Base79 reaches out beyond YouTube
By Kate Bulkley
For The Guardian February 17, 2014
UK multi-channel network is targeting brands and ad agencies eager to create their own online content
A platform for talent … Simon Cowell, pictured with judges on the US version of The X Factor, runs SycoTV, a Base79 partner. Photograph: Fox
There may not appear to be much connection between Aston Villa FC, French comedian Remi Gaillard and the nightclub-cum-music-label Ministry of Sound. But all of them want to attract more subscribers to their videos on YouTube, and they have chosen UK-based company Base79 to help them do it.
Founded in 2007 by Ashley MacKenzie, son of former Sun editor Kelvin, Base79 has been at the forefront of what it calls "making YouTube simple" for its clients. It has successfully ridden the wave of YouTube's phemonenal growth, clocking up an impressive client list including sports agency IMG. MacKenzie, 41, says it is on course to become profitable for the first time later this year.
Recent layoffs at Base79's London HQ led to rumours the company was hitting a wall, but MacKenzie insists it is merely reconfiguring now that new technology has been built. Meanwhile, its newest clients, the Jim Henson Co and Hollywood studio 20th Century Fox, are indicative of fresh growth. Fox is Base79's first major studio client and has signed a wide-ranging global contract that marks a simultaneous move by the UK company into marketing and promotion services as well as embracing the online video needs of advertisers and brands more directly.
Base79 belongs to a group of companies – Elisabeth Murdoch's Channel Flip is another – known as multi-channel networks (MCNs) because they manage and monetise multiple channels of video content on YouTube, where every month more than 1 billion viewers are watching over 6bn hours of video. It is one of the biggest MCNs outside the US and is YouTube's largest channel-management partner in Europe, generating 800m views a month across its 1,800 channels, including Simon Cowell's You Generation.
MCNs as a group are "refining their business models and focusing on sustainability," notes Eva Knoll, an analyst at Enders Analysis. "So far we have seen little consolidation, but I do expect a number of bigger players to evolve who will then be more dominant in the space."
For the past 12 months Base79 (79 is the atomic number for gold) has been in investment mode after raising $10m (£7.5m) in 2012, from the Chernin Group, founded by former senior Fox TV executive Peter Chernin and talent agency Creative Artists Agency. The deal reportedly valued the business at £37.5m and triggered a board restructure which resulted in Kelvin MacKenzie stepping down as chairman.
The MCN has used its latest funds for new technology developments and to open offices in France, Germany, Spain, Australia and Los Angeles. Last summer one of YouTube's most senior employees in Europe, Patrick Walker, jumped ship to join Base79 as its chief content officer.
The new money has also been put towards funding the 20 channels that Base79 owns outright, including a parcour and free-running channel called Flow that in less than a year has clocked up 177,000 subscribers around the videos uploaded by participants. "It's about leveraging insights about audience demand and then letting these people create a brand that they can call their own," explains Jason Bergsman, senior vice president of the Chernin Group and a Base79 board member. "We believe brands such as Flow have a very good opportunity to stretch onto other formats and platforms, be that Xbox or Sky Sports, for example," says MacKenzie. "We are still making measured bets in content creation, however, and working for third parties remains the core of the business. We don't see that changing, certainly not in 2014."
Some media owners have decided they want to keep closer control of how their rights are exploited online, the kind of move that is Base 79's biggest threat. Last month, Big Brother producer Endemol pulled back control of an animated Mr Bean channel on YouTube that Base79 had built to over a million subscribers. Endemol is launching its own MCN as part of a £25m digital video project announced last November.
"We were disappointed that Endemol decided to leave. But it's one of over 800 partners we have and we are signing up new ones all the time," says MacKenzie.
"Our core business is still building online audiences for content owners. But we are now taking the technology and the skills that we have been investing in really heavily over the last year and using it to the benefit of advertisers." Under a new sub-brand launched earlier this month called Brand79, MacKenzie is pitching to brands and advertising agencies eager to create their own online content. "It's clear to me that content marketing is set to grow and grow and we hope that the Brand79 products are the ones chosen. So one day perhaps, when a client signs off a media plan, instead of having YouTube written on it, it has Brand79 written on it."