Remember 2013? It was the year of the man bun, EDM, and people saying, "I know right?" after just about every sentence. MCNs (multi-channel networks) were all the rage and they were selling for big money.
Awesomeness TV started it off when they were acquired by Dreamworks for about $120 million. In early 2014 Maker Studios was sold to Disney for approx. $500 million. Fullscreen was sold to Otter Media for about $200 million and StyleHaul to RTL for approx. $150 million.
Fast forward to last week when Maker Studios, once the premier MCN, announced massive layoffs and cut ties to the majority of their online talent.
So how did we end up here and what does the future hold for MCNs?
Stephanie Horbaczewski, Founder and CEO of StyleHaul, said, "Three years ago there was a great need for companies like StyleHaul because advertisers weren't getting what they paid for. They were just spending money because they needed to be in the influencer space. You'd see a lot of content that was generating hundreds of thousands of views but only getting 12 comments. There was no engagement."
After jumping into the business, the MCNs quickly realized that the traditional ad driven business model didn't work. After splitting the revenue with YouTube and the creator, there wasn't a large amount left over. Plus, if a creator didn't have a massive following, they weren't generating the necessary revenue to keep creating good content.
The MCNs had to come up with a new revenue stream and the smart ones embraced long form content. AwesomnessTV was an early adopter of this and they have produced many successful branded content series, such as Royal Crush. They have sold shows to Netflix and are getting into the movie business, with their first release, Before I Fall, coming to theaters this month
You can't call them MCNs anymore. They do so much more.
Originally MCNs were created as a way to help YouTube content creators with programming, cross-promotion, monetization, and audience development in exchange for a percentage of the ad revenue from the channel.
Stephanie Horbaczewski says, "We were never an MCN. We create large-scale multi-platform marketing programs with a data-driven management system that identifies consumers with the highest affinity for the brand. Our capacity to analyze trends across their influencer base in real-time to identify the ideal influencers and content strategies for increased engagement and ultimately customer conversion is what has allowed us to take our business to the next level in the digital space."
Fullscreen is another example of an MCN that has evolved over the years. They produce live events, own their own production company, and are in the streaming business.
All these new ventures have their own challenges though. It is extremely expensive producing high quality long form content. Plus there is intense competition for top Hollywood producers.
Some talent are starting to question whether they even need MCNs. The old days of big guaranteed money (sometimes hundreds of thousands of dollars) are gone. It's getting harder for them to justify signing with an MCN. The ones that do sign with them do so in order to get brand partnerships and help with creating content.
So what does the future hold for the MCNs?
They are getting back to basics: Working with less creators, instead focusing on the ones that have the biggest followings that align with the brands that they represent. They will continue to evolve and create new ways to add value to both their advertisers and their talent.
As people spend more time on digital every day, they will continue to drive innovation and content.
Call them a multi-platform entertainment company, an influencer marketing platform, or an MPN: Just don't call them an MCN.
This article originally appeared in Forbes on March 10, 2017