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Google-backed Machinima plans for online TV service

The Google signage is seen at the company's headquarters in New York January 8, 2013. REUTERS/Andrew Kelly
The Google signage is seen at the company's headquarters in New York January 8, 2013. REUTERS/Andrew Kelly

By Ronald Grover

LOS ANGELES (Reuters) - Google-backed Machinima has become the latest Internet company to try to launch a TV-like online video network, and has begun talks with Hollywood studios to produce full-length programs or possibly become investors, several sources told Reuters recently.

Machinima, which caters mainly to so-called fanboys or 18- to-34-year-old men whose interests often include videogames and comics, wants to raise $80 million to create an online video subscription service, according to two executives with knowledge of the situation.

Machinima has held talks with potential partners or investors including Time Warner Inc's Warner Brothers studio and Viacom Inc's Paramount Pictures, said three people with knowledge of the meetings.

The two studios already make shorter videos for the website. Warner makes an 8-to-12-minute live-action series based on the videogame "Mortal Kombat." Paramount is making a show based on the Los Angeles black market for stolen cars, called "Chop Shop."

Representatives of Warner Brothers and Paramount declined to confirm the talks.

Machinima, a major fixture on YouTube that also runs its own advertising-supported website, confirmed it intends to start an online video service but not the amount of financing it was targeting or which studios it contacted.

"The fanboy viewer is crazy, engaged and ravenous," Machinima CEO Allen DeBevoise told Reuters in an interview.

"We intend to raise capital to be a company in the spirit of HBO and AMC, but in an over-the-top world," he said.

"Over-the-top" refers to viewers who watch TV shows online, bypassing traditional cable or satellite services.

Machinima joins a growing number of tech or Internet companies intending to make programs or provide over-the-top video services, including Yahoo Inc and Amazon.com Inc. Google Inc, Apple Inc and Intel Corp are also considering starting cable TV-like services that sell subscriptions to existing cable channels.

DeBevoise says he intends to license full-length 44-minute shows, which is the duration, without commercials, of a typical hour-long TV show. The studios would retain ownership of the shows, to sell overseas or in other markets.

Machinima's current fare includes trailers for videogames like "Grand Theft Auto 5," entertainment news clips hosted by irreverent hosts, dramas featuring attractive women and more than 20 other weekly shows aimed at its fanboy audience.

The new subscription service it plans "is a bold attempt," said Keith Richman, executive of Break Media, whose ad-supported sites also target 18-to-34-year-old men. "It's a great demographic and I'm excited someone is trying to find a new way to monetize it. I'm just not sure the market is ready for it."

Machinima is being advised by Allen & Co. Melissa Zukerman, Machinima's spokeswoman, denies Silicon Valley rumors that the company has shopped Machinima to tech companies.

"The company is not for sale," she said. "And that is not the origin of this process."

Last year, Machinima raised $35 million in a financing round led by Google. The Internet search company joined existing investors Redpoint Ventures and MK Capital, who participated as well in that round.

In June, the site was YouTube's seventh-largest channel, with 20.4 million viewers, according to comScore Video Metrix..

Its viewers watch an average of 19 videos per month, tops among YouTube channels, staying on the site an average of 76 minutes. The site has more than 8 million non-paying YouTube subscribers, according to YouTube.

(Editing by Edwin Chan and Matthew Lewis)

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