MCN March Madness -- Who’s Next?

March Madness -- it’s not just about hoops anymore.  Just look at the past several weeks in the wacky world of MCNs -- which spilled over to a fine April day just yesterday (just like the hoops classic spills into this April weekend with the Final Four).  LA investors -- you are finally getting your close-up!

Here’s the scoreboard:

March 10 -- gamer-focused MCN Machinima -- $18 million new investment led by Warner Bros.

March 24 -- broad-based MCN Maker Studios -- acquired by Disney for $500 million (up to $950 million).

March 26 -- talent-centric MCN Collective Digital Studio -- German TV giant ProSieben acquires a 20% stake in the company.

March 31 -- Machinima back in the news -- announces cable industry veteran Chad Gutstein as its new CEO.

April 2 -- yesterday -- hours ago -- talent-centric MCN Big Frame -- acquired by AwesomenessTV (a division of DreamWorks) for $15 million.  When comparing Big Frame’s $15 million to Maker’s $500 million or higher price tag, note that Big Frame has about 1/10th of Maker’s subscribers -- 39 million compared to 380 million; and while Big Frame has had 3.6 billion view views to date, Maker reports 5.5 monthly billion views.

In any event, make no mistake, by no means are we done yet.  As the Carpenters once sang (yes, sadly, I know many of you will have no idea who I’m talking about!), “we’ve only just begun.”  I voiced this same theme one week ago -- on March 24 -- immediately after the Maker deal when I was asked to comment by Todd Spangler of Variety.  Here is what I said at that time:

“MCNs are now top-of-mind for all the major studios.  There certainly will be a flurry of M&A activity in the next 12-18 months.”

10 days before that on March 14th in a guest article for Variety, I predicted Big Frame to be one MCN that would be directly in the relevant line-of-sight for such M&A activity.  And now, here we are.  Maker Studios, cashing out.  Big Frame, cashing out.  They have found dance partners in Disney and DreamWorks, respectively.

So, who’s next?  THAT is the question!  One thing’s for sure -- the studio water coolers are buzzing right now with that very question.

Here is my “take” -- my predictions, if you will, based on the chatter and overall buzz I hear in Silicon Beach.  These are not necessarily listed in order of “buzz-worthiness”-- but you will notice a trend -- virtually all of these are vertically-focused MCNs, unlike both Maker Studios and Big Frame.  That alone makes this list interesting.  Expect many (if not most) to be taken out in the next 12-18 months:

ZEFR -- while technically not an MCN (although there is no single “right” answer to the question, “what is an MCN?” anyhow), this LA-based company is built on top of YouTube and is hot, hot, hot.  Great technology, great mega-name brand clients.  They won’t last more than 12 months.

MACHINIMA -- it’s only a matter of time here.  This one is obvious.  They are one of the most high profile MCNs, and they cater to the coveted young male demographic.  In the hands of the right acquiring platform, this could be magic.

STYLEHAUL -- this one is vertically-focused on fashion/beauty/lifestyle -- kind of the anti-Machinima demographic.  This company is hot hot hot as well, with over 4000 channels and a potentially massive international opportunity.  Lots of chatter here.  Very positive chatter.

FULLSCREEN -- this one is a known “player” in the space -- somewhat of a cross between Maker Studios (broad-based content) and ZEFR (deep analytics and technology).  That makes them “different.”  And, different can be good in the right hands.

DANCEON -- this vertically-focused MCN is the “MTV of dance” and fills an obvious void for that massively under-served market.  DanceOn is hot and growing fast -- very fast -- and is backed by A-list investors, including AMC Networks, Nigel Lythgoe (creator of “American Idol” and “So You Think You Can Dance”), Guy Oseary, and Madonna.  Madonna??!!!  And dance??!!  How can you go wrong?  You can’t!  DanceOn owns this very international category.  This one is also only a matter of time.

CRUNCHYROLL -- all anime, all the time -- which means the audience is passionate.  The studios are watching this one closely.  Other vertically-focused MCNs compare themselves to this one to give outsiders context of the overall market opportunity.

INDMUSIC NETWORK -- this one bills itself as “YouTube’s Largest Music Network,”giving indie musicians and those who support them the tools to more effectively monetize.  Very ZEFR-like in that way.  Music, of course, is an obvious vertical with an equally obvious passionate customer base.  And, look at the A-list investors and management team behind this one.

THE WHISTLE -- here’s an obvious vertically-focused MCN, which apparently wasn’t obvious to too many, since it just launched in January of this year.  I only recently learned about this sports-focused MCN -- but the vertical alone makes this one intriguing.  And, this company somehow has cobbled partnerships together from most of the major sports leagues in record time.  Which makes it doubly Intriguing.

TASTEMADE -- I also just learned about this foodie-focused MCN -- a vertical that is much bigger than you may think for the YouTube set.  They’ve raised significant money themselves and have established a nice international audience.

Grab your popcorn.  We are still only in this movie’s early frames ....