There’s a turn in the tide happening in the world of web video. The second half of 2010 has so far signaled a resurgence of investor interest in the business of making original programming for the internet. And those investors are once again bullish on original content.
Just a week after rolling out its largest slate of original web series programming to date, online network My Damn Channel announced it has closed a $4.4 million Series B funding round today. The round is led by Intuitive Venture Partners along with Okapi Venture Capital and Sunshine Wireless Company which both participated in the $3.2 million Series A round back in 2007.
Its the latest of online content networks this year to raise money—Machinima.com raised $9 million in June and Next New Networks closed a $3 million Series C back in March—proving that the VC thesis on the space is clearly getting some reworking after some notable misses a few years ago.
My Damn Channel says it plans to add advertising sales and business development staff as it grows out it original content offerings. Those offerings have already branched out from its early days of hits web series like You Suck at Photoshop and Wainy Days, and into branded entertainment series like IKEA-backed Easy to Assemble (and Sparhüsen) and Trident-sponsored The Webventures of Justin & Alden along with partnering with traditional studios like Fox Television Studios.
But just how far are we from seeing a sustainable and profitable business model emerge for original web content—one that can stand on its own without further investment? I asked My Damn Channel CEO Rob Barnett who alluded to a multiple revenue stream business being essential to his strategy, including add premium content subscription plan.
“Our original video world is only sustainable and profitable if you run a business well,” said Barnett. “We believe the best content wins. And you’ve got to diversify revenue streams. We’re fueled by display advertising, branded entertainment deals, licensing of our content to all digital platforms—and soon by premium paid programming in Q4.”
Branded entertainment continues to be a growth opporunity for My Damn Channel, and Barnett added that he is an increase in the number of branded deals increase over the past few months, with “the size of these deals is also building as more brands realize the need to tap the bajillions of video views happening every minute.”
There’s still the question of whether viewers, already swimming in online content choices, will actually pony up the cash for watching web series. “We don’t believe people will pay for the milk they’ve already been used to getting for free,” added Barnett. “We also don’t believe in farming analogies. We do believe that star-powered, premium paid programming is going to be a new weapon in the My Damn Channel arsenal.”
The smart money is starting to notice the surging online viewership numbers and increased ad spending from big brands—eMarketer is projecting $1.4 billion spent on online video ads for 2010. And with My Damn Channel’s announcement today part of a front page story on the financing resurgence, it’s likely this won’t be the last one we’ll see this year.