EXCLUSIVE: After an 18-month effort to make headway in the saturated streaming video marketplace, Fullscreen Media is shutting down its subscription video on demand service next year.

The demise of its $6-per-month SVOD service follows a decision in September to trim about 3% of Fullscreen’s total staff of about 750. About 25 jobs would be lost as a result of the shutdown.

Fullscreen CEO George Strompolos said, in an email to staff, that millions had downloaded the app and “hundreds of thousands” had chosen to subscribe. But despite this momentum, the service will be shut down in the first quarter of 2018 so Fullscreen can devote resources to original production and branded video content.

“We came to the conclusion that funding SVOD — a longer-term investment — was limiting our ability to invest in our dynamic Creator, Brand, and Rooster Teeth divisions that have more established scale and immediate impact,” Strompolos wrote (read the full memo to staff below).

Founded in 2011 by Strompolos, a former YouTube exec, the company is owned by Otter Media, the joint venture of the Chernin Group and AT&T. Fullscreen had announced its entry into the SVOD space, where an array of stand-alone services have gravitated as digital video consumption has surged, during a presentation at its New York offices in April 2016.

Fullscreen’s SVOD service targeted 13- to 30-year-old “social-first” viewers with a launch slate featuring The Deleted, a violent thriller from American Psycho author Bret Easton Ellis, a daily meta-sketch show called Party in the Back, spoof Filthy Preppy Teen$, and a superhero take from YouTubers Grace Helbig and Hannah Hart called Electra Woman & Dyna Girl, plus library titles including Dawson’s CreekChappelle’s Show and Daria.

“The award-winning product experience and technology we’ve developed over the past two years will be valuable as we build new brands and content offerings in the future,” Strompolos wrote in the note to employees. “We will continue to identify and invest in talented creators and make ambitious bets to push the space forward. It’s in our DNA.”

While Disney and others have vowed to carry on with their streaming plans, the broader OTT revolution marked something of a milestone last spring, when the rate of growth of new stand-alone OTT launches slowed for the first time, according to Parks Associates. The research firm also recently noted that there are more than 200 OTT services available to U.S. consumers, 87% of which have some form of subscription version.

Here’s Strompolos’ full memo:

Team:

When we set out to launch our own SVOD service, we knew it would be a huge challenge. We wanted to provide a new platform for the breakthrough creators, personalities and storytellers of social entertainment — and the fans who love them.

A lot went right. Our talented team built and launched a best-in-class OTT product experience from scratch. We created bold, first-of-its-kind original programming that resonated with young fans. Millions downloaded our app and hundreds of thousands became paying subscribers.

Despite our momentum, we’ve made the difficult decision to shut down the Fullscreen SVOD service in January 2018. We came to the conclusion that funding SVOD — a longer-term investment — was limiting our ability to invest in our dynamic Creator, Brand, and Rooster Teeth divisions that have more established scale and immediate impact. I shared this news in person with the core SVOD team earlier today.

Many smart, creative people gave so much in pursuit of this ambitious project, from our staff to our talent and partners. In addition, many young fans supported us by subscribing with their own hard-earned money. We thank you all for giving us a chance.

Going forward, we will double-down on our mission to empower creators and bring brands closer to fans. The award-winning product experience and technology we’ve developed over the past two years will be valuable as we build new brands and content offerings in the future. We will continue to identify and invest in talented creators and make ambitious bets to push the space forward. It’s in our DNA. I will share more details about our evolving strategy at the December all-hands meeting.

Onward,
George