AOL bets big on Netflix-style original programming: ‘We don’t get laughed out of the room like Netflix did’
AOL’s director of video Mark Melling is on a mission to transition the media company from a platform to a producer, to make content that is so powerful that Netflix would buy it, as he lays out ambitions to use its wide distribution network to become a new breed of broadcaster.
Ross Kemp as a guest on AOL's weekly live interview series Build
Melling, who has been with the media company since 2011, was appointed as director of AOL Video in Europe in 2014 to push it to the fore of the company’s commercial proposition during a key moment in the medium’s widespread adoption as a source of news.
Short-form content to accompany news stories on the Huffington Post formed much of the initial focus, including its web series #PowerShift that takes cues from trending news topics.
However, in recent years technology has reduced the barrier to entry for publisher brands to create broadcast-quality content, leading to the adoption of in-house production studios. Being both a producer and distributor of content opens up a rich revenue stream for those brands that are over reliant on advertising or third party distribution.
As such, AOL is banking on its ability to compete on the same level as more established brands like Netflix and Amazon Prime by investing in high-quality mid-length original web series that can be easily remodelled as long-form TV shows, what Melling refers to as “the convergence of TV”.
To reach the scale of these digital streaming services, AOL will create a distribution powerhouse using its 2000-strong publisher and advertiser network, AOL On, as well as its close relationship with Facebook, the biggest social media platform in the world.
“One of the biggest barriers we have always had is it is difficult to compete with TV on scale and we didn’t have live capabilities to reach large audiences. Facebook Live has knocked down those barriers for us by giving us the distribution and the tech to get it out in a live format,” says Melling.
AOL created its first live long-form show in 2014, Build, a weekly interview series that launched in the UK last summer. In December, the series accumulated almost one million views, boosted by the teaser clips shown on Facebook and via its partner brands.
But it is mid-length premium, original programming where AOL has proven itself as a real competitor. It dipped its toe in this space in 2015 with a five-part series following finalists in the Mars One mission for its tech publisher Engadget, and in 2016 with a nine-episode sport reality series Coach Snoop, fronted by Snoop Dogg,
This year, the digital media company will unveil five original series, including the already launched 10-part fashion series with Fearne Cotton, a two-part documentary series Antarctica: The Last Wilderness shot in 360 video, a 10-part ‘Engadget Original’ series Tech Hunters; a new reality show, The New Activists, created by the producers of Made In Chelsea; and food show The Chefs’ Chef featuring a different world-class chef each episode.
It funds this original programming, which it calls ‘Core Projects’, through brand-funded packages and video advertising. AOL comes up with an idea for a series, works out the execution, budgeting, time scale, and invites a brand to sponsor the series exclusively before work begins. This amounts to half of its video output, Melling says. It uses this sponsorship revenue to fund the other half; unbranded AOL-original series. It also creates custom video ad formats for brands that provides additional revenue for reinvestment, and slots preroll ads onto its unsponsored videos.
What’s more, the company’s shift from platform to producer has gained significant momentum since it was acquired by Verizon, evidence that the telecoms firm is looking to create new revenue streams from content as its traditional legacy business slows down. Melling says Verizon’s investment into original content “has been fantastic since we were acquired”, but would not share figures.
In the next three years, Melling hopes to make content so powerful that broadcasters and streaming services “tap him on the shoulder” and buy the format. It’s not inconceivable given VH1 spun off its web reality series Candidly Nicole, fronted by Nicole Richie, into a linear format in 2014.
He has high hopes for The Chefs’ Chef, AOL’s attempt to capitalise on the food revolution that has seen the explosion of popular cooking shows Great British Bake Off and Netflix originals Cooked and Chef’s Table. “When that comes out do I expect a broadcaster to tap me on the shoulder and talk about that format? Absolutely,” he says.
The new Netflix
Netflix represents the pinnacle of this ambition. Not only does Melling want to sell his shows to Netflix - “it is totally an ambition” - but he is pivoting AOL Video around the same model they pioneered in 2013. It started out as a platform, and four years ago became a producer when it commissioned its first original series; House of Cards. It was an immediate success, and the streaming service is now synonymous with broadcast-level content, this year picking up three Golden Globe awards, and committing $6bn to original programming in 2017.
“It was a big risk at the time; tell me a star right now that's not dying to do a Netflix series. That is how much has changed in three years,” says Melling. “My ambitions are for our brands to do the same.”
Melling believes that AOL has a “shorter path” to reach this scale because of its existing digital connections through its AOL On network, which connect content producers to publishers: “We have those connections in the same way that Netflix has its audiences,” he explains.
“This year is about taking that content which we believe does compete with the broadcast space, and working with partners to distribute it outside our own properties. And when I talk about that ambition for our brands, it is a no brainer, it makes sense. And we don’t get laughed out of the room like Netflix did,” he adds.
However, AOL faces a number of stumbling blocks if it is to succeed on this mission, not least whether it can shift perceptions from a content producer to a credible online broadcaster, something Netflix has always been.
“Despite AOL's wide publisher network, there are already a number of go-to video platforms in market like Netflix and Amazon, and they are all investing heavily in proprietary content. This positions them as both a platform for - and producer of - video content,” says Liam Pook, senior director of partnerships and emerging media at Essence. “If AOL is to compete, it will need to deliver on two key things. Firstly, it needs to continuously produce high quality content that draws audiences away from other platforms. Secondly, it needs to build out a high scale distribution platform, accessible easily through multiple devices such as Google's Chromecast.”
What’s more, while Netflix is one brand, AOL is managing many. If Yahoo is introduced into the mix (should the Verizon deal go through), it will be managing even more. Where Netflix has an ad-free model, depending solely on subscriptions, AOL relies heavily on advertising to fund its video output, a costly operation.
But with Verizon’s deep pockets, a network of over 2000 global publishers and advertising partners, and three successful online brands, AOL becoming a new breed of streaming service, sitting at the table with Netflix and Amazon Prime, is not an impossible feat.