Viacom has revealed its intentions to go direct-to-consumer via the acquisition of ad-supported streaming service Pluto TV. The deal is worth a reported $340 million and will see Pluto TV operate as an independent subsidiary of Viacom. The transaction is expected to close in the first quarter of 2019.
Viacom has revealed its intentions to go direct-to-consumer via the acquisition of ad-supported streaming service Pluto TV. The deal is worth a reported $340m and will see Pluto TV operate as an independent subsidiary of Viacom. The transaction is expected to close in the first quarter of 2019.
Viacom is the owner of MTV, Comedy Central, Nickelodeon and Paramount Pictures. In 2017, it reported annual revenues of $13 billion from media networks and filmed entertainment businesses. Pluto TV was founded in 2013 and had received several rounds of funding from investors including broadcasters ProsiebenSat.1 and Scripps Networks in 2016.
The acquisition came at a time when Viacom’s media networks advertising revenues were under pressure. Nearly half of its media networks revenues are advertising and in the first nine months of 2018, advertising revenues dropped 3.5% year-on-year from $3.57 billion to $3.44 billion, largely due to lower linear impressions.
The ad-supported streaming market is becoming intensely competitive, with each player trying to counter the influence of global giants Google and Facebook as advertising budgets continue to focus more on cross-border growth. Alongside Awesomeness TV, the youth-targeted video service Viacom acquired in July 2018, Pluto TV will complement Viacom’s advertising strategy. Pluto TV boasts over 12 million monthly active users and over 100 channels, Viacom now has the scale and reach to support advanced advertising capabilities and give values to brands looking to use TV’s traditional support with more digitally-targeted attributes.
Not only that, the group also hopes Pluto TV can support acquisition and retention of consumers for its subscription services like Comedy Central Now. The company affiliates fees revenues, which also include subscription video on-demand revenues, only grew 0.2% year-on-year in the first nine months of 2018.
The fact that Viacom has decided to acquire a direct-to-consumer streaming service rather than building its own might give it the first-mover advantage. Rivals like NBCU, Disney and AT&T are in the process of building their own services which are scheduled to launch some time in 2019-2020. Given the time advantage, Viacom can leverage its vast content with ad sales capabilities and a device-agnostic approach to engage young audiences and attract cord-cutters.
Viacom’s digital strategy was first alluded to in 2018 when it announced plans to launch a new service featuring over 10,000 hours of library content. Since then, it had made several digital investments in 2018, including influencer marketing company Whosay, video content conference Vidcon and Awesomeness TV.