Refinery29 thinks it can double revenue to $200 million despite a tough climate for digital media

  • Refinery29 has been through two rounds of layoffs and faces a tough ad market, but it has a plan to get profitable by 2020.
  • It’s doubling the number of shows it’s developing and has already sold 17 shows since the fall.
  • It’s also expanding its events and readership footprint outside the US.
  • Execs said the company made $100 million in 2018 and could double that.
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Women’s lifestyle publisher Refinery29 had raised $125 million as of 2016, when it was valued at $500 million, and investors like Turner swooned over its ability to reach millennial women who were turning away from linear TV.

But it’s still not profitable, despite going through two rounds of layoffs, in 2017 and fall 2018, when it had about 360 employees. Venture capitalists are losing interest in funding digital publishers, digital outlets have sold at fire-sale prices or lost value, and others are in various stages of seeking a buyer or merger partner to get profitable, industry watchers say.

But two of Refinery29’s cofounders and its co-CEOs, Philippe von Borries and Justin Stefano, aim to get the company into the black by 2020 by balancing advertising, now 70% of the business, with other sources of revenue.

Stefano said the company pulled in more than $100 million in revenue last year and that he believes it can get to “well north of $200 million.”

“Long term, it’s hard to say,” he said. “We believe the sky’s the limit.”

“We’re building a great independent business with a laser-like focus on serving women across the board,” von Borries said. “It’s an exciting moment.”

A big bet on video originals

Video is a big plank of the strategy and a risky one. The company had focused on short, social video, but started pivoting away a few years ago to original video that could be sold to video buyers like Amazon, Netflix, and Jeffrey Katzenberg’sforthcoming mobile video service Quibi that have been throwing money at premium video.

Refinery29 has 28 video shows in development, double the number developed last year. The company said it’s track record has been to sell 30% of the shows it develops. In this way, Amy Emmerich, Refinery29’s president of North America, who developed the video strategy, is aiming for video revenue to be 10% of total company revenue this year, from around 7% in 2018.

The company says it’s sold 17 video series since the fall. Stefano wouldn’t go into specifics, saying the buyers weren’t ready to announce them, but said one show was sold to a “very large television network” and others to “new services that are gearing up to launch next year” (a potential reference to Quibi).

Buyers want to keep ownership for themselves

In selling its original video, Refinery faces the same hurdles as other digital media companies. Prestigious buyers like Netflix often seek to own shows outright. That can make them good sources of revenue and marketing for the producers. But it limits the producer’s ability to make money off their own shows by licensing them to other platforms after a certain window of time.

Refinery also has a lot of competition as other digital publishers like Vox Media and BuzzFeed are in the same boat, trying to sell long-form video to TV and streaming companies.

Claiming to be able to sell 30% of developed shows is “pretty damn bold in this industry,” said Peter Csathy, founder and chairman of video consulting firm CreatvMedia. “It is a bit like venture investing. You hope to hit one out of 10 out of the park.”

As for licensing versus selling, it’s all about IP ownership right now, Csathy said. “Netflix, Amazon, Hulu and all other major SVOD contenders want control over their shows and films. Ownership gives them control, and gives them the opportunity to commercialize worldwide, which frequently means they would be licensing to other territories.”

The execs at Refinery29 acknowledge this won’t be easy. Having only shifted from social video last year, Refinery29 has only just started to establish itself as a high-quality video producer. This year, Refinery29 expects half of the original video it makes to be sold versus licensed, Stefano said.

“In the first year, you need to get accreditation in the market,” Emmerich said. “We’ll get more leverage with the more originals we sell.”

Stefano said no one is doing just the kind of video and reaching the kind of audience Refinery29 is and that while there are certainly more sellers out there, there also are more buyers, so it evens out. Refinery29 has focused on scripted, non-scripted, and documentary series on women and underrepresented communities.

It’s already sold “Strangers,” a half-hour coming of age dramedy, and late-night talk show, “After After Party” to Facebook Watch. It sold a film out of its women-directed, short film series, Shatterbox, to TNT in 2018, and is developing three feature-length films from Shatterbox.

Refinery29 is also looking to overseas, events to grow

Refinery29 is also expanding internationally with a French edition coming this month. Already, 38% of its site’s audience — and less of its revenue, 20% — comes from outside the US. It’s able to expand while other media companies like BuzzFeed and HuffPost have scaled back their overseas editions because Refinery29 has figured out a low-cost formula. It stopped making original content overseas last year and began focusing on articles that have broad appeal. Staff in London and Berlin adapt the content for other languages, to avoid the cost of opening bureaus in other countries.

And it’sexpanding its 29 Rooms events internationally. 29 Rooms is a made-for-Instagram series of events where creative folk and brands decorate rooms in interesting ways. The events sold 80,000 tickets last year at $40 each.

“We might be the only digital media business that can say it’s built its international business profitably this year,” Stefano said.

As everyone knows, the market for ad-supported media funding has dried up, and there’s still talk of digital media companies merging to erase their losses. Refinery29 itself was said by people close to the company to be close to combining with Group Nine, another millennial-aimed digital media company.

Von Borries and Stefano said they aren’t actively seeking a buyer but that they see media mergers as a matter of not if but when. Von Borries said it’s been meeting with potential backers overseas for funds to help it expand internationally while in the US, “there’s a very small market for raising money in media.”

Certainly, Refinery raised more money than the $60 million raised by Mic, another onetime digital media darling that sold for a fire sale. But from the Refinery perspective, they didn’t raise a crazy amount of money compared to other digital media companies.

“Considering where the business is, we’ve raised a moderate amount of money,” Stefano said.

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