As this week’s Newfront digital video ad presentations in New York highlight, most news sites have been building up video production in the past couple of years. It’s a way to tap the $70 billion in TV ad dollars some think could switch to digital in the coming years. But as sites are discovering, video is also hugely expensive to produce, making it a risky gamble.
The best example of that may be Mashable, which launched its video division Mashable Studios last summer and bet its future on the medium. The video push, which involved hiring new personnel and buying equipment, sent Mashable’s costs soaring to between $4 million and $5 million a month, according to a person familiar with its figures. Those costs were significantly higher than its annual revenue that last year reached about $40 million. In other words, Mashable was at times burning through more than $1 million a month in cash. In contrast, before it emphasized video, Mashable had made money in some months.