The video producer’s 45 different shows have a total of about 28 million subscribers and six billion views.
On a recent episode of Recode Media, hosted by Peter Kafka, Rooster Teeth co-founder Michael “Burnie” Burns talked about subscription models for web content, audience depth and breadth as a winning formula, and making money from web video before YouTube came along.
You can read some of the highlights from the interview at that link, or listen to it in the audio player above. Below, we’ve posted a lightly edited complete transcript of their conversation.
If you like this, be sure to subscribe to Recode Media on iTunes, Google Play Music, TuneIn, Stitcherand SoundCloud.
Transcript by Celia Fogel.
Peter Kafka: I’m here with Burnie Burns, the co-founder of Rooster Teeth. Normally, Burnie, I say Digital Media is a real company with a funny name, now I have to say Burnie Burns is also a real person with a funny name.
Michael “Burnie” Burns: It is, it’s not my real name. My real name is Michael Burns.
Really? You wrecked my whole opening!
When I moved from New York to Texas, there were too many Michaels, so ... Listen, I wanted you to get the facts right is all.
Rooster Teeth is a real company.
Rooster Teeth is a real company, yes.
Also a funny name.
Also a funny name. And an early nod to the early days of online video. It was the first catchphrase that our audience ever latched onto.
I was doing some serious googling before I came here.
Yeah? Trying to find the origin?
Yeah. You tell me what the origin is.
It’s a great mystery, right? So everyone always asks us that: What does Rooster Teeth stand for? And there’ve been a number of times over the years where I’ve actually regretted the name of the company Rooster Teeth because it’s just such a silly name. But — can I go a little blue? Is that okay?
Yeah, yeah, that’s what I’m ... I want to elicit the words from you. I didn’t want to say them, I want you to say them.
So the very first video we ever put out for “Red vs. Blue” was the trailer for “Red vs. Blue.” The voiceover guy who’s doing the trailer gets in an argument with the guy who’s doing the subtitles, and that’s the joke of the trailer: They start arguing back and forth. Subtitle guy calls the voiceover guy, in subtitles of course, he calls him a cock bite. Audiences latched onto that and they started ...
It’s a good thing to latch onto.
Yeah, exactly. And then they started calling themselves that.
Cock biters.
Yeah, exactly. They called themselves the Cock Bites. So when we formed the company, “Red vs. Blue” took off and we wanted to form a company that was over that. I went to the state of Texas — I live in Austin, Texas — and I tried to register Cock Bite Productions, and the state of Texas said, “You’re not doing that.” So I came up with Rooster Teeth.
That’s something you cannot do in Texas, even though it’s a free republic.
Yes, exactly.
Weird.
Well, there’s limitations.
So now that we’ve talked about cock biting [BB laughs], let’s back up and talk about Rooster Teeth, what Rooster Teeth is, for the handful of the people in our audience who do not know what the company does. You guys make videos, primarily.
We do. We have probably been making videos for the internet longer than just about anybody.
So you guys are pre-YouTube, if I have my facts right.
The first video we ever had that went viral was in 2001.
Pre-YouTube.
And then we started our long-running web series, “Red vs. Blue,” we started in 2003. That’s three [sic] years before YouTube.
So you started off making a web series. “Red vs. Blue” uses the characters from Halo.
That is correct.
And you create your own comedy based around that.
It’s actually a little distinction, but we don’t use the characters from Halo; we use the graphics from Halo. So Master Chief is the well-known character of Halo; we don’t use any of those characters and repurpose them, we just use the images of these parts.
If you’re a casual gamer, or even less-than-casual gamer, you go, “Those look like the Halo dudes.” And that’s the idea.
Right, or they look like robots, you might even think that. There was a guy who told me he discovered “Red vs. Blue” because he found a CD at his local pool — somebody had burned our episodes — and he went home and watched it. He thought it was a cartoon about drunk robots.
It’s like the AOL distribution method back in the early ’90s, they mailed those out.
Exactly right.
So let’s pull even further back before we go into “Red vs. Blue” and everything else you make. Broadly speaking, the company makes videos for a big audience of people who are what age, what kind of stuff? Just describe it broadly to someone. You run into someone on the street: What is Rooster Teeth?
We can go over the big numbers that everybody does. So for instance, on YouTube, which is a huge platform for us, we have about 28 million subscribers across all of our owned and operated channels, and we have about six billion video views and we produce about 45 different shows. We’re a little different than most online video companies or people who have a channel on YouTube in that we tend to focus more on scripted narrative content.
If I’m describing your audience, and I want to generalize, can I call them dudes? Can I call them young dudes? Can I call them millennials, gamers?
Gamers is the term that’s most often used to describe the audience.
So you’re doing stuff about games. Not always, though, about games, but for people who like games, people who will know the difference between Master Chief [and someone who is] not Master Chief.
Well, yeah. And also, I think, people who just grew up in the general culture of gaming and internet now. I reject the term “gamer” because I fell into that category myself a lot. It’s like if you look at HBO, what they’re doing, and they’re making “Game of Thrones” and they’re making “Westworld” and they’re making these higher-production-value, longer-form series, you wouldn’t say to them, “Oh, so you’re making television shows for movie fans.”
It’s like, what’s a movie fan? Everybody’s a movie fan. That’s how I feel about gamers. Everybody’s a gamer, but they tend to call that out for people who play games. But everyone has a game on their mobile phone, everybody does that.
