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12 December 2019

Lego builds D2C OTT channel – sowing seed for YouTube exodus

Toy franchise titan Lego has launched a direct to consumer OTT video service – but believe us when we say this is anything but child’s play.

Brick by brick (sorry), Lego has built a phenomenal business including a movie that grossed $469.1 million worldwide, along with a spate of successful animated shows and computer games – so it’s about time the company tried to disrupt the on-demand streaming space.

The Lego Channel has launched this week as a free ad-supported service featuring around 1,000 titles – surely not enough content to hold its own against competing services and generate enough ad impressions to break even, let alone make profit? Even Disney, one of the world’s largest studios, has acquired rights to non-Disney content to increase the appeal of its Disney+ subscription entertainment platform.

That’s where the recruitment of multi-platform content distribution specialist Future Today comes in, providing Lego with access to 350 content partners to distribute, market and monetize content. Details of the partnership are thin on the ground, but we suspect Lego – with its successful content track record – is in the planning stages of a serious original production strategy.

Future Today provides cloud-based technology and an ad-based monetization platform to manage OTT services, priding itself on enabling content owners, producers, distributors and major media companies to launch TV channels across multiple devices in “a matter of days.”

Lego’s content strategy is not limited to animations, however. A YouTube channel called Rebrickulous takes the use of Lego bricks to extreme lengths in the real world and has over 1 million views. It even has a complimentary instructional channel on constructing Lego creations and just a few weeks ago Lego even acquired the world’s largest online Lego fan community, BrickLink. Meanwhile, the main Lego YouTube channel has a whopping 8.2 million subscribers, making its decision to branch outside the YouTube ecosystem a bold move. This could be growing trend perhaps driven by YouTube’s contentious monetization practices.

It suggests we could see other major consumer brands breaking away from YouTube in acts of defiance, as long as they have the resources. We might add that it’s unlikely Future Today is the only supporting technology supplier for the new Lego Channel. Future Today is on the monetization and distribution side, so clearly it didn’t build the apps or handle the back-end processes – although neither Lego or Future Today responded to our request for extra color in time.

It’s worth noting that Lego’s video platform partner Future Today was acquired by US OTT content firm Cinedigm earlier this year for $45 million in cash and $15 million in Cinedigm stock.

At the time, this increased Cinedigm’s OTT footprint to over 7.6 million monthly active users and 67 million total app installs and is expected to be immediately accretive. Future Today says revenues increased by 150% last year to an estimated $23.9 million in full year revenues.

Future Today owns and operates over 700 content channels, and manages more than 200,000 movies, TV and digital content assets collectively clocking up over 85 million video views a month – although the only coverage-worthy partnership deal has been Comcast Watchable and that crashed and burned quite spectacularly. “Comcast Watchable – anything but” read an October 2015 headline from Faultline, two years before the service was put on life support.

Interestingly, the buyout came about after Future Today changed its tack to long form full-episode player entertainment content – when it rolled out WatchFreeFlix, FilmRise and FawesomeTV.

The new Lego Channel announcement lists Roku, Fire TV and Apple TV as among the supporting devices, with connected TV being a specialist monetization field for Future Today. The absence of Android and iOS apps is peculiar.