Machinima will retain its brand and online presence, sources say, though Otter will steer business operations and look to apply its expertise in content delivery and audience targeting to grow the gamer lifestyle brand.
Negotiations have been going on for months and some elements have yet to formalized, sources say. It is unclear, for example, whether Machinima Studios — which has produced such original series as Mortal Kombat: Legacy and Street Fighter: Assassin’s Fist — would be combined with another Otter Media asset with a similar audience, Rooster Teeth.
Machinima’s content marketing operations may well become integrated with Fullscreen, a one-time multi-channel network that has evolved into an influencer marketing and branded-content agency.
It is unclear how the combination will impact Machinima employees.
The move offers further evidence that AT&T is not hesitating to rearrange the furniture in the entertainment portfolio it paid $81 billion to acquire last June when its landmark Time Warner merger was finally approved.
Two weeks before the Machinima news, the company announced plans to shutter cinephile streaming service FilmStruck, only to backtrack slightly after a fierce backlash led by many A-list directors and other Hollywood figures. The company ended up compromising by bringing back streaming for Criterion Collection titles, a component of FilmStruck’s offering.
Founded in 2000 and long a trailblazer in gaming circles, Machinima was acquired in full by Warner Bros in November 2016. When the property underwent a significant rebrand early in 2018, it said its properties were attracting more than 140 million monthly views.
From the time it owned Machinima completely, though, Warner Bros faced a tall order in pivoting from a traditional multi-channel network to a broader content provider focused on the intersection of gamer culture and entertainment.
Russell Arons, who replaced Chad Gutstein as CEO in 2017, described an effort in 2017 “to truly take the time to evaluate what Machinima is and what our true ‘north’ is.” She told Deadline last February that the management team had ruled out any subscription models, despite a challenging environment for digital video advertising, 80% of which is controlled by Google and Facebook.
Other MCNs have faced headwinds. Maker Studios, once one of Hollywood’s hottest upstarts, has also had to reassess its strategy. Disney’s $500 million acquisition of Maker in 2014 has, by most accounts, been one of the least successful of CEO Bob Iger’s tenure.
Otter Media and WarnerMedia declined comment for this story.