Last week, Ynon Kreiz, the former CEO of the global TV and digital company Endemol Group, became executive chairman of Maker Studios, one of the biggest YouTube networks. The move shows the rapid corporatization-slash-legitimization process going on in the YouTube universe. As companies like Maker attract more money (last year it received a $36 million cash infusion from investors including Time Warner) and build bigger audiences—Maker receives over 3 billion views a month—big media companies are taking notice. Just a week ago, DreamWorks Animation acquired AwesomenessTV, Brian Robbins’s teen-oriented YouTube channel, for $33 million.
And as big media gets involved in the YouTube world, there’s a demand for more experienced leadership to help steer companies like Maker toward even bigger growth and opportunity. Presumably, under Kreiz’s reign, there won’t be the kind of public kerfuffle that broke out last year when one of Maker’s biggest stars, Ray William Johnson, got into an ugly contract dispute with Maker founder Danny Zappin, ultimately leading to Johnson’s split with the company.
Last week, we caught up with Kreiz—who’s relocated to Los Angeles (with four kids in tow) from London for his new post—as he drove to work one day. Besides talking about his appreciation of Southern California sunshine, which he got to know when he received his MBA at UCLA, he shared these thoughts on the future of Digital Hollywood—his own words below.
The way I see the space is, there used to be three, four, five broadcast networks in the old days. New technology came along and with that, a whole new industry was invented with pay TV, cable, the cable satellite industry. Big companies were founded on the ability to distribute cable content.
This is effectively the third time around, where, back in the early cable days, you had three, four, five channels that became 30, 40, 50, and then 400, 500 channels. And now with the advent of online technology, and the devices and this whole new ecosystem, a whole new industry is being created the third time around.
Except that this time it's going to be a lot bigger, because you have the unlimited capacity; everything's global; there are very low barriers to entry at the initial stage; and, most effectively, there are advertising technologies that allow for a very targeted reach, very focused buys. It’s a dream for advertisers. So this new technology is creating a new market, really.
This is still early days. The industry is still very nascent, and things will evolve, but eventually I believe in parity in terms of the value of the eyeball. You can argue that obviously TV has an advantage in mass reach, but in the end, it's not necessarily the [reach] that matters, it's hitting the right people and engaging them and converting that reach into commercial value. So to me, online distribution or online content has the potential to be worth at least as much as it is on TV because of all the other attributes that have come along with that.
[As for when parity will be reached] it’s hard to tell, but I think it’s definitely becoming—the word "legitimate" is wrong. It's not that. It's really about becoming a real product that advertisers want to buy. And they want to reach young viewers, they want to engage, and they want to engage on specific verticals. There's no better way [than online]. So it's just a matter of time.
I think YouTube has done a great job in becoming a mainstream player. I thought the channel strategy was excellent. Even if the channels themselves might not do as well, it's not about that, it's really about instigating, stimulating, catalyzing an industry. It put them in position as a mainstream player. And they may not necessarily be the only online distributor but they're definitely well positioned with the very strong force of Google supporting them, so I'm a big fan of the way YouTube has been building and operating the platform.
I think they will continue to evolve. It remains an excellent platform for user-generated content, but I think we'll see more professional quality, higher value programming that comes in. And overall the platform will become more efficient, and I think more successful.
I think the smart ones will. All kidding aside, I think it's obvious. It's not a phenomenon. It's a tidal wave and you can't ignore it, and I think those that don't embrace it will be left behind. And I've spoken with a lot of very smart people in town and they get it. People are very progressive in their thinking and understand where this is headed. But you know, I asked a friend of mine, a very smart person, I won't say who it is, we were talking about online video and he said, it's not about what we think, just look at the numbers. Look at the numbers and it's a fact, it's out there. You have to just look at where we're heading and it's staring at you.