Machinima saw 149 million unique users racking up 1.3 billion video views in March 2012. Machinima has about 101 million subscribers across all its websites. By contrast CBS TV network has about 350,000 subscribers on YouTube and has earned about 1.2 billion views for its online content in six years.

The site has been heralded as part of YouTube’s original content strategy and its influence on the coming generation is likened to MTV during the ’80s. “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.”

“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 Hugh Hancock, founder of the Machinima studio Strange Company and one of the co-founders of Machinima.com. “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.”

Hancock actually sold his stake in the company around 2006, right before YouTube changed the way video is consumed on the Internet. “At that time, we started to forget about trying to do this on Machinima.com and put all our efforts into YouTube,” recalls Machinima’s CEO, Allen DeBevoise.

While Machinima focused first on game videos, it expanded out with instructional videos, talk shows, fantasy battle series, reviews, and events coverage. “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.”

“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.”

Sampson has brought in 13 sales executives, adding staff in New York, Chicago and San Francisco and ad sales have surged 300 percent over the last three years. “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.

Nanea Reeves, Machinima’s new COO, says they need better analytics off of YouTube. “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.”

The company has already started to expand out with Mortal Kombat: Legacy, which generated 4 million to 6 million views per episode. “Machinima isn’t really about machinima anymore,” notes MTV’s Akel.

Despite the good reception to series like RCVR and Bite Me, Machinima’s programming isn’t necessarily the focus of Machinima the brand. Machinima’s content has generated over 3 billion views, while the Machinima YouTube network has scored 24 billion.

While comScore puts Machinima’s YouTube channel at just 23 million users, the reason for any discrepancies is that Machinima has over 4,200 partners—amateurs and semi-professionals who produce Machinima videos and partner with Machinima on distribution and ad sales. For instance, the Online Gamer was picked up by Machinima, which offered founder Jason Schnell a partnership and Reckless Tortuga saw its number of subscribers go from 50,000 to 150,000 in just a few months.

“It exposed us to a whole new audience,” says Schnell. “[Machinima handles ad sales,] and they don’t ever ask for creative control.”

While there have been complaints that Machinima retained the rights to sell ads against videos produced for its YouTube channel in perpetuity, the company has since shortened its contracts and made it easier for producers to opt out. “Of the entire group of nearly 4,000 partners, very few have ever had problems or issues—about one or two percent—over the past two years,” says DeBevoise.

While some of Machinima’s content is far from family friendly, they’re looking to incorporate more ad-verification tools like AdSafe. “The long-tail content you might find across our global network is very diverse,” says DeBevoise. “Advertisers look to us to help them enter that world, translate that audience to them and translate their brand to that audience in a safe way that’s authentic. That’s something a lot of traditional media are not really able to do.”

“Edgy is a relative term—P&G used to think that Dawson’s Creek was edgy,” notes Michael Kassan, CEO of MediaLink, which consults many digital media companies.

“What Machinima’s done better than anyone else is that they’ve been insanely focused on this incredibly active community. That’s the radical difference between TV and the Web: the community,” says Fred Seibert, original creative director at MTV in 1980 and one of the co-founders of the video programming pioneer Next New Networks. “And ultimately, Madison Avenue goes where the audience tells it to go. It’s not the other way around. There are these moments that happen in media. Machinima’s just the most obvious case of this. There are dozens, probably hundreds of others percolating.”

Machinima’s flexibility is a bonus and a recent product placement deal with History generated 3 million views. “No other network would let us do this,” Chris Meador, History’s VP of consumer marketing. “[Machinima is] far from niche—the hardest thing to get over was that they are on YouTube, and it took us a month to pronounce their name right.”

While some think Machinima wants to be acquired, Jay MacDonald, CEO and managing partner of Digital Capital Advisors, doesn’t think so just yet. “Machinima’s sort of in phase two this year,” he says. “It’s the same kind of concept as Facebook and Twitter: get big, figure out what content is acceptable and later on figure out monetization. They appear to be on that track, and their investors don’t appear to be that concerned. But some of their third-party content is questionable. They’ll probably focus on cleaning that up.”

Source: AdWeek.com