Gaming’s $4.4 billion video-content business is why Warner Bros. wants Machinima

Traditional media companies see a huge amount of potential in gaming-related content, and that has translated into another acquisition.

Warner Bros., a hollywood and gaming behemoth, took full control over the Machinima digital-video company yesterday, as first reported by Variety. While a lot of internet media startups are struggling to find a business model that can sustain growth, larger companies are seeing this market as a way to access a younger, more connected audience. This acquisition should give WB a way to develop and distribute content specifically for a key demographic of people ages 13 to 34 who have already turned the gaming-related online-video business into a $4.4 billion market annually on YouTube, Twitch, and elsewhere, according to intelligence firm SuperData Research.

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“The acquisition of Machinima by Warner Bros. is evidence of the maturing market for online and digital video and the ongoing popularization of gamer culture,” SuperData chief executive Joost van Dreunen explained in a note to GamesBeat. “As video games have emerged as a mainstream form of entertainment, a wider variety of content-forms, including video, have started to become financially viable and, more importantly, sustainable.”

SuperData argues that WB will attempt to use its brands and filmmaking known-how to Machinima’s youthful tone because the Hollywood studio expects that the generation growing up on YouTube right now will begin to demand higher-quality production values.

Additionally, van Dreunen notes that Machima has a history of working in the fast-growing esports business. Professional competitive gaming tournaments draw in millions of viewers, and esports has developed into a market that is approaching $1 billion in revenues thanks to sponsorships, marketers, and gambling.

“Important in this acquisition is Machinima’s experience around eSports,” explained van Dreunen. “As this market grows to $892 million this year, a growing number of brands and advertisers are looking to gain access to a generation of media consumers that do not adhere to traditional viewing patterns and content. Machinima is in a strong position to provide relevant content around this growing market segment.”

It’s also unlikely that this is the last big acquisition by a traditional media power. You can expect more companies to make moves as they attempt to figure out a changing landscape that is moving away from cable subscriptions and onto the Web and smartphones.