Griffin.
For now, his content, aimed at both early and late teenage viewers, is only available on YouTube. But venture capital firms are betting that AwesomenessTV and other popular YouTube channels have the potential to eventually become global media companies.
In the past two weeks alone, two YouTube channels, AwesomenessTV and Balcony TV, have received funding from venture capital firms including Greycroft Partners, MK Capital, New World Ventures and Polaris Venture Partners. Machinima, the video network with over 3.5 billion YouTube video views, has raised more than $50 million at a valuation around $190 million, AllThingsD reported in May.
“This is the third wave of programming from broadcast to cable to YouTube,” said Mark Terbeek, a partner at MK Capital which led AwesomenessTV’s $3.5 million Series A round. “The cost effectiveness of YouTube is so much cheaper with essentially free distribution.”
But before they can become global media brands, venture-backed video content providers need to earn revenue. Dublin-based BalconyTV, which showcases up-and-coming music artists, has nearly 32 million views but is exploring advertising, sponsorships and brand partnerships to capitalize on its massive following.
AwesomenessTV, meanwhile, is currently relying on ad revenue it shares with Google but Terbeek said the earnings were “material” so far. But he added that larger opportunities including licensing content to third parties and big media brands exist down the road, not to mention potentially lucrative exit opportunities.
Web-based TV network Revision3, which features popular YouTube shows such as “Epic Meal Time” and “Tekzilla,” was acquired by Discovery Communications in May.
“Cable channels and multisystem operators are major players in the space for potential acquisitions,” said Terbeek. “These can be long-term independent businesses; some have the potential to become public companies.”
RBR-TVBR observation: Terbeek is spot-on. Content is content today, no matter how it’s delivered. But when Smart TVs/iPTVs, smartphones, laptops, PCs, etc., can receive TV-quality programming for essentially free, vs. paying $80 per month to see it on cable, consumers’ trending will likely be to gravitate toward the free option. Venture capitalists see that the future providers of programming to especially younger generations may just be the YouTubes, Netflixes and Hulus of this world.