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Machinima Ready to Raise Its Game

CEO Chad Gutstein Discloses Plans for a New Premium Play 7/06/2015 8:00 AM Eastern

Machinima, the ad-supported over-the-top multichannel network for gamers, is already a hit with the hard-to-reach millennials audience.

 

It’s now looking to parlay that success, open up its game and take on some new risks as it prepares to launch a premium channel that will initially be offered as part of a pay TV bundle and on an a la carte basis through PlayStation Vue, Sony’s broadband-delivered pay TV service.

 

On paper, it looks like a perfect match. Machinima is for gamers and the fandom culture. PlayStation Vue is offered on PlayStation 3 and PS 4 consoles. Machinima estimates that more than half of its U.S. audience already owns a PlayStation console.

 

The challenge ahead is to develop and launch a new service that PS Vue users will find appealing, but take that next step and also pay extra for it.

 

Machinima CEO Chad Gutstein won’t yet provide the full playbook for the coming subscription offering, but said it will feature a blend of originals that are exclusive to subscribers alongside a curated collection of “best of Machinima” content.

 

CONTENT ROLLS IN

 

Machinima’s premium service would offer the television-equivalent of at least 250 hours of original programming per year, Gutstein said, noting that the company is in “late-stage development” on its first batch. Some of the content tagged for the subscription offering will start rolling in by the third quarter, he said, ahead of a full-service launch expected in the early part of the fourth quarter.

 

The company has already put out nearly 400 scripted and unscripted original series, he added, spanning animated comedy to horror, competition and documentaries.

 

“We know how to produce, for our audience, the kind of content they want to watch, and we know how to do it across all formats and all genres,” Gutstein said. “I think you’ll see us take our capability set and apply it here [on the premium service].”

 

The supplemental, curated content will come from the quite-staggering 33,000 hours of new, additional content that is generated by Machinima’s army of creators. That content will appear on the premium service based on usage data, determined by what’s trending, getting the most viewership and being shared most frequently via Twitter, Facebook and other social networks.

 

PlayStation Vue is Machinima’s launch partner for the service, but Machinima will also seek out other distribution partners, including cable operators and other types of MVPDs that are trying to connect with millennials and the gaming/fandom group. Because distribution partnerships are the initial focus for Machinima’s premium service, it won’t try to sell its premium product direct-to-consumer.

 

“But I wouldn’t rule anything out. We have an extraordinarily powerful, difficult to reach affluent audience,” Gutstein said, noting that the core audience is 18-34, skews male, and has a median household income of $87,000.

 

But not everyone agrees that Machinima will have success trying to gain distribution outside platforms such as the PlayStation (Machinima, by the way, does offer the free version of its app on the Xbox One and Xbox 360.)

 

“There are a lot of synergies there on PlayStation,” Colin Dixon, founder and chief analyst at nScreenMedia, said. “But I don’t see the same synergies with [traditional] pay television.” He also said he doesn’t see Machinima having more than limited interest on a service such as Sling TV, Dish Network’s new over-the-top pay TV service for cord-cutters.

 

Gutstein, the former chief operating officer of Ovation who took the helm of Machinima in March 2014, believes his company is well equipped for “this third wave of television” and can help partners get in touch with this large, coveted group of viewers.

 

“There’s this huge digital, native video-driven, mobile first audience that is amazingly difficult to reach and [one] that traditional television is now doing a worse and worse job of serving and reaching. And we have them,” he said.

 

And the distribution world continues to evolve, he said, noting that Hulu, which will bundle subscriptions to cable premium channel Showtime, is starting to look like a digital MVPD of sorts.

 

REAPING GREEN FIELDS

 

Plus, Machinima isn’t hindered by digital rights issues that have slowed or limited the progress of others that pushing onto new platforms.

 

“We are not burdened by the 30 years of business history that exists,” he said. “We have a lot more flexibility.

 

“I think traditional networks have done a fantastic job of the last several years of making progress on getting differing rights and preparing themselves for this new digital future … but we’re already there.”

 

Playing Soon on PlayStation Vue

 

Machinima has lined up multiple ways to gain distribution for its new premium service on Sony’s recently launched pay TV platform:

■ Bundled with PS Vue’s Elite package ($69.99 per month) that’s currently offered in five markets: Los Angeles; San Francisco; Chicago; New York and Philadelphia.

■ Nationally, via the PS Vue service on an a la carte basis — for $3.99 per month, or at the discounted rate of $1.99 per month for PlayStation Plus members.

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