“[I]t’s with a heavy heart I announce that Rooster Teeth is shutting down due to challenges facing digital media resulting from fundamental shifts in consumer behavior and monetization across platforms, advertising, and patronage,” wrote the company’s general manager, Jordan Levin, in a memo to employees on Wednesday.
Rooster Teeth, owned by Warner Bros. Discovery, was one of a number of digital studios that gained traction during the rise of web-based video and YouTube, including Maker Studios, Fullscreen and Machinima. Many such companies were acquired by larger media firms and eventually either shut down or folded into other operations.
Rooster Teeth had more than 45 million subscribers to its YouTube network, 1.2 million unique monthly visitors on its apps and more than 4 million community members, according to its website.
The company began in a spare bedroom of one of its founders, Burnie Burns, in Austin, Texas, in 2003. The long-running comedy series “Red vs. Blue” helped fuel its growth. Rooster Teeth came to Los Angeles when it was part of YouTube’s creator program that funded Rooster Teeth’s first film, “Lazer Team.” Rooster Teeth is headquartered in Austin but has production staff in L.A.
Some digital media companies that relied on tech giants including Facebook and YouTube to drive traffic have struggled to adapt to changing algorithms.
In October, Rooster Teeth removed some of its programs, including “Red vs. Blue” and “Camp Camp,” from YouTube and instead made them available only on its own website.
“YouTube revenue is just not cutting it for us anymore,” said Kerry Shawcross, a Rooster Teeth showrunner on an Instagram video in October.
“We know that’s frustrating for some of you, but that’s just the reality of what we need to do,” Shawcross said. “Animation is hard and it’s expensive … for the most part, our shows rely on you.”
Rooster Teeth has gone through several owners. It was bought by Fullscreen in 2014. When the deal was announced, Rooster Teeth was heralded by Fullscreen’s chief executive as “one of the strongest and most authentic media brands in the world amongst 18-34-year-old, male-skewing audiences.”
Fullscreen was later acquired by Otter Media, which became part of Warner Bros. Discovery. David Zaslav-run Warner Bros. Discovery has been cutting costs and killing selected projects, including “Batgirl” and “Coyote vs. Acme,” to save money. There have been severe layoffs across the entertainment industry as companies face pressure from investors to be more profitable and navigate changes in consumer behavior.
“Warner Bros. Discovery thanks Rooster Teeth’s groundbreaking creators and partners, and the strong management team, for their many years of success. Your passionate and loyal fans are testament to your achievements,” Warner Bros. Discovery said in a statement.
Rooster Teeth’s Levin said in his staff memo that the Roost Podcast Network will continue to operate.
Rooster Teeth’s intellectual property and licensing rights are also being discussed for sale.