Jan 24, 2019
By Nicole Bitette
Capitalizing on the growing ad-supported streaming market to create more value from existing IP.
In the ever-shifting ecosystem of streaming video, ad-supported platforms offer content creators and audiences something new: premium content for free. Of course, it’s a model pioneered by television broadcasters ages ago, but in the streaming economy, it’s a relatively rare alternative to the subscription model.
The most recent indication of this trend was Viacom’s agreement to acquire Pluto TV, the leading free service in the U.S. The deal marks a significant moment in Viacom’s evolution. At $340 million, it’s the company’s largest digital deal to-date and will expand Viacom’s distribution and advanced advertising capabilities with a direct-to-consumer platform that’s already operating at scale and is known for delivering quality programming and a “lean-back,” TV-like channel-surfing experience. It also makes Viacom a player in the $8 billion ad-supported streaming market, which is expected to double in size in the next five years.
“Our strategy is fundamentally to grow the presence of our IP into as many places as possible to create value,” said Viacom President and CEO Bob Bakish in an interview with Bloomberg Television on Wednesday morning. “We’re tremendously excited about Pluto TV. It's a differentiated asset in the marketplace, it supports Viacom’s strategy on multiple levels, and, when we look at the deal, we think it’s a tremendously attractive financial expression … This company is worth multiples of what we paid. That's the type of M&A we are focused on, and we think it is extremely value-creating.”
"This is an ad-supported platform that can work with [distributors'] broadband-only subscribers … We think that’s tremendously exciting and the next leg in our distribution strategy."
President and CEO, Viacom