Warner Bros Agrees To Buy Machinima

David Lieberman
Deadline

Time Warner just significantly beefed up its digital holdings with an agreement to buy Machinima, the digital video service that targets gamers. The company already was a major investor.

Machinima generated about $25 million in revenue last year. It has raised nearly $98 million from several funding rounds, including one that Time Warner led last year for $24 million. Other investors included Redpoint Ventures, MK Capital and Allen DeBevoise.

Warner Bros will fold Machinima into Warner Bros Digital Networks, created in June to develop digital and video productions. It is planning direct-to-consumer services and works existing ones at corporate cousins Turner and HBO.

The gaming entertainment service has “enormous reach and high engagement with audiences that play our games and are big fans of DC films and television shows,” says Craig Hunegs, who’s president of the WB unit. “Machinima also produces great, high-quality content for their community, and together we can create an even more compelling experience and do some really exciting things involving our key franchises. This acquisition is another meaningful move forward as Warner Bros. develops more direct relationships with our consumers.”

In addition to supplying cash, Warner Bros. has made several online-video programming deals with Machinima, including Mortal Kombat: Legacy and the Justice League: Gods and Monsters Chronicles.

The companies also share an interest in the fast-growing e-sports business. This year Turner teamed with WME-IMG to create a venture called eLeague.

Around the same time, Machinima introduced Mach-1, which provides data and analytics to advertisers understand the eSports terrain and opportunities. The company’s Machinima Preferred Media Solutions helps them navigate what it calls “the complex, layered topography of gaming and fandom.”

The collaborations provide “proof points as to how the companies can work together to accelerate Machinima’s growth plans,” Machinima CEO Chad Gutstein says. “We’ll now be able to take full advantage of Warner Bros.’ intellectual property, sales and distribution, while still creating content for social and premium digital platforms that gamers and geeks love. Plus, we’ll be fully embedded and can help Warner Bros. continue their incredible digital marketing successes. It’s honestly a win-win.”

Machinima took off a few years ago when YouTube heavily promoted its multichannel networks. But the gaming service has been trying to broaden its reach, including on Verizon’s go90 mobile platform.

Last year Machinima reached a settlement agreement with the Federal Trade Commission, which charged that it had engaged in deceptive advertising. The agency said that Machinima had paid people to post videos on YouTube endorsing Microsoft’s Xbox One and some of its games, without disclosing the business relationship.

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