• by Ashkan Karbasfrooshan , Op-Ed Contributor, September 23, 2013

Last week, Machinima laid off 10% of its staff.  The company will redeploy capital to other areas.  While both it and fellow MCN Maker Studios are on top of YouTube patterns, it's worth examining what Netflix is doing to feed a voracious audience's appetite for content.

In Bear Market, You Maintain; In Bull Market, You Expand

Once upon a time, I recall thinking that unfortunately, it didn't really matter how much content we produced.  Content was a canvas or placeholder for advertising, and so long as the content was brand-safe, audiences were watching and distributors would license it, and the trains kept humming along.

However, our audience has grown exponentially, and au contraire, the more content we produce, the greater the views we generate and in turn, the higher our revenues.  We can't produce content fast enough, even if, as always, we adopt the field of dreams approach and deficit-finance it in the hopes that audiences will come and watch it after the fact, so that we can recoup our investment and generate a profit.

The Birth, Rise and Exponential Growth of Binge Viewing

What really matters is that while some have been busy talking about the death of pageviews, the smart money has shifted to audience engagement as measured by time spent on a channel -- not surprising, considering how much Netflix is also focusing on binge viewers. YouTube is also increasingly focusing more and more on this metric. 

The Single Greatest Change to Entertainment

As programming moves from linear to on-demand, the consumer/viewer is king, and while technology is zero-sum, content is anything but.  Audiences tend to have an insatiable appetite for content, and as the supply of good content increases, demand will stretch out to capture the extra programming that is served up.  This is one of the most radical changes to hit the entertainment industry, and it is compounded by the fragmentation of media.

Netflix is leading the charge, and chances are that it will be a market-maker for years to come.  YouTube, meanwhile, is a different beast, since many of its most popular channels are not necessarily the ones that produce the most amount of content.  VEVO, for example, manages 15,000 channels on YouTube - including some of the most popular ones.  But VEVO's content supply is in fact limited.  Some of the YouTube native channels are also not necessarily in a position to match their audiences' insatiable appetite for fresh content.

I've been focused on our vast amounts of data on YouTube to try to figure out how much new content leads to incremental views (instead of your audience just watching more or less the same amount of views, just spread out over more content).  My gut says it's more imperative than ever to turn on the firehose as a result.  Time will tell if my gut is right.