Germany's Mediakraft Thrives on Local Content

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While broadcasters in the UK have managed to maintain and even grow their share of audience thanks in part to the complementary rise in online viewing, matters are very different elsewhere in Europe where younger audiences are switching en masse to video on demand.

“Audiences are abandoning TV like rats on a sinking ship,” says Spartacus Ollson, CEO of Mediakraft Networks, which claims to be the largest online TV network in Central Europe.

Its 300 million streams of varied lifestyle, entertainment, news, comedy and sports reaches 25 million viewers distributed over platforms such as YouTube, Dailymotion, Yahoo, Clipfish, or SnackTV.

Comic clip show Y-Titty (a play on YTD, short for YouTube Dummies) for example, is the most subscribed YouTube channel in Germany, with 3 million subs, and whose originator, Philipp Laude is Mediakraft's executive creative director.

Mediakraft's popular comedy trio Y-Titty, from left to right: Matthias "TC" Roll, Oguz "OG" Yilmaz, Philipp "Phil" Laude

Germany's third biggest YouTube channel, LeFloid (1.7 million subs) is also part of Mediakraft's portfolio helping it achieve a total share of 45% of online viewing between 14-29 year olds in the country.

“Our network is created by creators for creators,” says new media entrepreneur Ollson, who launched Mediakraft in 2011 with former TV producer Christoph Krachten after co-founding Tinstream. “We co-create content and intellectual property with our partners.”

In late 2012 they raised more than one million Euro in VC backing from Hamburg-based Shortcut Ventures, which named Ynon Kreiz, the former head of Endemol, to an advisory board. Former Sony Pictures Gmbh CEO Martin Borowski was also chairman of Mediakraft's advisory board at this time, but is no longer active in this position.

Together with Laude and Lukas Klumpe, who runs Mediakraft's Athletia network (a broad mix of classic sports, fitness, and trends like BMX and Parkour), Ollson claims to have united old and new media: “Two worlds that we believe need to merge to be successful in the online TV market.”

Administered from Munich, Mediakraft helps creative partners to increase their reach by providing advice and analytics to improve the quality of content. The network includes more than 1,500 channels, most of them produced by net newcomers which Mediakraft will invest resources in on a case-by-case basis once it sees potential. About 200-250 channels have more substantial relevance in terms of content and reach. In-house resources include finance, technical assistance, and production equipment in Berlin, Cologne, and Hamburg including green screen studios, edit suites, audio, and music libraries.

Although it has yet to run into profit, the multichannel network (MCN) shares ad revenue generated with its affiliate creators and sees greater future financial return in branded content. “We are going through a revolution that we are partly fuelling where content and advertisers need to find new ways to reach audiences,” says Ollson. “Our focus and vision is where branded entertainment exists right next to normal entertainment. They benefit from each other. Brands will start making their own content and distributing it online and that's where we step in.”

It is already working with MacDonalds on branded content, runs Techlab for electronics-retailer Saturn, and has just launched a German-versioned Coke channel. Other examples of its branded content are viewable on the Mediakraft website.

“In commercial TV, 90-95% of revenues have traditionally come from ad-breaks with 5-10% from sponsorship,” he says. “Online we see that working differently with a 50-50 split between sponsorship and ads.”

Capturing Audiences in Central Europe

The MCN has branched into Turkey, Poland, and the Netherlands, manning offices to grow video networks in each country, but Ollson says the Hungarian and Romanian markets, “are too small for a sustainable online TV business at this point.” Nor does Mediakraft have the U.S. or UK in its sights as yet because of cultural differences in media consumption.

“In the U.S. and UK we see the survival of broadcast TV to a certain degree,” says Ollson. “That is simply not supported by trends in Germany. There is nothing ambiguous about the message here. Aside from certain huge events like the World Cup, it is getting more and more difficult to get audiences to synchronise their time to watch TV.”

He gives two reasons for this: TV does not offer the content that viewers want when they want it, nor do they interact with media in the same way. “They are not finding out about content from a schedule in a magazine but from recommendations on Facebook. This is where broadcast TV has no chance to follow.”

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