Relativity Media is apparently dying to get into the Multi-Channel Network business. So much so that less than a month after their attempt to outbid Disney for Maker Studios fell flat the Hollywood studio is courting a new MCN. AdAge reports that Relativity has been making acquisition overtures to Fullscreen, currently the largest independent MCN in operation.
Exact numbers aren’t yet available, but Relativity offered Maker nearly $500 million in cash and stock options and another $75 million in bonuses for key executives. Fullscreen, like Maker, is a heavyweight MCN that has been consistently adding value. Most recently, as Tubegeeks reported, the network signed YouTube superstar Grace Helbig and helped to land a 13 episode TV deal for the Fine Brothers. Given the scale of Fullscreen’s operations and the depth of their talent pool it’s likely that Relativity will be making another Maker sized offer.
Relativity’s interest in acquiring a multi-channel network of its own is part of a larger trend playing out across the online video ecosystem. The MCN landscape, which exploded over the last five years as digital content creation became more lucrative, has entered a period of contraction. Beginning with larger MCN’s acquiring or merging with smaller networks those same large networks are now being snapped up by Hollywood studios. Maker and Fullscreen are only the latest to be wooed by traditional media giants. Last year saw AwesomenessTV join DreamWorks Studios and Revision3 join Discovery Digital.
Mainstream media brands and Hollywood studios are enamored of the massive reach of multi-channel networks. The ability to produce and distribute content with relatively low overhead to an audience of millions is obviously alluring to major studios used to operating in the more costly realms of television and film. On the other hand MCN’s, once glowingly described as the future of Hollywood, have struggled to become profitable.
The multi-channel network model relies almost exclusively on ad revenue. Because the online video industry as a whole relies almost exclusively on a single platform, YouTube, to distribute content, networks are at the mercy of Google’s fairly ungenerous 45/55 revenue split. Left to haggle with their creator partners over their share of the remaining 55%, networks have turned to a hodgepodge of brand deals and merchandising to make ends meet. There can be little doubt that the idea of tapping in to more traditionally monetized distribution platforms through major Hollywood partnerships would provide MCNs and their partners with the stability that the current model lacks.