But it’s a niche, right? Everyone’s playing games, but if your exposure to games is Candy Crush, you’re going to come to some of the Rooster Teeth stuff and not really understand what you guys are doing. So it’s a niche, and it’s a big niche and a growing niche.
Yes, absolutely.
Whereas you could come to “Game of Thrones” and not know anything about Dungeons and Dragons or orcs and trolls and you would get some sense of what they’re doing.
Yeah, and I think “Westworld” is a great example. “Westworld” is a show, [but] if you look at the way it’s structured it’s like a game. It’s like you’re watching a show based on an MMO but that’s not part of it. And then, of course, there’s all the game inside of it and everything else, not to give any spoilers. But it’s actually, I think, one of the best video game shows that’s not presented as a video game.
I’m like five episodes in so I gotta do some catch-up, so no more spoilers for the rest of this episode, please.
Don’t read any fan theories, don’t read any fan theories.
It sort of leeches in anyway, though.
It does.
Which is kind of good for you, right? I mean the point is ... not the point, one idea is that gaming culture has sort of suffused general pop culture. So even if you’re not familiar with Halo or any of the Halos or — I’m long removed from console gaming. You still have some sense of what people are doing and talking about. You’ve been exposed to it, maybe even ambiently, at one point. And that benefits you guys.
And I think there’s the common misconception that because, for instance with “Red vs. Blue,” that it’s based on a video game, that it’s about the video game. It’s not at all. The way we wrote it it’s more like “Stripes” in space. It’s more a sendup-of-a-military-bureaucracy humor. There’s no inside jokes about the games or anything like that. So there is this common misconception that if you don’t understand the game, you won’t like it. It just speaks to the same sensibilities of people who like sci-fi and geek culture.
What was the flip side? Duncan Jones came in — what was the movie he did?
“Warcraft.”
“Warcraft.” So, I saw that. Love Duncan Jones movies. Didn’t love “Warcraft.” In part, I think, because even though he was trying to straddle for Warcraft fans [and] people who didn’t like Warcraft, I don’t think that movie would appeal to you if you didn’t know what Warcraft was.
It definitely would appeal more to people who like Warcraft but I think people who played World of Warcraft for thousands upon thousands of hours also didn’t like the movie because it didn’t match up to their expectations.
So no one liked it unless you were in China where it apparently made a ton of money. So I guess they’re going to make more Warcraft movies.
It really had a huge impact on the way that people look at China and the movies that they’re willing to fund.
Are you guys going to make a lot of stuff for China?
Why not? Let’s do it. We’re just going to follow in the path of Warcraft.
[laughs] Let’s talk about how you got into this business. If you go to WIkipedia, you look up your name, there’s you and five other people who are listed as co-founders. Did you guys all get together in a room and say, “Let’s make videos for gamers?”
Pretty much.
Who we don’t want to call gamers.
It’s kind of a long story, but it basically condenses down to: I was a computer science student at the University of Texas, and this was just a couple of years after Robert Rodriguez had made El Mariachi for $7,000 down in Mexico.
Classic indie film made on a credit card. Still holds up really well today.
Yeah, and then that turned into the Desperado franchise. He was able to get that picked up on Miramax and it launched his huge career, now has multiple franchises. So we were very inspired by that idea that in the late ’90s, you could go out, make a movie, and set the world on fire.
And you could literally just sort of make it on a credit card based on whatever money you had and resources you had around you.
As long as you were scrappy and you had a lot of passion, yes. That you could make a movie on the cheap and you could get it out there.
So you went to college not thinking you were going to make movies, but at some point you say, “Hey, that looks fun, let’s do that.”
Oh. I went to college to be a doctor, because I identified that as …
You took a terrible turn!
[laughs] According to my parents, you bet. I changed from pre-med to computer science. But that was because the internet had kind of come out of nowhere. When I went to college, freshman year, I’d never heard of an email address. And then I got one my junior year, I had to get one for one of my courses, and then the internet, as you know, just exploded really out of nowhere. It was just a couple of years. And I was in college during all of that.
I wanted to get involved with that, switched to computer science, because I already had so many hours of biology pre-med [that] I had a lot of spare time on campus. [I] wanted to learn about filmmaking and I met a film student, Matt Hullum, one of our co-founders, and we talked about making a movie together. I figured I could go sit in film classes, or I could go make a movie, and by the time I’m done with the movie I’ve learned everything that I need to know about making movies.
So what was the first movie?
So we made a 16mm film …
Wow!
We shot it on film, and it was 105 minutes, called “The Schedule.” And it took us about 13 months to shoot it and then edit it. I built us a nonlinear editor so we could digitize footage. That was really rare at the time.
And we thought, by the end of that 13 months, “Okay, that’s it, we have our movie, we’re done.” But that’s when we learned that’s only your tickets into what is the real game of film, which is distribution and getting it out there and letting an audience see it. And in the late ’90s, the way that looked was it was independent film festivals. So we had to take our movie, send it to a selection committee of about seven people, and they would tell us whether or not we could then show it to a room filled with 200 people.
Right, at various college campuses across the country, one after the other.
Exactly. We have some very nice rejection letters from some of the most prestigious film festivals all over the world. But about that same time, because I had built that nonlinear editor and I could digitize footage, I started capturing video footage. You know, DV video was big at the time. Started making little shorts with my friends. Matt had moved away to Los Angeles and started a successful career in film — he dusted himself off from me and moved on to Hollywood. I stayed in Austin and I made a viral video where we were making fun of the old Apple “switch” ads. Do you remember those? Where people would stand up against a white background and talk about …
Right, right, yeah. This is the pre-John-Hodgman era.
