Did digital publishing suddenly lose its mojo? Both Buzzfeed and Mashable were in the news this week over financial challenges even as they continue to pivot hard into online video. It’s possible that even video isn’t automatically a key to success for the new publishing platforms, or perhaps not enough of a key for companies (and their investors) to count on the pivot to generate the riches they expect.
Mashable, a site that specialized in writing about social media, sold this week for an estimated $50 million to the venerable publisher Ziff-Davis. ZD, which turned 90 in August, owns sites and publications such as PC magazine, IGN and AskMen.
The sale price, while no doubt welcome to Mashable (and its investors), still represents a big comedown. Less than two years ago, Mashable was valued at $250 million, bolstered by a $15 million investment from Turner. The Turner investment was intended to help finance Mashable’s pivot to online video, and led to a wave of layoffs and the departure of executives such as its chief strategy officer. Despite the investment, the company reported a $10 million loss at the end of 2016.
And over at Buzzfeed, perhaps the most relentless chaser of video trends and publishing among all the new media players, sources told the Wall Street Journal that the company would fall $50 million to $70 million short of revenue targets for this year. That miss, as much as 20 percent of the company’s $350 million target, almost certainly will put a spike in plans for a much-rumored initial public offering in early 2018.
Buzzfeed issued a statement that didn’t directly address the Journal’s reports of missed revenue targets. Instead, the company said it had higher “revenue, content views, unique visitors, and time spent,” expanded into programmatic and other ad products, and diversified its revenue streams, including developing film and TV properties.
The company also has laid off some journalists while aggressively moving into video, especially in verticals such as Tasty and Nifty. Its e-commerce wing, BuzzFeed Product Labs, even released a smart appliance, the $149 Tasty One Top, a Bluetooth-enabled induction hot plate that is supposed to become available this month (it’s still in preorders here). All that expansion and experimentation and embrace of new products still hasn’t moved revenue enough, which may mean the company (and its investors) just has unrealistic expectations.
Even with the revenue challenges at Mashable and Buzzfeed, however, a video-first strategy still seems to make sense. Trends that emerged over the past few years – like changing consumption patterns, faster mobile networks and more capable smartphones – are continuing to make video, especially mobile video, a fan favorite. But the question is whether video is not only necessary but sufficient for online-publishing success.
In fact, diversification – offering not just (relatively expensive) video, but text and even audio content, live events, licensing and yes, e-commerce – is more likely a strategy for survival and success. Maybe every publisher should try to cook up their own version of the Tasty One Top, though they’re totally going to miss this Christmas season.