MCNs have been around for a decade and now we are seeing their third iteration.
We are now seeing the wave of MCNs, 3.0, propelled by YouTube’s riches.
Machinima in many ways was the first multi-channel networks, or MCNs 1.0. Machinima did more loosely what our then competitor Next New Networks wanted to do to build networks on distributed platforms.
Machinima’s approach was a scale-centric model. Founded in 2000, by 2006 it discovered YouTube and then embraced the platform (as we did), which would go on to beat its peers amongst aggregators.
adding third-party channels, by leveraging YouTube’s back-end APIs. YouTube won for many reasons, one of which was their Google infrastructure created value for the ecosystem.
MCNs were able to scale quickly, but were not sustainable as business models. As I say: what is scale overnight usually isn’t sustainable, what is sustainable isn’t quickly scalable.
A plethora of them – Fullscreen, Collective aka Studio71, Maker Studios, BroadbandTV, etc. – rose on top of the YouTube ecosystem. The bubble burst after Disney’s watershed $500M ($750M with earnouts) and some, like S71 and Broadband have survived and thrived as the 2.0 versions of the original purveyor.
We’re now seeing a rise of what I call the 3rd wave of MCNs, all focused on riding the hyper-growth Creator Economy in the 2020s. I will expand in the days to come, but they fall under a few approaches:
A) Royalties: paying an upfront against future revenues off of your old or new videos.
B) Intellectual Property: helping talent in the Creator Economy do more through intellectual property of one kind or another. This could come from Development, Licensing etc.
C) Representation: representing a more select roster of talent and help them be more successful, improving on the agency model.
Of course, the best have a combination of these, or are seeking another objective (i.e. diversification) through these. What other approaches do you see? I’ll be sure to include it (and credit you!) in my follow-up post.
One thing is for sure: no one is attempting to pursue a scale for scale’s strategy. Stay tuned!