Yeah, there you go. And the days of Ellen Feiss, if you remember her. She was kind of like one of the first viral meme hits as a person online. Anyway, we made this video, it went viral, people were sending it all over the place. There was no YouTube.
And “viral” meant you literally sent it to someone and said, “Watch this.”
That’s exactly right. They would send it to someone in an email, that person would send it to five other people, and that’s where the term “viral” comes from. It was shared in that way and would spread that way.
The movie you made, the original movie, that was called what?
“The Schedule.”
Can I see it? Did anyone see it? Has it been seen? Can I dig it up somewhere?
We had the opportunity to sell it and we decided we wanted to hold onto the story. Because we made it for $9,000 and I think we were offered about $25,000 for it.
So there’s an original unseen version of it.
We’re actually developing it now into a new series.
But the original one is buried in someone’s backyard.
It’s literally on VHS tapes underneath my bedroom. It’s just sitting underneath my bed.
Awesome. I’m sorry I interrupted. So you were explaining how a viral video went viral before YouTube.
So then, Matt was in LA, and we had put this video up and it started getting shared all over the place. And Matt was the manager of a visual effects company. He was walking around, he went to the guy’s desk who’s never doing what he should, he’s always looking at something on the internet. And this day, he was looking at a video of our friend Gus. And he listened to the video and realized it sounded like my writing, so he called me and he said, “I just saw this video on a guy’s computer at work, and it seems like something you would have made.”
And I said, “I put that up yesterday after work at my tech support company. I put it up at five o’clock.” So this was to us, this was ... You would hear this story very commonly today, but this was a huge lightbulb moment for us, because this was all those walls of distribution just falling down. Here was a video that got all the way across the country to somebody that I would have wanted to see it. And it got to him before I could call to tell him to watch it. And look for it. He’d already seen it.
You can share it over the internet.
So that was a huge moment for us. So we were really all-in, at that point, on digital media.
Again, if you are not an old person, it’s hard to imagine how mind-blowing this was back then. Because now, of course, it’s literally just a keystroke and it goes out.
Right.
Or you don’t even set a keystroke, it just shows up in your Facebook feed even if you didn’t ask for it. And prior to this, you literally had to hand someone a tape or mail them a tape. “You should go see this thing.” They spread really slowly.
Literally. We have people that we talk to in the audience where most of the people who watched the early seasons of “Red vs. Blue,” they watched it at someone else’s house or they were handed a CD with episodes burned on it.
Yeah, you would tell someone, “Hey, I have a cool tape of whatever thing you can’t rent at a store, come over and watch it.”
And this was the era of — the only other videos online at the time, really, were Flash animations. And we were so far in front of the online video revolution that you couldn’t watch a video in a web browser. You had to download a file and watch it in a separate player. There was none of those …
Right. Again, this is ancient history, but web video used to be a really difficult thing because if you wanted to make this stuff — this is what screwed up a lot of the early web 1.0 companies, they had to support a zillion browsers and a zillion different machines, and then the end product was super crude stuff you waited a long time to watch.
Different codecs and everything else. The other thing, too, is [that] we had to host it. There’s no YouTube, so we had to host all of our own videos.
So “Red vs. Blue” happens when? How far into that process?
So “Red vs. Blue” was an idea I had for a show to use a process called machinima, and there’s a company called Machinima. It actually started as a type of animation where you use 3-D engines, typically video games, and you do real-time animation. So we can do five minutes of animation with a team of about three people, these were my buddies in Austin.
[On] April 1 of 2003, we put the first episode online, and we had to educate people on how to download it. We also had to educate people that this was a series, that this wasn’t just a one-off video, which was what most of the internet was — that there’s going to be an episode this week, there’s going to be an episode next week, and this is a show. We put the first one up. It got linked at the time on Slashdot and Fark and Penny Arcade.
Fark, wow.
Yeah, Fark. And it just destroyed our servers. Three thousand people watched the first episode, 250,000 people watched the second episode. And by the end of the month, the fourth episode, we were at a million views a week.
And what was your ambition back in 2003? Was this a side project, or was this something you thought was going to be a business?
It was a fun video that I made for my friends to make them laugh, and then we put it online. We had some expectations for it as a project, but all of those were surpassed probably by about the second day of “Red vs. Blue.” It was as close to an overnight success as I’ve ever encountered.
And then, at what point does that become a business for you?
I’ll tell you exactly the moment it becomes a business. Because we had to host all this stuff, and because this was before YouTube, we couldn’t click a button or a check box and monetize our videos. There were no pre-roll advertisements, because YouTube didn’t exist. There was not this huge catalogue of online video that people were selling pre-rolled ads against.
So for us, it became a huge challenge. We were hosting the video. Every time somebody downloaded one of our files, it cost us money. So this huge hit was a huge problem. Gus came to me. He was in charge of all of our technology. He said, “Got our bill for the first month,” or did a calculation for what our bill was going to be. It was going to be $13,000.
For your hobby.
Yeah, for our hobby, our nighttime hobby after work. after our tech support jobs. So very quickly we realized we had something that people wanted to see, that they wanted more of, we just had to figure out a way to get them to do it. So then I started working on the business model for Rooster Teeth and “Red vs. Blue,” that’s where Rooster Teeth came into play. Because I also wanted people to know, if we’re building a business on this, it’s not about this one show, that we’re going to have other shows as well. So I started to build the vision for Rooster Teeth at that point in time. And then our first dollar we ever made was subscriptions, asking the audience to contribute to the show.
