The new supply chains : the Multichannel Networks

Digital innovation is transforming the media and entertainment industries. The professionalization of YouTube’s platform is paradigmatic of that change. The 100 original channel initiative launched in late 2011 was designed to transform YouTube’s brand through production of a high volume of quality premium video content that would more deeply engage its audience base and in the process attract big advertisers. An unanticipated by-product has been the rapid growth of a wave of aspiring next-generation digital media companies from within the YouTube ecosystem. Fuelled by early venture capital some have ambitious goals to become global media corporations in the online video space. A number of larger MCNs (Multi-Channel Networks) - BigFrame, Machinima, Fullscreen, AwesomenessTV, Maker Studios , Revision3 and DanceOn - have attracted interest from media incumbents like Warner Brothers, DreamWorks, Discovery, Bertlesmann, Comcast and AMC, and two larger MCNs Alloy and Break Media have merged. This indicates that a shakeout is underway in these new online supply chains, after rapid initial growth. The higher profile MCNs seek to rapidly develop scale economies in online distribution and facilitate audience growth for their member channels, helping channels optimize monetization, develop sustainable business models and to facilitate producer-collaboration within a growing online community of like-minded content creators. Some MCNs already attract far larger online audiences than any national TV network. The speed with which these developments have occurred is reminiscent of the 1910s, when Hollywood studios first emerged and within only a few years replaced the incumbent film studios as the dominant force within the film industry.