Los Angeles Business Journal

Video Producer Cuts Staff in Shift Into Distribution

By Natalie Jarvey Monday, December 24, 2012

It appears that Machinima, the rising star of L.A.’s budding online video community, is experiencing some growing pains.

The West Hollywood online video network confirmed last week that it has laid off 23 employees, or about 10 percent of its 200-person staff, in an effort to reorganize its business. The cuts affected the company’s programming and editorial departments, including Machinima’s news division, Inside Gaming.

But digital media insiders said the layoffs are not necessarily a sign of troubles for Machinima; instead, they signal the fast-growing company’s shifting priorities as it expands.

Machinima gained popularity as a niche site that distributed user-generated video game news, shows and trailers via its website. As the company grew, it created a network of YouTube channels as well as a team of editorial and production employees to create its own online content.

But Machinima’s popularity among the 18-34 male demographic has also attracted the interest of big media players willing to pay big bucks to tap into online video.

Joshua Cohen, co-founder of TubeFilter, an L.A. website that covers the online video industry, said the company looks to be giving less attention to its own editorial content in favor of the more lucrative business of distributing professional videos.

“They’re reorganizing. They don’t need as many development resources,” he said. “It makes sense. Machinima’s been doubling down on entertainment investments in recent months.”

In the last year and a half, the company has aired a nine-part series based on Warner Bros. game franchise “Mortal Kombat” and debuted Microsoft Corp.’s first live-action video series based on its popular “Halo” video games.

Machinima is also partnering with NBCUniversal to air “Battlestar Galactica: Blood & Chrome,” which is a prequel to the popular cable TV series “Battlestar Galactica,” as a series exclusively on YouTube. The Syfy channel will later air the 10 12-minute episodes as a TV movie.

“They are realizing that their efforts around aggregating content and better selling that content is their bread and butter, the core of their business,” said Ben Smith, founder of L.A. digital marketing firm Blayze Inc.

Niche website

Despite the layoffs, Machinima is continuing to hire. It currently has more than 15 job openings listed on its website in the sales, marketing and product divisions.

The company, which declined interview requests for this story, issued a statement to the Business Journal last week that the layoffs and open positions are part of an attempt to refocus on areas with the most growth potential.

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