Yesterday MiTú Networks announced that Upfront Ventures led a $10 million financing in what is now the largest producer of Latino online videos, primarily driven through YouTube.
As you may know, we co-lead the first round of financing of Maker Studios, the largest overall producer for online video content, along with Greycroft Partners. I was an early and tireless advocate for the growth of the Internet video ecosystem and, as virtually every article I wrote made clear, I believe the 800-pound-gorilla is YouTube and will remain so for the foreseeable future. If you want to build a strong online video business it almost certainly must make YouTube an important part of the strategy.
Last year at this time I spoke at VidCon and gave this presentation in which I said that YouTube was "the Walmart of Online Video." But I also commented that I felt YouTube was vulnerable to competition because its rev share to MCNs wasn't high enough to allow MCNs to build a profitable business inside of YouTube. Many people (including inside of YouTube) mistook this to mean that I was negative on YouTube itself. I wasn't. I was trying to be more analytical than critical. My point was that Amazon continues to dominate the web services business because AWS continues to cut prices and margin in the same way a hypermarket does to control market share. I was arguing that I believe in this strategy on the Internet as any disciple of The Innovator's Dilemma will tell you.
The Internet works best on Deflationary Economics.
So Why MiTú?
I have been saying privately for years now that I believe online video will evolve into fragmented distribution (my next online video post) and vertical production. By "vertical production" I meant that many online video production companies will have a strong vertical focus that will help them win the battle to sign up talent, build stronger and more loyal audiences and align with stronger advertiser relationships because they serve more endemic audiences.
Indeed we are already seeing that online. In food you have the amazing food network Tastemade--the Food Network of online video. In fashion and shopping you have StyleHaul. Gaming? Machinima. While cable TV gave us our MTV, online gave us Vevo.
And in Latino content (both Spanish and English)--the player I believe will build the next billion dollar business is MiTú, the online equivalent of the powerful offline brands like Univision or Televisa--both billion-dollar+++ franchises.
Some quick facts to help put things into perspective:
- There are 414 million people in the world whose primary language is Spanish, in comparison to only 335 million whose is English
- There are 53 million Hispanics in the United States (17.6 percent of the population)
- 25 percent of all children born in the US are Hispanic. Along with immigration, this means that in just a few decades the Hispanic population is projected to be greater than 30 percent of the country
Every politician in the country knows this as well as every consumer brand, every retailer, every restaurant and every media company. And as my Media Redef feed this past week reminded me Hispanics over-index for watching movies and they share their movie experiences 26 percent more than non-Hispanics.
With the cross-over celebrity successes of Eva Longoria, Sophia Vergara, Jennifer Lopez, Ricky Martin, Alex Rodriguez and many more--we're all Hispanic now! We even have the most dynamic mayor in the United States--Eric Garcetti--whose heritage is half Hispanic.
And of course many of you know this is near and dear to me because my own father is from Medellín, Colombia so I grew up in a household with the music, food, culture and language of South America.
In short, Latino online media will attract enormously large audiences and advertisers and will cross over from Spanish-speaking to including Hispanic culture overall. And I believe MiTú Network has the right ingredients to remain the market leader.
MiTú, based out of Los Angeles, was founded in 2012 by three veterans from the Hispanic media world: Beatriz Acevedo (recently named on the 25 most important digital media players on The Hollywood Reporter!), Doug Greiff and Roy Burstin. They realized that many Spanish speaking content producers weren't being properly represented in online media and that many advertisers in the US trying to reach younger Latino audiences didn't have the right opportunities.
So they began signing up Spanish-language content producers in Ecuador, Chile, Colombia, Argentina, Mexico and so forth. And of course they are also focused on the US Hispanic market. They have production facilities in Mexico where they have been creating lower-cost video for traditional TV for many years and they pivoted this facility to producing for YouTube. originally raised $3 million in financing from some of the smartest people in the industry including Peter Chernin, Allen DeBevoise and Shari Redstone.
By the time I funded them they were doing 400 million video views a month, had 40 million subscribers and had already become a powerhouse in ad sales / revenue working with marquee advertisers including: P&G, Budweiser, Nestle, Ford, Frito Lay and Honda.
MiTú produces and distributes programming in the lifestyle verticals of Beauty, Food, DIY, Home and Health and recently launched its male pop culture vertical MACHO by MiTú, anchored by the talk variety series El Show with Chuey Martinez, which is currently being adapted into a late night television series for CNN's HLN. Additionally, MiTú partners with talented Latino content creators to launch and grow their English, Spanish and Portuguese-language digital video channels and connect them with the global marketplace.
Example of these collaboration include Enchufe TV, the largest Spanish-language sketch company channel on YouTube. They also work with Huevoscartoon, one of the most popular animated content franchises in Latin America and with Chef Alfredo Oropeza a Mexican celebrity chef.
Why Double Down on YouTube
The world has moved on from "pure YouTube Networks," and we've all learned to exist in the multi-channel, transmedia world that is the Internet + our living rooms. Nobody has figured this out better than AwesomenessTV, who, not only has built an enormous online media presence, but also packages and distributes shows for Nickelodeon. We will obviously take a page out of their successful playbook. And we can stand on the shoulders of many other successful companies/models including TwitchTV (live streaming), SMOSH (owned and operated) and of course Maker Studios in multi-vertical YouTube networks.
But as I've pointed out in the past, I believe the "top end of any funnel is YouTube," and the media narrative that businesses couldn’t be built in close collaboration with YouTube is wrong as long as you know how to diversify your distribution networks and video production deals. I outlined in this post how I believe YouTube Networks can still build high-margin businesses.
And contrary to media reporting, YouTube has been incredibly supportive of networks like Maker and MiTú in building out our businesses. We’ve had tremendous support from Robert Kyncl, Courtney Lischke, Malik Ducard and Alex Carloss and many others. I regularly get updates on investment opportunities from the likes of Ivana Kirkbride and Jane Hu--both of whom originally encouraged me to meet with MiTú (along with my dear friend and fellow Jewtino Gerardo Broussi who has been telling me about MiTú for ages).
I must admit that I was also heavily swayed by the appointment of Susan Wojcicki as the new head of YouTube. In one of the first moves she made after being appointed, Susan flew down to LA to meet with all of the VCs who invested in YouTube networks and gave us assurances she wanted to see more investment. She then toured all of the YouTube networks themselves and started forming relationships. This was a marked change from the previous leadership of YouTube.
MiTú will use its $10 million to build out new production facilities in LA and Mexico. We will continue to build out talent acquisition teams across South America and the United States and will work hard to serve the interests of those wanting to develop for the Hispanic audiences. We're growing our technology team because, as I've outlined in the past, the best online video companies are a perfect mix of technology and storytelling. We're deepening our YouTube content while also building out relationships with other online networks. And we're growing our sales organization.
Oh, and I wouldn't be surprised if we signed an MCN partnership or two. It turns out that when you develop strong vertical content, you often find you have great collaboration opportunities and don't have to consider everybody a competitor.
Congrats, Team MiTú. I've enjoyed our journey thus far and look forward to the road ahead with you.
This article was originally published on Mark Suster's blog, Both Sides of the Table.