Since we’re talking about money, this is a good time to stop and listen to our fine sponsors who make all this possible. We’ll be back in a minute.
That is a rockin’ segue.
Good, right?
[ad read]
We’re back here with Burnie Burns of Rooster Teeth. Cock Biter would still be good for a secondary business.
[laughs] You know, I have to say, about brands in general, I have come to appreciate my own brand more over time. Because I didn’t realize, when I made it in 2003, how important having a uniquely searchable term would be. And if you’re looking for Rooster Teeth, you’re not going to find anything else. You’re going to find us, and that’s it.
Whereas Cock Biting, who knows.
Who knows!
Maybe you do know what, but a bunch of things might turn up.
And once we had a subscription service, I didn’t want “cockbite.com” appearing on people’s credit cards. That’s just too long of an explanation.
[laughs] Yeah, it could go either way.
They make videos on the internet, it’s fine. [laughs]
[laughs] Sure they do.
The internet and the business around the internet toggles back and forth between give it away for free, sell it, give it away for free, sell it. Which business model should we have? You had started off by saying, “We’re going to sell this stuff to you.” Were you selling actual access to the video, or were you selling something else?
One of the most ubiquitous things on the internet, which was a huge annoyance to us early on, was — it took us a week to make “Red vs. Blue.” We would write it on Monday, we’d record the audio on Tuesday and Wednesday. Thursday and Friday we would make the video and then we’d post it very late on Friday night, like 2 a.m., staying up to encode it.
So we’d work all week on this thing, it was enormously difficult, we were really concerned with what the audience was going to think about this episode versus the last episode. We’d post it, we’d see people watching it, we’d see it start to get downloaded. The comments would be there, they’d be blank, we’d be like, “What’s the first comment, what are they going to say? What are they going to say?” And of course the first comment was, “First post.” Always. That is the one universal law on the internet. If there’s a comment box, the first post is always going to be some jackass going “First post.”
Twitter got rid of that though, right? People don’t do “first” on Twitter anymore, they do something else.
No, they don’t typically do that because it’s so immediate, right? So the thing about the first post is people can’t believe they got there before anybody else. And they want to stake that claim, right?
Amazing accomplishment.
[laughs] It is an amazing accomplishment. But we were annoyed by that, as artists, but on a business level, we were saying, “Okay, if we take a look at this, this is what the audience is telling us they value. This is important to them, to be first.”
So what we did with our subscription model was, we built it in such a way that if you paid $20 for the season — that’s the way it was when we first started, now it’s a monthly subscription — if you play $20 for the season of “Red vs. Blue,” you would get a DVD, we would burn all the episodes and send them to you. And you also get early access to the episodes as they aired digitally. So we would put it out on Friday, and then the rest of the public would get it on Monday. We call that “the economy of first.”
Yeah, I like it. And then if you’re trying to put a business head on this, you’d have different things going on, right? One is, you’re windowing. You paid for it, you get early access. And also it sounds fancy, but it’s a fan club. You like the stuff a lot, you’re going to get a memento from us.
And it looked a lot like crowdfunding does today. We didn’t call it that back then, but if you paid $10, you got just the digital layer. If you paid $20, you got the digital layer plus the physical media at the end of the season.
And if you didn’t do that, you could still watch it for free. Were there ads? No. There were no ads.
No, there were no ads. You just had to be patient and it could come out on Monday.
So in the early days, how big was the paying audience?
Well, it kept us afloat. That and t-shirts, which were kind of the currency of the internet. A huge inspiration for me was Homestar Runner. They supported their entire flash animation empire based on t-shirt sales, from what we could tell. So we started selling those as well. In the early days, before our first season, we couldn’t have physical media until the first season was done, so until that point we were about 50/50, I’d say, subscriptions and merchandise. Maybe a little bit heavier on merchandise.
But the size of that audience, paying. Single digit thousands, tens of thousands?
In the first few months we were getting... I mean, I remember in particular, we would get a couple people who would just over-donate. We had one gentleman who gave us $500 and we thought it was a mistake, and he goes, "No, you guys have given me more laughs than a night out at a comedy club with my friends, here you go."
“I’m a superfan.”
Yeah, and that’s when we discovered there’s people like that out there who really want to support things they love. And I’m one of those people myself. So in the first year, we had enough to where we could fund everything and we could host all the files and then have enough to reinvest in the second season and make it a little bit bigger as well.
And so you don’t want to tell me how many people were using it then. How many people are paying now?
We have over 200,000 monthly subscribers now.
Who are paying money. It’s what, three bucks a month?
Yeah, those are our monthly paying subscribers.
And it’s still really the same business model, right? They get early access to stuff, they get — probably not DVDs, I’m assuming, but other physical objects that they can use to show off.
Our subscription service now is a lot more sophisticated. We had the digital layer as well for our first program, which looks a lot more like a subscription-video, on-demand service, and then we also have tiers where there’s what we call the double-gold layer, another inside joke with our audience. And that is where they get a crate every month, a box, where we put in different items from the Rooster Teeth universe and the Rooster Teeth store and they get a physical product every month as well.
And do you think they’re paying for it because they want that stuff, or because they love you guys and it’s like having an NPR tote bag and they want to fly the banner?
