Even for a non-gamer, Machinima.com’s Web series Halo 4: Forward Unto Dawn, based on the best-selling franchise, is entertaining, at times bracing. With impressive cinematography, editing, and acting, the $10 million YouTube series has the confidence of on-air dramas. Syfy would be lucky to have it. In fact, Halo—whose finale aired last week—probably outclasses a number of cable dramas.
Machinima, a Web TV network for gamers, is skilled at convincing companies like Microsoft to spend millions to reach an audience of gamers increasingly disenchanted with television. Brands love gamers, and Machinima’s success has helped it attract investors. YouTube watchers, then, were not surprised when news broke this summer that Google led a round financing for Machinima, to the tune of $35 million.
Google sees YouTube as a hub for premium advertising as Facebook threatens its search business. YouTube has been shifting focus from "performance" (views) to "engagement" (time spent watching videos). The goal is to feature higher-end programs that can command more attention and higher ad rates. The effect is to favor premium channels, which get hundreds of millions in production and marketing support from Google. (Disclosure: Slate runs one such custom content channel on YouTube.)
Going forward, the former-amateurs who built YouTube into the Web's leading video network do not appear to be high a priority for Google. After spending time and money to bring in brands, YouTube logically wants to give certain networks special treatment. Now those networks are growing stronger and flexing their muscles. And in recent weeks, independent producers have grown vocal about YouTube's changing priorities.
Many worry YouTube's focus on engagement privileges longer—read: expensive—videos like those of Machinima. The rise of YouTube networks or studios has heightened competition for real estate on the homepage and raised standards for marketing tactics like video tagging. Roughly a dozen such networks operate on the site, including Machinima, as well as Maker, Revision3, Fullscreen, and Big Frame. The companies sign new talent (creators, or indie videomakers who star, edit and publicize their own videos), help them find sponsors, and assist with analytics. Their success is based on a simple theory that has dominated American broadcasting since the 1920s: strength in numbers. Bundling groups of talent makes it easier to sell programs to advertisers and other financiers. The biggest video networks log billions of views each month.
A year ago, the press greeted these new studios optimistically. The New York Times compared Maker and its fellows to United Artists and MTV. But these days, they have birthed a welter of cautionary tales. YouTube has tens of thousands of creators who make a decent living but are looking for greater exposure and money for bigger projects. Networks offer to upgrade YouTubers to the next level. But critics say networks and studios sign stars with restrictive contracts that split revenue unevenly and make it hard for the dissatisfied to break free.
Leading the charge are people like Kevin Nalty, a YouTube veteran who has been arguing that studios don't benefit most creators. "Young artists imagine a team of network specialists supporting them, and collaborating with other artists in the network … dreams that don’t come true," he recently wrote.
Concerns about studios escalated last week when YouTube star Ray William Johnson, who built one of YouTube's largest subscriber bases, said he would leave Maker Studios and produce his show on his own, though according to a Maker spokesperson, he is still under contract.* Maker claimed Johnson's views were in decline, but Johnson accused Maker of cutting into his earnings and attempting to take ownership of his channel.
Many fear YouTube will soon go the way of radio, broadcast, and cable before it: a small fleet of companies sailing comfortably on a sea of talented producers eager to be plucked from obscurity onto profitable ships.
Correction, Nov. 6, 2012: This blog post originally said that Ray William Johnson had left Maker Studios. Though Johnson is now producing his show on his own, he is still under contract with Maker, according to a company spokesperson.