Warner Bros. is in talks to buy gaming-focused digital media company Machinima, The Hollywood Reporter has confirmed.
The studio, which already owns a piece of Machinima through two previous investments, had an option to buy a majority stake that expired this spring, sources tell THR. According to The Information, which first reported about the deal, Warners' option would have valued Machinima at $150 million, or twice the company's $75 million in projected 2016 revenue. Now, Machinima is expected to be valued at less than $100 million.
One of the early YouTube networks, Machinima has had a bumpy path as it looked to move beyond its roots as an advertising network, resulting in several rounds of layoffs. The company replaced co-founder Allen DeBevoise as CEO in 2014, naming former Ovation COO Chad Gutstein to the role. Gutstein has worked to rebrand the company as a place for original content devoted to gaming and fandom. Recently, Machinima has placed a bet on the growing industry of e-sports, inking a deal with The CW to air the finale of docuseries Chasing the Cup on the network.
Warners made its first investment into Machinima in 2014, leading an $18 million round. The following year, it led a $24 million round. Other Machinima backers include Google, Redpoint Ventures and MK Capital.
During the time of Warners' investments, several other entertainment companies were making their own bets into the digital space. Disney acquired Maker Studios, DreamWorks Animation bought AwesomenessTV and Otter Media, the joint venture of The Chernin Group and AT&T, bought a majority stake in Fullscreen.
Representatives for Warner Bros. and Machinima declined to comment.