That’s exactly it. Some of it’s exclusive merchandise that we only put in that box, as well. And then some other merchandise that we get from our partners, and it’s just — you never know what you’re going to get in the box every month, and I think the exclusive items are probably the biggest part of it.
So you guys start off by saying, “We’re going to sell subscriptions to this stuff, we’re going to ask people to pay for the content." That’s what, 2003? 2004?
We started in April 2003, we were asking by May 1 of 2003.
So there was a culture of the internet then, and it continues to be that “no, this stuff’s going to be free, and you can’t ask people to pay for this stuff.” Were people coming up to you and saying, “You can’t sell this stuff, it doesn’t make any sense to sell this stuff, wise up?”
There are always those voices. As soon as we announce it, and of course it was a nail-biting moment when we say, “Hey, here’s the deal, we have to be able to afford the bandwidth cost on our server to be able to do this, here’s what it’s going to cost, if you do this, we’ll do this." And then there were definitely some people who were like, “I’m out, bye. Money’s involved. Nothing on the internet should cost any money,” and they were gone.
Right, so you weren’t even requiring them to pay money. It wasn’t like they had to get behind a paywall, they just didn’t like the idea that you were attaching dollars to it at all.
No. Especially on the internet at the time. In fact, for us, it’s funny to think about, we’ve been doing this so long, there was a long period of time after we could have added pre-rolled advertisements to the episodes where we didn’t. It was a decision for early content creators whether or not to put ads on the content they were posting online. Nowadays, that’s the first step that everybody takes is adding those pre-roll advertisements.
Yeah, but I think there’s some push to get rid of those again and we’ll go back to paying for it and …
Only because they’ve decreased in value, but yes, yeah.
Yeah, there is that. So there’s video ads in the stuff? I was on YouTube looking at a lot of the stuff the last couple off days. So I saw pre-rolls there, you eventually made some money from that.
Sure. If it’s on YouTube, that’s the No. 1 way to monetize on YouTube.
Yeah. So: Nerdy side question. I remember going to some online video thing years ago and Allen DeBevoise was there from Machinima, and he wanted to explain what he did, and he showed “Red and Blue.” So at what point did you get connected with Machinima, which eventually became a company, which eventually just got sold to Warner Brothers?
It started with a horrible period of brand confusion. Because we were the standout hit of the genre of machinima, then there was this company called Machinima, and we were constantly confused …
So you were distributing your stuff through Allen DeBevoise’s company called Machinima.
Never.
Never, oh.
No. But there were times when our videos appeared on their site, but we never distributed with them.
[laughs] So he should not have been showing your video as an example of his work.
[laughs] Yeah. Well, there was a period of time where we did — after a while of brand confusion, we were just like .... And Machinima pioneered, to their credit, I think they pioneered the MCN model. Especially with the growth of YouTube, we actually ended up partnering with them for ad sales, because the relationship was such that we had so much brand confusion, and it didn’t seem to be going away, and it was better to try and figure out a way to have that benefit us in some way. So we had some ad partnerships with Machinima for a short period of time. I’m not bitter.
That was really just for me I guess, and maybe if Allen DeBevoise listens to this. So you guys predate YouTube, you have a successful business, at least the makings of a successful business pre-YouTube. YouTube explodes 2005, 2006 …
I still remember the first time I saw it.
What did you see first?
My buddy who made this series “Ask a Ninja” showed it to me. He was like, “This thing is going to be huge.” I took one look at it, I was like, “This site looks like garbage. [laughs] This will never be anything.”
Looked like garbage, worked really well.
It was a great prediction!
Yeah, you should not have shorted their stock. [BB laughs] They sold a year and a half into it to Google and the whole idea is ... and there weren’t ads, they had huge bandwidth bills, server bills, and they had no advertising. But they get sold to Google, and it’s very clear they’re going to turn that into an ad-based business. So at some point, do you think, “Now that there is going to be an ad-based business here, we should move into that and move away from subscriptions?”
Well, because there were not all these entities around when we started, and our dot-com was where we focused, initially our evaluation of all these platforms was to see them as competitors. Because why would I want to put my videos up on YouTube, especially before they had a partner program?
Right, in the very old days they didn’t share ad revenue. First of all, there was no ad revenue. And they didn’t share anything with the people who put the stuff up there.
And to their credit they were enormously progressive for creating that model. But for a long period of time they didn’t have it. Like, my buddy I was just talking about, who ran “Ask a Ninja,” that ran on YouTube, millions of views pre-monetization. It was just a timing thing, really, for the success of some of these series.
And you know, we looked at them as a competitor for a long period of time. Frankly, we were probably a little bit slow to get on YouTube. We didn’t get on YouTube until 2008 or 2009, and we ended up having to play catch-up. But it just reached a point as a brand where YouTube, you had to be part of the conversation. If you wanted to be in online video …
If you want people to see your stuff, you go to the biggest video website in the world and put it up there. And then, once it was up there and freely available on this thing with huge distribution, what did that do to your subscription business? Did it boost it, did it knock it down because it was so easy to find?
For RoosterTeeth.com, the subscription layer has always grown at a very steady pace. There probably was some cannibalization of having the videos up on YouTube and people just thinking, “Oh I’ll go to YouTube and watch it.” But then also, the more notoriety that we got, the more eyeballs that we had, that always grew the subscription layer. However, for a really, really long period of time, and I don’t know that we’re beyond it yet, people who were on YouTube didn’t leave YouTube. They didn’t click away to go to anything else.
