Jeffrey Katzenberg’s Netflix-meets-YouTube video service raises $1 billion

Jeffrey Katzenberg has secured his first $1 billion in financing for his mobile video startup NewTV, which promises to deliver YouTube-length video clips made by A-list talent. Katzenberg, the DreamWorks cofounder and former CEO of DreamWorks Animation, announced NewTV last year as part of his new media company WndrCo, and has been steadily putting the pieces of the company together with characteristically splashy announcements. Earlier this year, former Hewlett Packard CEO Meg Whitman was named NewTV’s CEO.

The latest investment round, led by media companies like Warner Bros. and Disney, gets NewTV closer to the starting gate, and Katzenberg has been reportedly making the rounds in Hollywood, talking to directors and producers about creating content for the platform. The idea is to create a Netflix-like mobile service loaded with premium, episodic content. According to Bloomberg, each series would cost between $5 million and $6 million per hour. Each episode will be about 15 minutes long.

In essence, Katzenberg is marrying the Netflix and YouTube models in the hopes that viewers will be willing to pay for more polished video content on the go. Imagine being able to see short episodes of a series like Game of Thrones on your phone (an idea that has occurred to AT&T as well).

Almost two decades ago, Katzenberg played with this idea when DreamWorks launched its short-lived, online startup Pop.com, which promised to feature content created by top Hollywood artists like Ron Howard and Katzenberg’s partner at the time, Steven Spielberg. In many ways, Pop.com was ahead of its time, launching more than five years before YouTube and well before widespread broadband and wireless. Today, no such roadblocks exist, and Katzenberg is seizing the opportunity to argue that short-form digital content need not be DIY.

Katzenberg is one of the few old-school entertainment moguls who has been able to successfully segue into the digital age—IAC chairman Barry Diller and Otter Media founder Peter Chernin are among the handful of others–and at DWA he made the savvy investment in the YouTube channel AwesomenessTV. Indeed, no one questions his ability to doggedly pursue his vision or his understanding of young audiences.

But there are still many questions surrounding NewTV, such as whether millennials that have been raised on Snapchat, Facebook, and YouTube actually do want highly produced videos—and more importantly, whether they’ll pay for it. YouTube has experimented with this with its subscription service YouTube Premium, but the company has never revealed how big its audience is.

Then there’s the issue of securing talent. Both Snapchat and Facebook have attempted to woo Hollywood players to make content for their platforms and have been met with meh levels of success, in part because of what they’ve been willing to pay (or rather, not pay). Katzenberg is planning on being more generous, but it will still mean convincing directors and actors to take fee cuts.

The price of a NewTV subscription also remains unknown, as well as where and how it will be distributed.

Then there’s Whitman, an accomplished business leader, but one who has never led an entertainment company nor who has any real experience in the youth market.

But for now, players are lining up to bet on Katzenberg. According to CNN, Katzenberg’s $1 billion war chest was made possible by Disney, 21st Century Fox, Warner Bros., Entertainment One, and other media companies, who collectively invested about $200 million. The rest of the funding has come from institutional investors in the U.S. and China.