BuzzFeed, the social media company, may eventually make most of its revenues from videos, its new president has said, underlining how publishers are looking beyond the written word for online profits.
“There is a decent chance that our video business will be larger, much larger than our website business,” said Greg Coleman, who was appointed the viral content website’s second-in-command last month.
The online media company – which has found fame through amusing lists and pictures of cute animals – is planning to invest more in video production after raising $50 million from venture capital fund Andreessen Horowitz last month. It has enlisted Michael Shamberg, producer of the film Pulp Fiction, as an adviser.
Many news sites have been ploughing money into video, as production costs fall and advertising rates are significantly higher than for online display ads. The New York Times company, whose chief executive is the former BBC director-general Mark Thompson, says it is on course to double revenues from video advertising this year.
BuzzFeed, which raised $50 million in August valuing the company at $850 million, may follow the experience of online magazine Vice, where video has overtaken text as the major output. Vice recently produced an hour-long documentary on the militant group Isis, is making food programmes in partnership with FremantleMedia, the television production company, and is also producing content for brands.
BuzzFeed has been producing video since 2012, when it hired YouTube star Ze Frank to lead its efforts. Like Vice, its target audience is millennials, those aged 18-34. Unlike Vice, however, its videos are short so as to be easily viewed on a mobile device.
Last month BuzzFeed rebranded its video arm Buzzfeed Motion Pictures and said it would look to collaborate with Hollywood studios. It is investing in mid-length serialised content and is exploring longer projects, advised by Mr Shamberg.
Mr Coleman said it was “too early” to say how BuzzFeed’s video business would develop. But he said it had grown faster than anything else launched by the company, with revenues quadrupling in the past 18 months from a low base.
While BuzzFeed’s articles have broadened from entertainment to business and politics, its video offering remains focused on lighter content. Its main YouTube account, which has more than 2 million subscribers, features clips such as “If Disney princes were real” and “6 snacks you’re eating wrong”.
Buzzfeed expects total revenues to be exceed $100 million this year. It does not charge for access to its editorial content, or sell online advertising on it. Instead, it produces sponsored posts and videos, paid for by brands, which are intended to be viewed in their own right.
Ken Doctor, a media analyst, said that Vice and Buzzfeed were likely to draw marketing dollars that were currently directed towards television advertising.
“These are not American players, they are global players,” he said.
- Copyright The Financial Times Limited 2014