Even though you can put in all sorts of buttons and “please subscribe” and “please visit our site, click this button here.”
Right. It’s better than it used to be, but it was always very hard to get people to leave YouTube.
So a YouTube viewer is a YouTube viewer, they don’t go to this other thing. I think it’s definitely true for ... I think people really hope that if they put a clip of “SNL” or “Jimmy Fallon” up online, they’ll eventually move over and watch it on TV. It turns out no, no, they’re going to watch it on YouTube, that’s where they want to watch it. And that’s the same for you guys.
Right. And it does kind of reduce the exposure benefit of being on YouTube if you’re trying to build an actual business.
Some of the stuff I was looking at the last couple of days is on YouTube Red, the subscription service.
Right.
How’s that working out for you?
Great. We were wrapping up, this is going through a number of years later, we just recently produced our first feature film as Rooster Teeth, got back to our core feature film roots.
Lazer ...
“Lazer Team.” Right. So we were at the end of our postproduction cycle. We had already shot the movie, and we were about eight months, nine months into postproduction, and then we learned that YouTube/Google were launching their huge subscription platform. And that’s just one of those serendipitous moments. That’s a window in history that doesn’t come up that often. They wanted to make “Lazer Team” one of their launch titles, and they put it up on billboards in Times Square and everything else. It was enormously successful for us to be on YouTube Red.
And it’s successful because they’re putting billboards of you guys up on Times Square, because they’re giving you money, or both?
Well, we raised $2.5 million for “Lazer Team” via crowdfunding, so we had a $2.5 million sci-fi movie. What can make or break movies at that level is marketing. And YouTube launching YouTube Red, they were willing to put the marketing muscle behind “Laser Team.” We had a great movie, we just needed to let people know we had a good movie. So they came out and watched it. We were able to fulfill all of our crowdfunding obligations, and then we were also able to show it to the YouTube Red subscribers.
And was that something where, prior to that, you guys might have thought you’d put it in theaters, you’d sell …
We did.
You did.
Yeah, we did that. When we went to crowdfund “Lazer Team,” a big part of Rooster Teeth is the engagment, how we approach our audience. We ran a crowdfunding campaign for an original movie that nobody had ever heard about before. We did it on IndieGogo, and we broke the record for the highest-ever funded project on Indiegogo with $2.5 million. At the time, of course, people were asking, “How will this be distributed?” And I said, “Well, this movie’s going to take 12 months to make. I can’t tell you how people are going to be watching content in 12 months. Even sooner than that things could rapidly change. So I’d like for it to be in theaters, but we’ll see.”
Sure enough, over the time we were making the movie, we learned about a company called Tug that allowed us to do crowdsourced theatrical screenings. So we actually had a huge opening night all over the globe for all of our fans. We had “Lazer Team” screenings in theaters in 300 different cities and set the record for crowdfunded theatrical release, too.
And do you think your audience wants to see it on a big screen because it’s a cool mark of validation, or because they actually distinguish between watching on a phone, watching on a laptop, watching on TV, watching on a movie screen, and those are different experiences they have different values on.
We tend to have a younger, millennial audience — and I hesitate to use the word millennial because they tend to react negatively, which I understand because it’s usually said in such a pejorative context. But honestly, the social aspect of it, I think, more than anything else. Because we’ve outsourced so much of our social interaction, we’ve discovered in the past few years that live events are such a huge touchstone for people, and that’s theatrical screenings [and] our Let’s Play groups that play video games for some of our personality-driven content. We actually do tours with that where they play videogames and sell out theaters like the Hammerstein Ballroom and theaters all over the U.S.
And when I go to the theater, what am I watching?
For Let’s Play Live in particular, you’re watching our video game personalities. In some cases they’re playing video games and you’re watching them do that.
“eSports.” I just did some air quotes around it.
It’s kind of the like ... the best comparison between eSports and Let’s Play is, like, the Harlem Globetrotters of eSports. So you don’t go to watch them be tremendous at the game, you watch them because …
They goof around.
… They’re entertaining, yeah. And then they do skits in between, and it’s just a comedy show. It’s a rock and roll concert for millennials, essentially. And then we also have our live events. RTX is a big convention that we have in Austin. Last year we had 70,000 people show up to our convention in Austin.
So your fans think of going to a Rooster Teeth movie screening as not something necessarily where they’re like, “I need to see this on the big screen,” but “I’m going to go there because there are going to be other millennial gamers like myself.”
Mm-hm. They want to share Rooster Teeth with the people in their life, which is why we made “Lazer Team” as a big motivation for it. You can’t hand someone a 14-year box set of “Red vs. Blue” now, which is going into its 15th season. You can’t hand someone that series and go, “Here, watch this, you’ll understand.” People are like, “That’s 14 seasons, I’m not starting that.”
But you can hand someone a DVD or send them a file and say, “Watch this movie, these are the guys that I watch every day.” So sharing that is a big part for people. Sharing that experience with other people who also enjoy it? That’s been so decentralized for people, it’s been outsourced to the internet. And for gamers in particular, you know, you used to sit on the couch next to your friend and you’d play Nintendo. And that’s how you would form relationships with your gamer buddies. But because of the internet and Xbox Live and online gaming, you can play anybody in the world, but you don’t ever have that social experience of sitting next to people. People are clamoring for that, I think.
Well, that’s reassuring, that people want to still be around each other in 2016.
Not everybody, that are definitely some people who don’t. [laughs]
Some people you don’t want to be around.
