Google leads $35M round in Machinima

Search engine puts more money into original content programming

Financial trends and news by Steven Loeb
May 21, 2012
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Google has been on a bit of a spending spree when it comes to original programming, as it committed to invest $100 million in 100 channels on YouTube. Now Google is making another investment, this time in one of the most popular video producers on YouTube, Machinima. 

Gaming and media stream website Machinima closed a $35 fundraising round, the company announced Monday. The round was led by Google, and included existing investors Redpoint Ventures and MK Capital.

The money raised will be used to advance the company’s “content and global sales operations, international expansion, distribution strategies, and product and technology initiatives.”

"With this latest round of funding, Machinima is well positioned to make the next evolutionary step in the world of multichannel video programming and distribution by expanding into original content, international territories and new platforms and devices," said Allen DeBevoise, Chairman and CEO of Machinima.

The Los-Angeles based Machinima was the third top-rated channel on YouTube in April, behind only VEVO and Warner Music, according to a study by comScore. It was second overall in number of videos streamed, with 382,360 total, and had the highest engagement, with viewers watching its videos for an average of 65 minutes.

As YouTube is owned by Google, the company is essentially giving money to one of its own partners, in hopes of seeing a return on the investment through more hits on its own site.

“Machinima has built a brand and an audience that rivals some of the biggest channels on TV,” said David Lawee, Vice President of Corporate Development at Google. “The success and uniqueness of their business makes this a smart investment opportunity.

In total, Machinima videos have over 1.6 billion views per month, serving over 168 million viewers, they said in their statement. 

This is by far Machinima’s largest fundraising round yet. It had previously raised $9 million from Redpoint Ventures and MK Capital in 2010.

Google's original content foray

With this new investment, Google is sending the signal that it is ready to move into the original content game in a big way, joining Hulu, Yahoo and Netflix.

Netflix debuted its first original series, Lilyhammer, earlier this year, and is now getting ready to air the first new episodes of cult TV series Arrested Development since its 2006 cancellation. 

In January, Yahoo has signed a deal for a animated Web series with Tom Hanks, and on Monday Hulu announced a list of original series that they would be debuting over this coming summer, including one called Spoilers, hosted by director Kevin Smith.

Amazon also recently announced that it would be airing original content as well, and that it would be taking scripts for new comedies and children's shows from anyone who would submit them. This follows an announcement in March that Amazon would be expanding its streaming library by 3,000, with shows from Discovery Channel, TLC and Animal Planet, among others. 

Many streaming sites are experimenting with giving their customers original content, and Google might already have a leg up. According to the comScore study, Google video sites have by far the most unique viewers, videos uploaded and minutes watched per video.

Google spending

Besides this investment, Google has been spending a lot of money in the last year or so. 

It previously purchased online payment company TxVia in April. Google was also rumored to be in talks to purchase social networking platform Meebo for about $100 million earlier this month.

Google acquired 26 different companies in 2011, including Zagat for $151 million in October, Daily Deals for $114 million in September, and app developer Clever Sense, who are behind the restaurant suggestion app Alfred, for an undisclosed amount in December.

Google’s largest purchase, by far, was for mobile manufacturer Motorola Mobility, who they bought for $12.5 billion in August of last year.

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