YouTube Acquires Video Production Company Next New Networks

An insider says YouTube -- which is contending with growing competition from Hulu, Netflix, Amazon and other sites -- paid south of $50 million for the 4-year-old online firm, which produced viral hits "Bed Intruder" and "Double Rainbow."

In the face of growing competition for the delivery of video on the Internet from the likes of Hulu, Netflix, and others, YouTube said Monday it has acquired 4-year-old online video production company Next New Networks.

The announcement, made in a blog posting by YouTube director of global content operations Tom Pickett, coincides with the creation of YouTube Next, an initiative designed to boost the quality of videos and help monetize them.

YouTube didn't disclose the price of Next New Networks, though a company insider said it was south of $50 million.

Next New Networks is a New York-based firm that is behind dozens of branded networks available on YouTube. The company typically partners with folks who are creating popular and interesting online video and helps them take their productions to a higher level in terms of quality, popularity and profit potential.

In his blog post, Pickett wrote that Next New Networks "has built a highly effective platform for developing, packaging and building audiences around original Web video programming, attracting 2 billion views and 6 million subscribers across their partner networks of channels and shows."

Examples of their content include Barely Political, the team that was behind "Obama Girl" three years ago. That series included 23 episodes, the most popular of which was seen by 37 million people.

Other Next New Networks shows include Beyond the Trailer, a movie-review show that attracts 2.5 million viewers each week; The Wing Girls, which consists of silly and raunchy dating advice for guys delivered by a couple of women who go by the names Jet and Star; and KEEPtheHEAT, which spoofs popular songs and music videos.

Pickett described YouTube Next as "a new team tasked with supercharging creator development and accelerating partner growth and success."

According to eMarketer, online video is attracting advertisers at a rapid pace, with the industry growing 40 percent in 2010 to $1.4 billion in the U.S. This year, online video ad spending is expected to approach $2 billion domestically.