By Sahil Patel
Network of the Year
Before multi-channel networks stormed YouTube, there was Rooster Teeth. Hell, before YouTube even existed, there was Rooster Teeth. The digital studio and network, founded in 2003, has been a fixture in online video ever since they thought it would be funny to create a series of animated videos using in-game player models from Microsoft’s dominant “Halo” franchise.
That show, known to many as “Red vs. Blue,” has since grown to 12 full seasons and a five separate mini-series — some of which have been financed by Microsoft itself. But that’s not why Rooster Teeth was the best network of 2014.
Since 2003, Rooster Teeth has grown from an online video production company to a multi-faceted business that includes original programming, branded content, a YouTube network, a podcast network, video games, and live events. Its seen “innovative, next-generation, disruptive” (pick your adjective) businesses rise and fall on the web, and it still stands, profitable and growing.
“We have gotten a lot of credit for having very progressive business models — live events, subscriptions, home video,” says Rooster Teeth co-founder and creative director Michael “Burnie” Burns. “But really for us, those are fundamentals. When we started this, there were no other ways to monetize content.”
“When we first started, there were barely any ad networks — even for display ads,” adds Matt Hullum, CEO of Rooster Teeth. “After our 10th anniversary, we got a thing in the mail from Google AdSense — they had hit their 10th anniversary, after ours.”
Faced with the task of building a successful online content business before there was any indication that it was even possible, Rooster Teeth opted for the “time-tested, traditional ways to raise revenue and monetize content,” says Burns. “And over time, we have held on to those.”
The company, which today employs 70 people, has done more than that. Consider all of the revenue streams Rooster Teeth has established: Its YouTube network, which includes the main Rooster Teeth channel as well as channels for shows like “The Know” and “Slow Mo Guys,” is approaching 17 million subscribers; Its website now boasts more than 8 million monthly visitors, and 1.8 million registered users; and its annual RTX expo, held at the Austin Convention Center, had roughly 30,000 attendees in 2014.
But that’s not why Rooster Teeth was the best network of 2014.
It was the year when Rooster Teeth finally accepted outside help, by way of a sale to Fullscreen, one of the largest MCNs in the YouTube business.
Online video had a pretty remarkable 2014. After years of industry insiders claiming that online video will soon have its day in the sun, it was in 2014 when the first domino fell. Maker Studios and Disney kicked off an M&A spree; cable TV ratings and the US box office suffered noticeable drops; the cable upfront market was lukewarm at best; and as a result, more and more TV networks decided it was time to take digital a bit more seriously.
This is to say, it’s no surprise that Rooster Teeth found a buyer. What makes Rooster Teeth more remarkable is that it was acquired for reasons that go beyond the promise and potential of online video.
When Disney bought Maker Studios, and Otter Media (a joint venture between The Chernin Group and AT&T) acquired a majority stake in Fullscreen, their reasoning was simple — traditional media wanted to hedge its bets in the face of shifting viewing habits and these companies, the two most prominent MCNs, could be the future.
Rooster Teeth, however, was acquired by another online network. And in this particular case, Fullscreen didn’t buy Rooster Teeth because it could be some vague “future of entertainment.” Instead, this was a pure, sound business deal; Rooster Teeth is making money — while declining to disclose specific revenue numbers, Hullum says the company has seen “50% revenue growth year-over-year” in the past few years alone — and already has business assets — live events, subscriptions, premium content — that Fullscreen wants to build at a greater scale.
Of course, the deal also holds great value for Rooster Teeth. “We have access to their whole sales network,” says Alan Abdine, head of business development at Rooster Teeth. “In the past, we’ve been competing with all of these big MCNs head-to-head and have done quite well…Going in together with Fullscreen provides a complete solution; now we can develop our audience with the help of Fullscreen’s expertise with females, and we can help them with males and gamers.”
There’s another factor: premium content.
In 2014, Rooster Teeth released new episodes of 45 shows, including the 12th season of “Red vs. Blue.” Not many online networks come close to that level of production and IP ownership, but Rooster Teeth wants to do even more.
“I feel like this is the time to take a huge leap forward. We’ve been doing this for a long time, but now we’re at a point where the industry has matured to a stage where everybody feels like it’s time to play this game seriously,” says Hullum. “We want to be the biggest player. We thought Fullscreen was the optimum partner to do that with. They have a great grasp of the current landscape, a great vision for the future, and we’re just excited for working them.”
Looking ahead, Rooster Teeth has three major projects that it’s currently working on.
First among them is the studio/network’s first feature-length film “Lazer Team,” for which it raised close to $2.5 million in 2014 as part of a record-breaking Indiegogo campaign. “I think it’s a good example of how
we’ve operated through the years,” says Burns. “We were early to online video and had these core philosophies. As new things came along, we didn’t jump in right away; we waited for it. We were kind of late to the crowdfunding game, but we wanted to wait and do it for the right project.”
There’s also “Day 5,” a live-action series that’s shrouded in secrecy as if it was the next Christopher Nolan project. “There has been a lot of interest in it from the few parties that we have been able to show it to,” says Hullum. “It will be significantly longer and bigger than the types of things that we have done in the past.”
And beyond video, 2014 was also the year that Rooster Teeth ventured into in-house game development. “RWBY: Grim Eclipse” will be an expansion of the network’s popular animated series “RWBY,” an attempt to grow a piece of IP beyond its core medium. “It’s new for online media,” says Hullum. “But it’s common in traditional.”
On its own, Rooster Teeth could probably make all of those projects happen. But with the backing of Fullscreen, there’s a better chance to do it “bigger and better,” according to Burns and Hullum.
More than anything else, though, expect Rooster Teeth to continue pushing the boundaries of what you think a digital creator, or studio, or network is capable of. “We’ve had a great time adding studio-type shows, we want to do more that,” says Hullum. “We want to do more movies. More long-form series. More cartoons. Just more better, bigger, awesome, explosive — whatever adjective I can throw in.”
For other best-of lists, as well as profiles of the creators, networks, and stories that dominated the online-video news cycle in 2014, check out the rest of our 2014 “VideoInk Entertainers of the Year” special issue.