We may be witnessing the final chapter of the MCN era. After a few years of YouTube’s multi-channel networks (MCNs) being considered the hottest new acquisition opportunities for traditional media firms like Disney, Discovery and Dream Works, that fever pitch is all but wound down, and now these legacy media firms are left with oodles of Web video content creators and digital networks that aren’t proving to be quite as lucrative as initially hoped.
The most obvious case of MCN buyer’s remorse comes from Disney, which purchased Maker Studios for $500 million – $675 million when it was all said done – in 2014. Disney has been unsure how to proceed with the acquisition since day one. Initially, Disney seemed happy to let Maker Studios operate as an independent company, but later decided to fold Maker into its Disney consumer products and interactive media (DCPI) group.
Since then, the company’s declining interest in the MCN has become more and more obvious. After months of leadership changes, troubled content initiatives and its most recent PewDiePie fiasco, Disney is further reeling in the online video network. Maker Studios now sits within the Disney Digital Networks division, alongside the company’s other digital video assets.
Meanwhile, the rest of the MCN superstars have metaphorically left the building. AwesomenessTV, now partly owned by Hearst, Comcast and Verizon (after being acquired by Dream Works Animation), has built a nice business of selling shows to the likes of Netflix, Verizon’s Go90, and Viacom’s Nickelodeon; Fullscreen – owned by The Chernin Group and AT&T, via Otter Media – has pivoted towards a subscription model, with some success; Fullscreen also acquired YouTube MCN Rooster Teeth, which also operates a subscription service. The MCN model’s 15 minutes have passed.
Disney is now taking Maker in another direction. The company will be pairing Maker Studios creators with its in-house branded content division, Disney Co/Op, as a way to craft and extend marketing messages across social platforms online. In fact, after years of failed upstarts to capitalize on Maker’s success on YouTube, branded content is likely the final fate for the MCN – under the guise of “influencer marketing.”
“This network is our response to how our advertising partners have been telling us they want to engage audiences: with high-quality content, mobile formats including micro-content and short-form video, social media influencers, and diverse distribution options across all major platforms,” said Rita Ferro, president of sales at Disney-ABC Television Group. “We can now connect these opportunities with first-party data, proprietary insights, quality of service, and brand safety. This is something only Disney can deliver and we are excited to bring this incredible opportunity to the advertising community.”
Maker Studios once had some 60,000 creators on its roster, but Disney has systematically trimmed the fat from the MCN, pairing it down to a mere 1,000 content creators that are contributing programming. Now, Disney will be reducing that workforce further to only 300 content creators.
Disney has been quietly downsizing Maker Studio employees over the years, too. After moving Courtney Holt, former head of Maker, to EVP of media and strategy at Disney corporate, Maker Studios was shuffled over to DCPI and lost some 110 employees.
Disney execs said the company is aiming to leverage more of Maker’s YouTube magic within its other digital properties – and that means extending the Disney brand to Maker Studio programming. Disney will be focusing on creators within the Maker family that align with the company’s brand identity and target audiences, and has essentially snipped out everyone from Maker who doesn’t fit the mold.
That leaves Disney with a very fine line to walk. YouTube MCNs rose to prominence among Millennial and Generation Z viewers precisely because their approach to content was irreverent, original, and authentic in a way that resonated with generations of viewers who grew up on Instagram and Facebook and are content creators themselves. Disney’s efforts to bring down the Mickey Mouse glove on those creators will likely function as a kiss of death for whatever creative momentum that appealed to its audiences. Instead, Disney wants to leverage its YouTube generation talent to market products and brands to its young, web video hungry audiences that don’t watch linear TV anymore.
The digital video network unveiled at Disney’s digital NewFront presentation this year was dubbed “one of the most impactful publishers in digital media,” by Jimmy Pitaro, chairman of DCPI. “This network extends our stories to the platforms Gen Z and Millennial audiences are on every day, with diverse editorial voices that integrate top creators and influencers.”
“We’re building a digital media network of Disney and non-Disney content for kids and Millennials on the platforms they use every day,” said Andrew Sugerman, EVP of DCPI and new head of Maker. “For advertisers, this network offers mobile, video, short-form content, micro-content and influencers, all at scale.”