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Why DreamWorks Is Spending $33 Million On YouTube Youth Channel AwesomenessTV

In what a source describes as a quick deal, the teen-focused YouTube channel would presumably host content from both DreamWorks and Awesomeness and help launch new material. Plus, if all goes to plan, DreamWorks could shell out $117 million more. In an interview earlier this year, AwesomenessTV creator Brian Robbins forecasted his channel’s success.

When I sat down with TV and film veteran Brian Robbins earlier this year to talk about AwesomenessTV, his YouTube-funded channel that is one of the few breakout hits among Hollywood channels, he was very much in “build” mode. Less than a year after founding the teen-oriented channel that’s home to web series such as IMO (In My Opinion) and Runaways, it had garnered over 14 million subscribers and 800 million views, making it one of the biggest teen destinations on YouTube.

“It feels like we’re doing something right, but we haven’t won yet,” Robbins told me, sitting in Awesomeness’s spacious production studio in West L.A., where downstairs there’s an enormous chalkboard that says “Be Awesome” in huge, colorful letters. “It’s still early in the race.

“But,” Robbins added, smiling ruefully. “People are paying attention. Everyone wants to try and buy in and sniff around, from the big media companies to VCs.”

A few months later, one of those big media companies--DreamWorks Animation--has done more than just take a whiff, acquiring Awesomeness for $33 million in cash. If earnings targets are met, DreamWorks could pay up to $117 million more by 2015.

Brian Robbins

It’s certainly not a bad deal for Robbins, who raised $3.5 million to start Awesomeness last year. At the same time, considering that big YouTube networks like Machinima are valued at nearly $200 million, DreamWorks seems to have gotten a bargain.

According to a source, the marriage came together quickly--in less than 30 days--and was instigated by Robert Kyncl, YouTube’s head of global content.

“Robert and Jeffrey (Katzenberg, CEO of DreamWorks Animation) had been spending time together and Robert was talking to Jeffrey about Awesomeness and how excited he was about the potential of the company,” said the source. “So Jeffrey and Brian got together, and it very quickly seemed like there would be a great marriage there.”

Robbins’ background in both digital and traditional media--he produced TV shows such as Smallville and directed the 2007 Eddie Murphy comedy Norbit (which DreamWorks released)--was appealing to Katzenberg, who will be relying on Robbins to help build a DreamWorks Animation digital family channel. Content from both DreamWorks and Awesomeness will presumably live on the channel, with AwesomenessTV serving as a development platform for new material, as well as a marketing and publicity tool for DreamWorks.

The deal--negotiated by the United Talent Agency, which incubated AwesomenessTV--underlines Hollywood’s interest in tapping into massive online audiences that can be migrated to TV and movies. Last year, Time Warner invested $25 million in Maker Studios, a next-generation studio that represents YouTube stars. And Robbins himself recently made a deal with Nickelodeon to turn web series from AwesomenessTV into half-hour shows.

Indeed, when I spoke to Robbins, he made it clear that until digital advertising rates catch up, TV and movies are still where the big money is.

“If we were building a business today solely on advertising revenue from YouTube, I’m not sure I’d be so bullish,” he said. “Eventually, yes. But the opportunity to create IP that’s valuable and that could be valuable downstream in all the other platforms that exist, that’s a big revenue stream.”

With the DreamWorks deal, he now has those platforms at his fingertips, something that presumably played a part in his decision to sell. Plus, Katzenberg, as the source noted, is a “great persuader.”

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