Welcome to our ongoing series, From the Big Chair, where top digital decision makers from around the world share their thoughts on the most pressing industry issues of the day.
Today, we meet with Chad Gutstein, CEO of Machinima, the gaming, comic and fandom-centered MCN.
What started in 2000 as a website full of animated video game shorts has since turned into a full-blown digital network that covers ground far beyond YouTube. It’s best-known online series include Mortal Kombat: Legacy, Inside Gaming and Battlefield Friends.
Gutstein first came on board Machinima in March 2014. Since then, the company has grown across an array of platforms, striking exclusive content deals with Sony’s Playstation Vue and Verizon’s Go90. It’s expanded Battlefield Friends to a number of transactional and subscription VOD platforms, such as iTunes and Amazon, and opened the doors to Machinima Studios to create original content in-house that can be distributed across platforms like Go90, Vessel and XBox.
With more than 3.1 billion monthly views, 407 million total subscribers and 16.8 billion minutes of video viewed across all platforms, it seems like Machinima is unstoppable right now — but Gutstein says keeping the gears moving cleanly down at Machinima is still constantly in the front of his mind.
Where do you see the biggest opportunity in digital streaming, right now?
I think the biggest opportunity is around the evolution of platforms and this ever-expanding marketplace for digital-video content. It’s becoming more and more profitable for networks and producers to invest in content. More revenue streams and more diversification always means more opportunity. Just look at television. You wouldn’t have the richness we have in television content today if we still had a single revenue stream supporting television. That’s why we’re starting to see people investing in content to drive their businesses, to drive platform adoption. You see that people want exclusive content, you see this avalanche of ad dollars move in. Advertisers are looking for quality content, and recognizing also that the traditional 30-second commercial spot is really losing effectiveness, particularly in an on-demand streaming world for millennial and post-millennial audiences. Within five years, that traditional 30-second media placed ad will be about as effective as a banner ad, which is to say, not at all, and you see the increasing prevalence of native or custom content, or whatever you want to call what we call content-based solutions.
What makes that content “quality” in your mind?
Quality is in the eye of the beholder. There’s a lot of stuff that a lot of advertisers look at and say, “That’s just (user-generated content). Txc hat’s not quality.” But the person developing that content has developed a significant audience with a resonance, an intimacy and the engagement to that audience. And, by the way, that audience happens to be the hardest to reach. So on one hand, quality is, “Hey, do I have a content creator that is able to generate content that resonates at scale with a very attractive audience?” On the other hand, there’s that traditional measures of quality — production value, recognizable IP, and again, how does that perform and how is it crafted? I think there’s a large spectrum about defining quality, and I think that’s part of the challenge. You have advertisers who have concerns about brand safety. They try to put a traditional lens against measurement of streaming quality that sometimes is accurate and many times is not accurate because you’re dealing with a fundamentally different proposition than buying a traditional television or magazine ad.
What keeps you awake at night?
The key to any business success is execution. You can have the best strategy in the world but if you can’t execute it, it doesn’t matter. If you have bad strategy but great execution, you tend to quickly pivot your strategy and find a way through. What keeps me up is execution. The people on our team, are they communicating and collaborating effectively? Do they understand where we’re trying to get? Do they have appropriate measures for success? Do we have a good feedback loop? Are we listening to the talent within our network? Are we executing with excellence? Those are the kinds of things that keep me up at night more than anything else. The rest of it is, we’re all out here trying to surf the tsunami. The excellence and execution is, do I have the right size board? Am I positioned right in the ocean? Am I paddling too early or too late to hit the wave?
What are some of the things that make it seem like such a tsunami?
It’s just that we’re in a growth phase. We are every day, every one of us in this industry, breaking new ground, and doing something that you’ve never done before, and trying to figure it out as best as we can. I don’t think that’s unqiue to us. It’s common to any new industry that is growing as rapidly as we are. We’ve just entered the second decade of broadband video. YouTube is 11 years old. Machinima is 11 years old. Vimeo is 11 years old. It’s still a relatively new business that’s changing every day and again, it’s only in the last few years that you’ve really seen economic activity move at very very large scale.
Everyone I’ve spoken to on the subject says gaming and comic culture is mainstream culture. But how is that culture in itself evolving?
Traditional pop culture – film, sports, fashion, music these traditional pillars have always been defined by consumption. Who’s your favourite band? How many times have you seen them? If you’re a sneakerhead, how many pairs of Jordans do you own? If you’re a sports fan, how many home games did you go to this season? That’s how we measure our fandom in traditional pop culture, by consumption.
What’s different from fandom and gaming is that it’s measured in creation, not consumption. Yes, you buy the game, but if you’re really into first-person shooters, you’re battling it out, you’re recording it, adding the overlayed commentary, and then you’re uploading video from those exploits and sharing it with the world. Minecraft is something like 10% of all YouTube traffic; it’s 40% of all gaming traffic. Same thing in e-sports. There’s critical mass of players on a global level playing Starcraft, Dota 2, League of Legends, Mortal Kombat, it goes on and on. Some are pros, some are amateur consumers, but they’re all streaming live, they’re recording, they’re uploading, they’re sharing their exploits with the world. There’s 200 Comic Con events at the United States alone and you see the level of creativity that comes from the cosplay and the fan art that people create. That’s where the evolution comes from.
What are some new trends you foresee in the way of platforms and content distribution?
The biggest platform is still YouTube, but you’ve got a few other large-scale platforms that are growing their offerings, like Snapchat and Facebook where anyone can upload content. Then you have curated that are more premium like Go90, Vessel, and bigger OTT services. Some will be successful, some won’t. We were one of the launch partners with Samsung Milk, and they’re gone now. Some platforms are kind of “me-toos” who are dipping their feet into it and trying it for the sake of trying it.
What do you mean by the “me-toos?”
There’s a lot of eagerness to just try something for the sake of trying it without really investing in it, and you see that a lot in video. If you’re not willing to go all-in on something, then you’re never going to be successful in anything. If you’re not willing to make an investment, you’re not willing to reap benefits. If you look at what Verizon did with Go90, they’ve made an amazing investment in Go90. They have dedicated tremendous amounts to it, they touch 100 million mobile customers every month. They’ve got a massive new advertisement, they’ve got a lot of resources at their disposal that they are using to be successful. Will they definitely be (successful)? No one can predict, but I can say, “Boy, they’re definitely doing everything that you wanna see something do!”
What’s the view like from the Big Chair?
To be blunt, my view is of the common area of our company. I sit in the middle of the office. I have a relatively small office, and soon when we move I’ll actually be moving out into a cubicle. My view from the chair is of the people who I work for. We remind people that when someone works for you, you work for them. My job is to make sure that the people who are here at Machinima have the understanding of what they’re supposed to be doing, the feedback loop to tell them whether or not they’re doing it with excellence. If I’m sitting in a big chair with my shades drawn, we’re in trouble, because generally speaking the CEO of the company is the last to know everything. You’ve got to be on the front lines to know what’s going on. The view from my big chair is the front lines.
Missed a Q&A? Check out more From the Big Chair sessions here.