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Online Video Service NextNew Receives $15 Million Funding; Goldman, Velocity, Pittman Invest

Online video production and distribution service NextNew Networks has received $15 million in a new second round of funding…the round was co-led by Goldman Sachs and Velocity Interactive Group (Jon Miller is already on the board from before). Previous investors Spark Capital has invested again as has Saban Media Group and Bob Pittman.

NextNew, co-founded by former MTVN (NYSE: VIA) exec Herb Scannell, former Sundance COO Jed Simmonds, former Hanna-Barbera president Fred Seibert, raised a $8 million round in 2006. I have been skeptical of video production studios like NextNew and since the company started, many other competitors have entered the field. It is a hits-driven business in a medium where a definition of hit is still being defined.

Meanwhile, NextNew has also announced a deal with AOL (NYSE: TWX) to provide AOL Video with about 2,000 episodes from some of the short-form videos it has produced since its debut last March. AOL will create a separate video channel for NextNew shows within its portal.

6 Responses to “Online Video Service NextNew Receives $15 Million Funding; Goldman, Velocity, Pittman Invest”

  1. Chris Moise

    I have always been curious about the business model for NextNewNetworks. Is it based on creating content, hit content or not, that gets syndicated and viewed from other sites. It doesn't appear that their websites are generating the traffic to drive 100 million views so I can only assume that this video is getting seen on other video aggregator sites or from links on someone's MySpace page. Since I don't see ads on their site or any sponsorship of the videos, I am curious on how they generate a ROI for their investors.

  2. As always, liking your insights, Rafat. I'd totally agree that hits in this space are still being defined, though to give you an idea, we look for (and reward) milestones like 1 million, 2 million, and 5 million video views in a month, which many of our networks have passed on a consistent basis (per Preetam's link above). And while Preetam's right that we've focused on building up reliable audiences in underserved niches as opposed to pursuing viral hits, everyone loves a hit, us included. It's interesting that there are web shows that do less traffic than many of ours that get much more press and attention in the blogosphere, not to mention sponsorship, and it's something we're thinking a lot about right now, as we'd love to be more relevant and visible in those areas.

    We're excited lately about how much Barely Political and Obama Girl has popped the culture, including her surprise appearance on the Tina Fey SNL episode this month, and we've got cult hits brewing in programming like Epic Fu, Fast Lane Daily, Indy Mogul, ThreadBanger and Channel Frederator (especially the Meth Minute 39) that are bubbling just under the mainstream radar and getting a lot of interest from distributors and advertisers. We're planning to invest more in them to build on their momentum — many of these properties are less than a year old, and operate on very small budgets — as well as continue to look for new programming that can break out for us.

    It's challenging, but a fun challenge, and this investment is going to help us really focus on those areas in year two.

  3. thanks, rafat: appreciate the clarification.

    looks like they're doing low investment productions for mass niche markets, and trying to distribute it across many different platforms….
    does it spell a success formula for a hit? i doubt it, as do you.

    but are they really after hits? doesn't look like it. they just want fair-sized traffic for each niche they go after.
    http://blog.nextnewnetworks.com/index.php/2007/12/31/we-did-it-100-million-views-in-one-year/

    i actually think this might be a winning model for the amateur content business.
    their execution/implementation leaves a lot to be desired, but overall, with a focus on niche-based production, and a half decent edge-distribution strategy, one might actually get somewhere…

  4. Rafat Ali

    preetam
    well, it still needs to be a hit in a niche to work..what than means to the definition of a "hit" is still unclear. that's what my point was…