Peter Kafka

Recent Posts by Peter Kafka

Smoshed! Alloy Digital Raises $30 Million for Web Video That Makes Money.

New day, new bet on Web video. This one comes from ABS Capital, which is plowing $30 million into Alloy Digital, better known as the home to Smosh.

And if you’re not a teenage boy, here’s what Smosh is:

Seriously? Yup, seriously. This stuff is hugely popular, both on YouTube and on Smosh’s own site, which is a crucial part of the story: While lots of YouTube’s biggest stars are trying to figure out how to make money on the world’s largest video site, the Smosh guys — Ian Hecox and Anthony Padilla, both 25 — figured out early on that they wanted a home that wasn’t owned by Google.

That has helped them create a business that Forbes thinks generated $10 million in revenue in the last year, and that’s why Alloy bought their services in 2011.

Now ABS is putting money into Alloy, which has an array of Web video stars following similar strategies. “The monetization model is Smosh,” says Alloy CEO Matt Diamond.

Which means: Attract eyeballs, and some ad money on YouTube, where Alloy says it has more than 12 million subscribers for the channels it owns (unlike other big YouTube players, it doesn’t spend much time representing other people’s clips on the site).

And then really blow things out outside of YouTube, via more ads, merch deals, iTunes tie-ins and stuff you create directly for sponsors, like this promo/parody paid for by the people behind the Assassin’s Creed videogame franchise:

Alloy and ABS won’t comment on the valuation that comes with the $30 million A round. But it’s worth noting that last year Maker Studios and Machinima raised rounds of $36 million and $35 million, both of which valued the companies in the $200 million range. It’s entirely possible this deal is even richer.

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There’s a lot of attention and PR around Marissa, but their product lineup just kind of blows.

— Om Malik on Bloomberg TV, talking about Yahoo, the September issue of Vogue Magazine, and our overdependence on Google