Machinima! Adventures of a Digital Content Company

Millions are watching. When will they cash in?

If not for Machinima, you might be unaware that gamers are terrified of zombies, Super Mario Bros. would have been better off if the villain had more of a back story, an Alienware X51 Mini Gaming PC will catch fire if you put it in the microwave for a couple of minutes, and Return of the Jedi, when you really think about it, has a lot of plot holes.

At this point, most of you are probably wondering: What is Machinima? How do you even pronounce that? And why should I care about all this fringe pop culture stuff?

An online programming company boasting a fanatical following among young males and a staggering 149 million unique users, last month Machinima’s videos were viewed 1.3 billion times (that’s billion, with a “b”). Across YouTube and other online destinations, Machinima claims a total of 101 million subscribers. To put those numbers in perspective, the CBS TV network has about 350,000 subscribers on YouTube and in six years has earned about 1.2 billion views for its online content.

Machinima (pronounced mah-SHIN-eh-mah) is one of a handful of players building massive media companies off Web programming.YouTube goes so far as to use Machinima as a case study in laying out its much-hyped $100 million, 100-channel strategy for 2012. Machinima has even been likened to MTV in its early days.

Yet there are those who believe that Machinima will have a bigger impact on the media business than MTV—and even the very rise of cable television overall—did in the 1980s. In other words, if you don’t know about these guys already, you should.

The company takes its name from the term machinima, which is a portmanteau combining the terms machine and cinema and that describes the company’s particular type of content. 

While has been around since 2000, the form—essentially the use of video game animation to produce short films—dates back decades. Think spoofs of popular video games (Grand Theft Mario) or art film-like montages of favorite killing scenes from Call of Duty, or even fan fiction. An early machinima series, Red vs. Blue, is now in its ninth season.

How big is machinima, and Machinima? “As a genre, I’d say that 90 percent of gamers know what it is,” says Tom Akel, executive producer of MTV Geek.“As a company, maybe every college kid playing Madden and Tiger Woods golf doesn’t know them, but most millennial male gamers do.”

Who would think there would be such a market for videos about video games produced by video gamers that have a rabid following? Hugh Hancock, for one.

“The thing you have to remember is, 10 years have passed since the dawn of Web 2.0, when creativity on the Web exploded,” says Hancock, founder of the Machinima studio Strange Company and one of the co-founders of “You’ve had the growth of all these platforms like WordPress and Blogger and Tumblr. It was all driven by UGC. And then you take gaming, which is arguably the most significant cultural trend of the past 100 years. It’s a vast medium, but unlike, say, film, is not as accessible. Yet there are a significant number of users in that group who want to do more than consume. They want to produce, and they can do that for as little as $50.”

But does that really constitute a business or merely an underground community of gaming filmmaker nerds? Maybe both. Hancock actually sold his stake in the company around 2006, after determining he was not the person to turn Machinima into a full-fledged media company. That was right around the time YouTube started humming, and the quality of videos and games started ratcheting up. “At that time, we started to forget about trying to do this on and put all our efforts into YouTube,” recalls Machinima’s CEO, Allen DeBevoise.

At the beginning, Machinima was all about Halo, the smash Xbox game centered on a futuristic alien rebel war that is now in its sixth incarnation. Then Machinima started moving into first-person-shooter games (those, for the uninitiated, are games in which the user kills lots of people), then sports games, then adventure games, and eventually, series. Today, Machinima’s YouTube channel features scads of seemingly random clips, yet it is actually a highly programmed environment. Among its products are daily series like Inside Gaming, instructional series on individual games, Wayne’s World-esque talk shows, fantasy battle series like Versus, reviews, events coverage and more. “We started remaking the traditional model,” says DeBevoise. “There were all these networks out there pushing their own sites. This was more like cable. YouTube pays for the bandwidth. They’re like the ultimate killer MSO.”

That’s where Machinima may be more than just a powerful super-niche. Some say the company pushed forward a media revolution, one in which massive networks can be built on YouTube, never involving a cable box. “The interesting thing about gaming is that it doesn’t do well on linear TV,” says DeBevoise. “Think of the old MTV model, where you’d have to wait for videos. If you’re a Gaga fan, you probably don’t want to sit through an Eminem clip. Gamers are the same. So Machinima works because it’s on demand. And with YouTube, it’s instantly global.”

“We don’t talk about cable households; we talk about getting on a billion devices,” adds Jay Sampson, a 15-year Microsoft veteran who became Machinima’s evp of global sales, marketing and advertising operations last August.

A billion views? A billion devices? Are these guys serious? Quite. The hiring of Sampson is a sign that Machinima is maturing into a serious business, as is the arrival of former EA executive Nanea Reeves, who last month was tapped as COO. Sampson has brought in 13 sales executives, adding staff in New York, Chicago and San Francisco. The company’s ad base was previously confined to makers of video games and movies, but Sampson and his team now have their sights set on categories including consumer electronics, automotive and packaged goods. Machinima boasts a client roster that includes Bing, Paramount Pictures, Motorola, Pizza Hut, Verizon and Unilever’s Axe, and ad sales have surged 300 percent over the last three years.

Meanwhile, Reeves seems to want to lessen Machinima’s reliance on YouTube while employing data to improve ad targeting. “We need to mature and become more data driven,” she says. “That’s our first big opportunity. We need to understand who our influencers are. We’re going to put the machine in Machinima.”

While goofy mashups and racy, profanity-laden clips of Halo might seem a tough sell, Machinima is so much more, having built an iron-clad slate of franchises, including reality shows such as Wrecknology (on which hosts review new products like the iPhone 4S—and then destroy them) and tent-pole scripted programs like Mortal Kombat: Legacy. That show in particular has been a smash for Machinima, generating 4 million to 6 million views per episode. As MTV’s Akel puts it, “Machinima isn’t really about machinima anymore.”

Last year, Machinima rolled out perhaps its most ambitious project yet in RCVR, a well-received scripted sci-fi drama that would not seem out of place on cable. The show, sponsored by Motorola, pulled in as many as 1 million views for each of six episodes. While Machinima has not yet decided whether to renew RCVR, another series, Bite Me, a zombies-chasing-gamers series being produced with Lionsgate that attracts half a million views per episode, is in its second season.

Machinima says it has dozens of scripted original series in development, and professionally produced content is a major priority. At the moment, Machinima’s programming isn’t necessarily the focus of Machinima the brand. Per YouTube, Machinima’s content has generated over 3 billion views, while the Machinima YouTube network has scored 24 billion.

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