With Disney Buying Maker, Do All Big Media Companies Need To Up Their YouTube Game?

Apr 1 2014, 7:10pm CDT | by

With Disney Buying Maker, Do All Big Media Companies Need To Up Their YouTube Game?
Photo Credit: Forbes Business

When Disney announced last week that it was buying Maker Studios for $500 million (which could end up being as much as $950 million if the company meets certain targets), it sent serious ripples throughout Hollywood. The YouTube multi-channel network hosts 55,000 channels, boasts 380 million subscribers and 5.5 billion views per month. But it’s probably best known for channels like PewDiePie, a Swedish “bro” who makes silly videos about video games like the one below. PewDiePie alone accounts for 25.5 million of Maker’s subscribers. Now he’s part of the Disney family.

Though some are questioning Disney’s strategy, the buy does give the massive media company an instant, solid online business. You’d think that considering the amazing content at Disney’s fingertips, everything from Mickey Mouse to Sofia the First to The Avengers, that building an online business would have been easy. But the company has always struggled online, most recently laying off 700 people in the Interactive division. With one simple purchase, the company now dominates online.

How Disney ultimately uses Maker remains to be seen. The Mouse House could use the business to push its more ‘tween-focused properties or use Maker as a kind of farm team to find new talent. The acquisition also gives Disney important information about who is watching what YouTube content. According to the Disney press release announcing the acquisition:

Disney will gain advanced technology and business intelligence capability regarding consumers’ discovery and interaction with short-form online videos, including Disney content.

Disney is the second big media company to buy a multi-channel network. Last year DreamWorks Animation bought AwesomenessTV for $33 million (the price could end up as high as $117 million depending on Awesomeness hitting certain targets). Insiders say there’s no doubt that other media companies are now kicking the tires at  YouTube companies. Machinima which mostly features gaming videos aimed at young men, recently scored an $18 million investment from Warner Bros. Germany’s ProSiebenStat.1 is buying a 20% stake in Collective Digital Studio, another MCN. Companies that could still potentially be bought include Fullscreen and possibly Defy Media which was recently formed from a merger between Alloy Digital and Break Media.

“Every major media company and brand now views YouTube as a critical part of their programming and marketing mix,” says Brent Weinstein, head of digital media at United Talent Agency.

One media company that many people believe will soon be in the market for an MCN is Viacom. The home of Comedy Central, Nickelodeon and MTV, Viacom just settled a $1 billion lawsuit with Google over whether YouTube had an obligation to take down copyrighted material. Reportedly, no cash changed hands in the settlement. Because of the lawsuit, much of Viacom’s online strategy has been separate from YouTube. Sites for The Daily Show and South Park have become destinations of their own.

But with 1 billion unique visitors every month, YouTube has to play a central role in any media company’s overall online strategy so it can grow and promote shows and offer brands more attractive advertising opportunities.

“Viacom already has great content,” says Michael Kassan, owner of MediaLink.  ”You look at the activity in the last 30 days, it’s hard to believe Viacom isn’t going to be looking at something.”

There are no reports that Viacom is considering any purchases at the moment and a spokesperson from the company had no comment. The media giant does have a YouTube presence through things like an MTV channel but with only 113,000 subscribers and 450 video uploads, it’s not a very active presence. (In contrast, Animal Planet has 840,000 subscribers and has uploaded 3,212 videos.) Media companies are signalling they need something more robust and many are finding that at this point, buying is easier than building.

Follow me on Twitter at DorothyatForbes.

Source: Forbes Business


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