Out Of Pure Curiosity What Are The Premium Funds Used For?

So, I've been a premium subscriber for awhile now. It never really occurred to me until now that I have no idea what the funds they receive from memberships are actually used for. I think I remember hearing jeff mention that alot of it is used to provide stuff for premium members (I could be misremembering that though) but It doesn't seem like they do alot of events?

I thought it might be for equipment and stuff, but brad saying they have budget folks during the rig stream made me thought that was all cbs.

It doesn't bother me, and I'm more than happy to just give gb my money in the hopes of keeping the lights on for as long as possible. I'm just curious since they were acquired by cbs and they don't seem to talk about that kind of stuff much.

In any case, it doesn't really matter I guess as long as we get awesome gb content! ? hopfully folks who have been here a little longer than I have will be able to provide some context ^_^

They're used to keep the site profitable. Like any business, they need to make more money than they expend. Ad revenue alone isn't enough to cover salaries, equipment, utilities, etc. Subscriptions cover the difference.

Yes, CBS signs their checks and provides their equipment, but if Giant Bomb didn't make CBS more money than those expenses cost, they would shut the site down or sell it.

yeah, as "we" moved to CBS it became less apparent to me what it was used for. Seemed to make a little more sense during the Whiskey Media days. I suppose the premium memberships make up for where the budget doesn't?

The premium membership system proves their financial value to CBS (including growth, not just current subscribers), and CBS no doubt adjust their budget accordingly. It allows them to exist rather than paying for anything. Matt Rorie revealed on a UPF that GB is profitable now which surprised me greatly, but that means they're in good shape and allows them to keep going.

I think they mentioned before that they actually lose money on some longer content because hosting costs exceed ad revenue.

Premium is just the primary means of funding the site. Jeff and the team have spoken many times about how the traditional ad-funded model is struggling with stuff like ad-blocking and what seems like a lower acceptance of ads on the internet in general. Without Premium they'd have fewer staff, less equipment and would not be able to do a lot of the stuff they do.

CBS hasn't really made a difference. CBS bought Giant Bomb because it was a profitable and growing brand and because the Premium model makes it more sustainable than other game sites, and they'd expect that to continue.

@ll_exile_ll: that makes sense! I guess I never really thought of it like that, what with cbs being the giant behemoth that it is ?

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My understanding is that Giant Bomb doesn't have quite as much site traffic as the huge sites like Gamespot, so the money generated from ads isn't enough to actually cover the annual costs of Giant Bomb (video hosting costs, staff salaries, etc.).

In the Whiskey Media days, they had a combination of venture capital/startup money from Shelby (I think that's right?) and then started also getting money from premium subs.

After the move to CBSi, I think it is expected that the money they bring in from premium subs (and the smaller amount generated by ads on the site) covers all of the site's budget. CBSi doesn't just have endless cash reserves to dole out to its staff. The sites are generally expected to generate a profit.

Premium funds the site. Without it, they would be a less profitable business. That could mean anything from no Ben or Abby, to fewer trips, to not being owned by CBSi, to no more Giant Bomb. Jeff has said over the past few years that the business is growing and doing better, and that's because of premium, as opposed to shrinking ad revenue.

I see Premium as what the others have already described but also as a way to have a profitable site without advertising everywhere. Just look at the other CBSi sites like Gamespot and CNET, they're a complete mess. CNET, specially, is an atrocious website. There's some good reviews there that gets lost on a confusing website made to make you click on an ad or watch a sponsored pre-roll video.

If it wasn't for premium, all the features would be free but Giant Bomb would be flooded with ads everywhere and the content would lose quality because they would have to make everything clickbait-y to make more money out ads.

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IMO, the subs works just like a patreon without tiers of different funding.

In a general broad way, it’s to show CBS that the little operation that giant bomb runs is a profitable one for the company

I completely own the fact that this is total armchair assumptions, but It took them a while to really get where they are at now, and on the latest brad run stream he said he didn’t want to go to pax and him not going makes them save money on their quarterly budgets.

So their quarterly budget, while not small, is probably not amazingly big, but Jeff has said that the site continues to grow and is doing great, so I always assumed that the premium service money goes to CBS, and then CBS takes their cut and then allocates the rest back to GB via a quarterly budget

So in short, even owned by a company, the premium service helps let them do their thing in peace and stay in control with minimal CBS overlord interference.

I'm pretty sure all the profit would go to cbsi and then redistributed back into the site, i would assume whatever "budget" that is allotted them is pooled from those profits as well as staff salaries etc. As long as the site is profitable it is more likely to remain autonomous, otherwise i wouldn't doubt we'd see this site merged with gamespot and whatever else and turned into everything else that is already on the internet right now.

Its to buy Rorie's new monitor.

It buys Alex more copies of Mass Effect 2.

Like other have said, I would guess it goes to salaries and hosting costs primarily, which keep the site profitable and in business.

I doubt anyone is going to comment in any official capacity, and I am very wary of armchair guesses about these kinds of things. Having said that, I am skeptical that membership fees cover costs.

