Defy Media was an American digital media company that produced original online content for the 12–34 age group. Originally founded in 1996 as Alloy Online (later Alloy Digital), the final company was formed in 2013 by its merger with Break Media.
On November 6, 2018, the company ceased operations after its assets were frozen by creditors leaving channels like Smosh without a company. Several former employees blamed poor financial management, while high overhead from YouTube, legal troubles, overly-aggressive expansion, and a shrinking advertising market were also described as contributing factors.
Alloy, Inc. (also known as Alloy Online) was founded in 1996 by James K. Johnson and Matthew Diamond as a holding company for Alloy, a teen-oriented magazine and website. By the time the company went public in May 1999, the website earned $15.5 million in monthly revenue and 1.3 million registered users. In January 2000, they purchased book publisher 17th Street Productions, renaming it Alloy Entertainment.
Alloy's additional early assets included Delia's (acquired 2003, spun-off in 2005), CCS.com (acquired 2000, sold to Foot Locker in 2008), and Channel One News (acquired 2007, sold to Houghton Mifflin Harcourt in 2014).
In 2009, Alloy created a division called Alloy Digital Networks to hold its online properties.
Alloy was then made private through acquisition by an investment group led by ZMC in 2010, and was re-incorporated as Alloy Digital in 2011. Within the next two years, Alloy Digital acquired Smosh, Themis Media (parent company of The Escapist and WarCry Network), Generate LA-NY, and Clevver Media. ZMC also sold Alloy Entertainment to Warner Bros. Television in 2012.
Merger and investment
In October 2013, Alloy Digital and Break Media merged to become Defy Media. The deal was brokered by RBC Capital Markets, and the resulting entity was owned in part by ZMC, ABS Capital Partners, and Lionsgate.
Viacom purchased a stake of Defy Media in 2014, in exchange for ownership of GameTrailers, Addicting Games, and Shockwave. In 2016, Defy settled a $70 million investment by Wellington Management Company, and ZMC exited from investment in 2017.
In March 2018, Defy Media laid off 8% of its headcount, exiting its programmatic advertising and video licensing and syndication businesses. Joe Bereta, creative director of Smosh, left his position being replaced by his former comedy partner Luke Barats. In June, multiple publishers claimed that Defy had not paid them for advertising. One of those publishers, Topix, filed a lawsuit for $300,000.
In July, Defy sold The Escapist to Enthusiast Gaming, and sold ScreenJunkies to Fandom.
In the Fall of 2018 former CEO, Matt Diamond, along with other employees made multiple offers to the company's senior creditor, Ally Bank, to purchase the company. Ultimately the bank rejected those offers and on November 6, 2018, Defy Media announced that it was shutting down operations effective immediately and laying off all employees at its Beverly Hills production office. Less than a day after this announcement, the company's assets were frozen by creditors.
Former employees and executives blamed poor financial practices and unrealistic investments. An over-reliance on major social media platforms and changes in market-space for new media were also described as contributing factors.
Smosh's CEO Ian Hecox stated that he was looking to find a new outlet for the Smosh brand.On February 22, 2019, Mythical Entertainment acquired Smosh.
Defy Media's former Head of Audience Development, Matthew "MatPat" Patrick, stated that the company stole $1.7 million dollars from him and other YouTubers. He claimed that the company was a Ponzi scheme and was using YouTube creators' money in order to look more attractive to outside investors.
Defy Media owned and operated online brands including Smosh, Shut Up! Cartoons, Smosh Games, Clevver Media, Break.com, The Escapist, AddictingGames.com, Gurl.com,MadeMen, CagePotato, The Warp Zone and Chickipedia, with some brands being inherited from Break Media. Each of these brands operated a dedicated website and YouTube channel in or about comedy, filmed entertainment, news, video games, viral content, girl culture, men culture, or MMA. Defy Media's online program offerings included The Single Life, The Confession, Fashion on the Fly,Dating Rules, Chasing, Style Rules,Wendy, Style Setters, and The Sub.
According to ComScore, in 2012, Defy counted more than 38 million followers among its owned brands, reaching 221 million unique visitors each month. Together, its channels reached over 80 million video viewers monthly.