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Break.com's low-brow fare is right on target

Young men lap up its sophomoric fare, which it has recently started producing itself after just buying it from users. Unlike bigger rival YouTube, Break.com turns a profit.

March 02, 2010|By Ben Fritz >>>
  • Break.com Chief Executive Keith Richman during taping of "The Bro Show." He and a friend bought the video website in 2004 for about $1.5 million.
Break.com Chief Executive Keith Richman during taping of "The Bro… (Lawrence K. Ho / Los Angeles…)

At an editorial meeting in the offices of Break Media on a recent Wednesday, the back-and-forth had a familiar Hollywood ring.

"The plan with this is to first get the pilot done for ad sales."

"That's still in development."

"It's one of our six tent poles for the year."

But these weren't studio or network executives brainstorming ideas for big-budget movies or prime-time TV series. They were Break Media's employees hatching plans for short videos that appeal to the sensibilities of young men targeted by its website, Break.com.

One idea involved two guys trained as firefighters stumbling into a male strip show while in their uniforms.

"Masterpiece Theatre" it's not. But Break's sophomoric videos are popular with 18- to 34-year-old men, the audience that's traditionally found watching ESPN or playing on video game consoles. With the television networks retrenching and lowering the bar for a hit, Break's video content and business model -- its series cost from a few hundred dollars to $15,000 -- may be a sign of where the old media are headed.

The Beverly Hills company, which owns a library of more than 3,000 user-generated videos, is now moving aggressively into producing original content. It has more than 15 series and single-episode videos in the works that can be viewed on computers, mobile phones and television.

As Internet-connected TVs proliferate, Break is betting that the distinction between its online platform and cable networks will begin to blur.

"We realized we have all the assets here of a real media business, and we need to create brands that keep people coming back," said Break's chief executive, Keith Richman, who thinks of himself as more in the mold of a Silicon Valley entrepreneur than a Hollywood insider. "I don't know exactly when the screens are going to converge, but for our audience segment it's going to be sooner rather than later."

Break's audience size is already comparable to cable networks that cater to young guys.

In December, it attracted an average of 765,000 people per day, according to data from ComScore. Spike TV attracts 702,000 viewers per day, according to Nielsen Media, while G4 draws 119,000 and Cartoon Network's Adult Swim gets 1.1 million.

Richman, 36, went to work for the Walt Disney Co. in 1995 but quickly left for Silicon Valley, frustrated by what he saw as the slow pace of business in Hollywood. After co-founding and selling two companies, he and a friend bought Break in 2004 for about $1.5 million.

Then, in 2007 independent studio Lions Gate Entertainment bought a 41% stake in Break.com for $23 million in stock.

"It was a bet for us on digital, but really it's a bet on Keith and his team, because they know better than most entrepreneurs exactly who their audience is," said Lions Gate Vice Chairman Michael Burns.

Though it was quickly surpassed in traffic and acclaim by YouTube, which was acquired by Google in 2006 for $1.65 billion, Break kept its focus on videos lapped up by young guys, which meant a heavy emphasis on pranks, scantily clad women and what's known in Internet parlance as "epic fails" (example: "Dumb soldier fails at grenade throwing").

While YouTube has yet to turn a profit, Break has been in the black since 2008. Last year it doubled traffic, increased revenue by 39% and hired 40 new employees.

Recent advertisers have included Sprite, Electronic Arts and Southern Comfort.

"In a space as difficult to monetize as online video, it makes sense to cater to one audience so advertisers know who they're reaching," said Paul Verna, a senior analyst for eMarketer.

After originally paying a few hundred dollars to buy popular user videos, in 2006 the company hired a development executive and started reaching out to talent agencies. It was the same model followed by failed Internet video ventures such as Turner Entertainment's SuperDeluxe and Disney's Stage 9 Digital.

"We learned that giving people a couple of thousand bucks to go and create content didn't work for the rapid cycle of the Internet," Richman said.

So, starting in 2007, Break adopted the classic "studio system" model in which most content creators became in-house employees.

Break now has a staff of about two dozen writers, producers and performers working on series and specials with titles like "The Bro Show," "Sports 180" and "College Hoops Fan Fiesta," some of which are made with sponsors incorporated from the outset.

Those videos will be key to Break's migration to television screens, but the company is also investing in other types of programming that will continue to be viewed online.

Over the last two years it has built up a network of seven editorial sites, including a GQ-like men's lifestyle site, one focused on mixed martial arts, and a humor blog.

This year the company is also spending several million dollars to establish a studio in Shanghai that will make video games, some as quick and cheap as the typical Break video and others elaborate, costlier multi-player titles.

Rather than plowing profits back into growth initiatives, Break could even look to get acquired. But with no investors eager to cash out, Richman is focused on building a media company that takes advantage of Hollywood's inability to figure out the Internet.

"We're at the perfect phase," he said. "We have enough resources to do what we want, and the world is headed in our direction."

ben.fritz@latimes.com

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