I have no idea how many paying subscribers GB has, but I do know that political site Talking Points Memo is at about 23,000 members paying $50-$60 per year. Let's say $55/member/year on average (which is probably high), and that works out to $1,265,000/year. I'm really just speculating here, but if GB had 23,000 paying members, I think that would be a teeny tiny budget for an operation with 8-10 employees in two offices in the two most expensive cities in the US.

A single GB employee must cost *at least* $100,000 (including salary, benefits, employment taxes, etc), and that's almost certainly an underestimate. Factor in that premium membership fees are not tax-free donations; taxes have to be paid on that income. And then there's equipment, travel, service subscriptions, and all sorts of other costs.

So either they have a lot more than 23,000 members (certainly possible), or CBS is underwriting GB because they see it as benefitting their bottom line in other ways. I suspect that no matter how many members they have, the latter is likely the case, and I would hazard a guess that that was the case at Whiskey Media as well--remember, Whiskey Media had VC money, and they would've been foolish to not spend it on their properties.

This is all just guesswork of course, please feel free to ignore!

Still hoping it is all going into a giant pot to fund the inevitable raid.

Well, Jeff saw this van...and he NEEDED to have it.

@lylebot: I can't imagine CBS underwriting Giant Bomb to a large extent for 5 years. For a short while sure, but not long term. Someone here mentioned that Rorie said they're profitable and Jeff has mentioned how they're doing better than ever financially.

They gained about 10,000 members from launching premium in September 2010 to June 2011 (technically for all of WM, but they said when they sold the site that nearly all members were there for GB). I'd wager they are substantially above that now, although it's obviously impossible to say for sure. Traditional ads definitely still pull in significant revenue and if their podcast is as popular as believed the ads on the Bombcast could potentially pull in a decent six-figure sum. And presumably stuff like shirts and merch does make some difference if small.

But still, if I had to wager I'd agree and say it's probably that they have more than 23,000 subscribers.

I'd like to think at least 20% goes to the cleaning crew of their building so they don't ruin the traditional GB office aesthetic of "just moved in but too lazy to fully unpack".

In a sense, it _is_ all CBSi - the subscriber funds aren't necessarily siloed off for GB to use however they want. The CBSi business folks are going to say what they can spend (on CapEx, staff costs etc.).

In a broader sense, it lets GB focus on the content people want to see, rather than the content that will draw the most traffic/ad clicks (see, e.g., GameSpot for how that _could_ go).

Pays for bandwidth/hosting, some equipment I imagine that they may not otherwise be able to justify in the budget, etc.

And it justifies the staff continuing to not only work but expand. No way would we have two new (awesome) personalities on the site without premium revenue.

They never say, but they put a lot of money into the separate office dedicated to the Extreme Girl Advice Line which goes from midnight to four AM PST. All you have to do is call (800) 256-BOMB. It'll only cost you a small fee of $13.55 for advice, but they also don't mind you using the free off-topic forums page.

Proof of concept. It's the same reason magazines contain ads yet are primarily available through a subscription service. The advertisements pay for the product but the subscriptions evidence its value. In fact, Giant Bomb is essentially a magazine in the most classic sense of the word.

Judging from other video game websites, having paid subscriptions probably helps Giant Bomb from having to resort to:

• Clickbait news articles and headlines, especially when the information being conveyed could've fit in the headline itself, but the headline remains vague, forcing you to click on it
• Having video players that auto-play in those news articles, so it can show you the pre-roll ad, so it can count as an ad view to advertisers
• Requiring your personal information and e-mail in order to get video game demo keys
• Having to write articles about the latest Game of Thrones episode
• Having to post picture albums for the top 20 best cosplays from expos and conventions
• Having more tolerance for forums trolls from the moderators, so instead of dwindling your audience and nurturing a better community, you have more people using your site
• Hiring less qualified on-camera talent, because they could visually appeal to a portion of your demographic
• Restricting creative freedom from their editors and producers, or not having enough monetary incentive, causing them to move on to other places, and creating a revolving door of editors and producers coming and going every few months

@rikiguitarist: This.

Think of most websites as a free to play game, where Giant Bomb says pay this set price up front and we won't bog you down with the BS that others have resorted to using to stay afloat. The fact that they are not dependent on a 3rd party video service is awesome.

It's to make a profit for CBS, but it also keeps CBS at a certain distance.

Say an exec has an idea for the site it's far easier to tell them to screw if you're making a profit directly from the consumers on a regular basis. Obviously if the profit isn't big enough that wouldn't work, but it seems to be fine.

Not the sole purpose for subs, but I'm sure it helps.

I don't get why people think being owned by CBS means they wouldn't need to make money. CBS isn't a charity. If they weren't profitable then Giant Bomb wouldn't have been able to expand into New York or build their new studios. A subscription means they can keep doing what they are doing. They are beholden to their fans, not advertisers.

Keeping people employed.