SANTA CLARA, Calif.--Warner Bros., one of the world's largest movie studios, remains committed to the online video space and plans to continue to create content for the sector, according to the head of Warner Bros.' digital business.
"We're really left on our own to really experiment," said Warner Bros. executive Lance Sloane during a keynote session here at the OTTCON conference.
Sloane is the head of programming for Warner Bros. Digital Distribution, a division within the movie studio dedicated to creating content for the online video market. The business is essentially a testbed for the studio to learn about the online video market, which many believe will eventually eclipse the pay TV business. And so far Warner Bros. Digital Distribution has enjoyed a notable level of success: The operation has created H+ (produced by Director Bryan Singer), Aim High (produced by Director McG) and the recent Mortal Kombat online video series.
Sloane said Warner Bros.' efforts in online video have been successful enough that H+, Mortal Kombat and Aim High will all soon release second seasons.
Sloane said Warner Bros.' experience creating Mortal Kombat content highlights how online video is changing the entertainment industry. He said the studio stumbled across a Mortal Kombat-themed video by Kevin Tancharoen, an unknown director and Mortal Kombat fan looking to break into Hollywood. Sloane said the studio initially planned to sue to remove the video for copyright infringement, but after seeing how popular the video became, the studio instead contacted Tancharoen to film a series of Mortal Kombat videos for online distribution. The result, Mortal Kombat: Legacy, has to date generated a total of 4 billion YouTube views. And, Sloane said, Warner Bros. and Tancharoen are now working to make a Mortal Kombat feature film with a budget of $40 to $50 million.
"To me, that's when it's less of an experiment" and more of an actual commercial product, Sloane said.
Sloane said the mechanics of the online video industry remain extremely fluid. He added that Warner Bros. continues to test different distribution models in online video. The company released Mortal Kombat through Machinima's YouTube channel. Aim High, meanwhile, was released through AOL/Cambio and Facebook.
Importantly, Sloane said none of Warner Bros.' online videos has yet generated significant revenues. Further, none has cost much to create. For example, the first season of H+, which takes place across 48 episodes lasting around 6 minutes each, was filmed in Santiago, Chile, for just $2 million.
Warner Bros. has been testing various revenue models, including placing standard ads alongside the content and selling sponsorships to companies that can place their brands inside the content. For example, Sloane said Oakley integrated its products inside H+ "in a way that didn't lose credibility."
As for Mortal Kombat, Sloane said Machinima is selling ads for the second season of the series with a 40-member sales force. Warner Bros. plans to release the second season of Mortal Kombat through Machinima's YouTube channel in 10 episodes, each lasting four to 10 minutes. Interestingly, Warner Bros. plans to retain a "feature length" version of the second season of Mortal Kombat that it won't release online. Sloane didn't say what Warner Bros. would do with that version.
Sloane said that, as Mortal Kombat and other series enter their second seasons, Warner Bros. is now able to more effectively sell ads and sponsorships since it can help advertisers estimate what kind of audience they can expect to reach.
"As every day goes by, you see more advertisers gravitating toward [online video]," Sloane said.
Sloane said the most important element in the online video market is how content is marketed. He said networks like Facebook and Twitter provide valuable word-of-mouth buzz for videos to gain eyeballs.
Further, Sloane said advancements in Hollywood's production process allow Warner Bros. to create quality content without breaking the bank.
"You don't have to lose quality if you're not spending crazy amounts of money," he said. "Good content is good content at the end of the day."
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