YouTube multi-channel networks have been struggling to make a profit for a long time, surviving only on the fumes of private investment and ad-hoc handouts from YouTube. Now, MCNs have started to actively attempt to bridge the funding gap between the cost of production and the revenue they get from YouTube ads by launching their own video services outside of YouTube. Maker Studios did it with their recently introduced Maker.tv platform, and now Fullscreen are reportedly doing the same.
According to TubeFilter, Fullscreen will try to compete with the likes of Hulu and Netflix by hosting their original programming and a selection of partnered and premium content on their own service. It’s unclear whether they will pursue a subscription-based (like Netflix) or ad-supported (like Hulu/Maker.tv) business model, but the company is reportedly weighing both options.
Fullscreen is one of the largest multi-channel networks currently operating on YouTube, with over 380 million subscribers and 3 billion monthly video views shared between the 30,000+ channels partnered with the network. While many analysts believe the network used to be profitable, the company confirms that it reported a loss last year on revenue of between $50 and $70 million.
The traditional MCN business model of collecting YouTube channels like Pokémon and hoping that economies of scale will emerge have always been a non-starter; especially with YouTube taking between 38-45% of their ad revenues for serving ads against their content.
By building this new platform, it’s appears that Fullscreen hopes to bypass YouTube’s near-extortionate cut of MCN revenues and secure more premium advertising deals on their own. Maker Studios has proven that it can be done successfully with their own self-hosted platform Maker.tv. Omnicom, one of the largest ad agencies in the world, pledged ‘tens of millions’ of dollars to Maker at the NewFronts, including significant advertising support for their Maker.tv platform.
No launch date has been announced for Fullscreen’s video service, but if their recent executive hires are anything to go by, this project has been in the works for some time now.
Tom Mohn was hired as Fullscreen’s SVP of Engineering in May, 2013. Having co-created the HBO Go application, he seems perfectly suited to lead the team building Fullscreen’s own distribution platform while Ashley Kaplan, former VP of Digital Content and Strategy for Magical Elves, was hired in March, 2014 and appears perfectly suited to lead rights acquisition for the premium content that is expected to feature heavily on the new platform.
Fullscreen represents a long list of top YouTube talent, including Devin Supertramp, Shane Dawson, and Connor Franta. The company has also been branching out into film production, reportedly funding The Fine Bros. latest feature to the tune of $5 million.
Fullscreen has also been at the center of a bevy of acquisition rumors, with Yahoo, Time Warner, and Relativity Media standing as just a few of the major players looking to purchase the company for up to $1 billion.