[ad read]
We’re back here with Burnie Burns from Rooster Teeth. You guys sold the company in 2014.
Right.
Did you make a lot of money?
Yes.
Good for you.
Thanks.
You sold it to — what was it called then? Chernin Group?
Otter Media.
Otter Media.
Which is a joint venture between Chernin and AT&T.
So Peter Chernin, former No. 2 at News Corp, big respected guy in Hollywood …
And really, we were acquired by Fullscreen which is — Otter is Crunchyroll, Fullscreen, Rooster Teeth, etc.
Right, so you got bought by Fullscreen, which is part of Otter Media, which is basically the combination of Peter Chernin and AT&T, [who] own the company that you work for now.
That is correct, that is a fair statement.
Besides getting a big chunk of money, hopefully it’s life-changing money, how else did that change your life when you guys sold the company?
This was our hobby that turned into our career. So we are, even after 14 years, still riding that wave of passion. There’s a lot of times when we have to pinch ourselves. We just all enjoy coming to work.
You’re in the videos.
I’m in the videos.
You put yourself in a lot of these videos.
Right. And my main passion is actually as a writer. So sometimes I act and direct under protest.
So you would do this for free?
I don’t know if I’d go on record and say for free. [laughs]
Yeah, yeah, yeah, exactly, I knew you wouldn’t say that. Because your boss is here.
But us being able to produce more and more content, that was the big thing for us. And really the decision of the acquisition for us was — when we got started in this in 2003, we thought that we were late to the video game. It sounds weird to say it that way. We were late to the video world.
To the video industry.
The video industry. Because we had watched the way the print industry had been disrupted in the mid-’90s by the rise of the internet and HTML pages. And then, as a function of bandwidth getting a little bit bigger and people could transfer larger file sizes, we saw how the music and audio industry was totally disrupted by Napster and other things like that. And that was 1999. So it seemed inevitable that the video industry, and also film and television, were going to be disrupted by video on the internet.
It’s coming.
It’s coming. And we started in 2003, we thought we were late to this. It turns out we were about eight years early. And I give a lot of credit to Netflix when they converted from a mail-DVDs-to-your-house service to subscription digital. That was, I think, the moment when everybody suddenly was …
They pushed the future a lot closer.
Yes. So that inevitability was imminent. So we wanted to be able to compete in the world of Netflix, Hulu, Amazon video. We wanted to be able to make that kind of content and compete on that level, and that’s why our relationship with a company like Fullscreen just made sense.
So they write you guys a big check personally, and then they say, “We’re going to spend a lot of money helping you produce more and more stuff.”
I should have had you negotiate the deal, by the way. It’s bigger every time you say something.
Was it life-changing?
Was it life-changing?
Yeah.
I would say yes, but my life didn’t change because I was already doing what I wanted to do. It was my passion. If I was going to retire, I would retire to do these kinds of things. I’m not going to retire to go play golf. This is what I want to do.
But you could retire. I always try to push people to talk honestly about money.
Sure.
As honestly as they can.
Yeah, I could retire.
Good for you.
Thanks.
It’s cool to do something you like and then get paid for it.
If you want to talk honestly about it, too, it’s like also having started as someone who was in a spare bedroom with four of my friends, over 14 years one of the big challenges is, and I recognize it’s hard to identify with, but how do you stay motivated and how do you stay hungry? I always have to find new ways to challenge myself and to hit new goals. You always have to set those for yourself. There’s nothing in me that just wants to walk away and do — what?
So what’s the 2017 goal for Burnie?
For me, the main thing for 2017 is I would love to get back to directing. The series that Matt and I started when we were in the basement of a television station in college, when we came up with the idea for “The Schedule,” I’m super excited about developing that into a series.
And then a big thing for me is, Rooster Teeth is one of those rare online entities where we now have multiple generations of talent that our audience loves. Kind of like an “SNL” model that we follow. And developing some of those people into huge personalities, that’s a huge goal for me. Because some of these people like Gavin Free who runs the ... do you know the channel Slow Mo Guys, by any chance, on YouTube?
Nope.
Does high-speed photography, makes some of the best videos I’ve ever seen online. I’ve known him since he was 15. He was watching “Red vs. Blue” videos in his house in the U.K. So developing them and seeing their careers blossom, that’s a huge thing for me as well.
So there are people who are Burnie fans, they want to see you.
I would hope so.
And you do podcasts and you talk about your personal life, right? To some degree. Probably not the money part.
No, way more than I should. Once the mic turns on and we start talking in the podcast, it’s all old friends. Sometimes we forget the mics are there.
And is that because you think people want to hear that, or it’s just what you like to do?
I like to be honest, definitely, as honest as I can be. And I was always a big fan of Howard Stern growing up, and I’m a big believer in that model. Rooster Teeth, the culture of the company, is a part of the show. It’s why a lot of people tune in, because they see the way we all interact.
Right, and you’re not an old person.
I’m 43.
You’re 43.
In the gaming world, in eSports, you age out at about 22, and I was 29 when I started “Red vs. Blue.”
And I’m 45, and when I got to VidCon, which is the big YouTube fan-club industry thing, I feel really old, because the base there is 13- to 14-year-old girls. It’s mind-blowing and really interesting to watch, but you definitely get a sense [that] no matter what YouTube says, their culture is teens and tweens. Seems like you guys probably have a broader audience, or at least if they’re willing to accept you as a 43-year-old guy on camera, they’re more accepting of a wider swath of people.
Well, it’s interesting that you say broad audience, because our strategy is actually not what we consider to be a broad strategy, but a deep one. We go in really deep with the audience that we have, and so I think the reason why they’re able to tolerate me as a 43-year-old is because they’ve already spent so much time with me and we have so much interaction. We consider media to be a two-way conversation.
That’s well put.
It’s hard to compare ourselves to any company in particular, because there’s not a lot of companies in our tier.
When I think of YouTube, or I think of video companies that were successful or are successful, it’s almost always a teengager, someone who’s in their 20s, someone who’s aging out of their 20s and is anguished about that but doesn’t really want to accept that. [BB laughs] Or, like, the Smosh guys, who are sort of boy-band dudes and now they’re sort of aging out of that. They’re trying to figure out how to create a version of Smosh that will exist beyond them at some point. You guys seem like you don’t really have that problem.
Pivoting more to a brand. And Smosh is one of those rare ones, like us, where it’s a brand. Typically, on the bigger YouTube channels, they’re named after the person. It’s all-in on one person, essentially.
Right. One day PewDiePie won’t be PewDiePie, right, and will his audience go with him?
You know, he’s now talking about deleting his channel when he hits 50 million subs.
Yeah, he’s going to bum people out if he does that.
Well, he’s trying to fight the changes on the YouTube algorithm. We don’t really talk too much about that, because YouTube is a big part of our business, but we rely more on our dot-com and YouTube’s just an aspect of it. So if YouTube needs to make algorithmic changes to make the platform healthier as a whole, then that’s their business.
You just nod your head in respectful silence.
Yeah, exactly.
Most digital video companies today say, “Well, we’re not just doing stuff on screen and we’re not doing stuff on a phone, we’re eventually either in TV or we’re going to get to TV.” Is that an aspiration for you guys?
We’ve had a lot of opportunities over the years to take, for instance, “Red vs. Blue,” individual properties, to television. We just choose those opportunities as they make sense. We’re very format-agnostic. Even when we made “Lazer Team,” which is a feature, that sounds like something you would put into theaters, and when it came time to release it, it made sense to put it in theaters and then to put it, a few days later, on a subscription and video demand service. But that’s the way we approach all our distribution for content. We make the content, we make the content as good as it should be, and then we determine how we should distribute it.
So I get why, if you’re a digital video company, you’d want the stuff to go on TV, because there’s money there. Oftentimes a lot more money than there is on the internet. A slightly less cynical version of it would be, well, we can reach a much bigger audience. But again, from someone who’s viewing it from 10,000 feet or more, it seems like I would assume most people who are viewing this stuff and want to view this stuff are getting it on the screen they want already, and they’re probably not watching television, which is why all these TV companies are interested in the stuff you guys and other people are doing. And it seems like this desire to port the internet to the television is probably not going to work.
Right. A lot of creators suffered for a long period of time because they would get a television pilot deal, they would abandon their web audience — because a lot of times they took it for granted, it was so easy they think to build that web audience — they would disappear for six months to work on what would ultimately be a failed pilot deal, and then they would come back to the web and say, “Hey I’m back.” And the internet has an exceptionally short memory. And a lot of people abandon ship.
They’ll stay with you, but then, if you go away, they’ll forget about you.
As long as you keep going, it’s very momentum-based. That’s why you’ll see a lot of vloggers who do daily vlogs and the grind just kills them, they just feel like they can’t stop doing it and they just keep going.
Right, because you can’t get off the treadmill.
No.
You don’t want to disappear from view.
So for us, we had opportunities to go to television with “Red vs. Blue.” Like in 2008 we had some of these opportunities, as early as then. And we looked at it as — we never wanted to abandon the web strategy, because like we said, we knew everyone was heading in this direction. We knew everyone was eventually going to be sprinting toward the ground on which we were standing. And we spent those early years building up our presence in online video, when it wasn’t that interesting and it wasn’t that sexy, and we spent all that time doing it and establishing ourselves. We weren’t going to give that up.
Early in the conversation, I said “millennial,” you didn’t twitch. I said “gamer,” you said, “I don’t like that term, I’d prefer not to call myself a gamer.” I’m wondering if any of that is ideological or you’re worried about the connotation of Gamergate and any sort of notion that some people who are gamers are also, now, sort of awful people as well who harass people online, send nasty Twitter messages.
Oh, no. I mean, we dealt with some of that. I actually did a tweet recently where I had to realize that Gamergate inadvertently prepared me for the 2016 election, the campaign.
Right, I’ve heard this theory before. If you don’t know what Gamergate is you’re probably going to have to pause now and go look it up.
We’ll see you in two years.
But basically it’s a handful of people, probably, being really vile and awful to another group of people, and a lot of people standing on the side going, “That’s weird.”
But the people who are on that side, who are mixed in with the vile people, there’s another group of people that are saying that the reasons why they were doing it were for more noble reasons, to put pressure on media.
Ethics in journalism.
Ethics in journalism, there we go. So it’s the same thing as when I talk to my friends who voted for Trump, and they say, “Well, I didn’t vote for Trump because of all the racist wall-building stuff, that’s not why I did it. Or the revisioning of gay marriage. That’s not why I voted for him. I voted for him for these other reasons, more noble reasons.” I say, “You gotta understand, for most of the world they can’t drill through those deal-breakers to get to the reasons why you did.”
Right. Amazingly, they do connect you with the racist people.
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