by Mark Fontecchio, Scott Denne
With the $340m pickup of Pluto TV, Viacom broadcasts its desire to provide more online video and gain insights about the viewers who watch it. The target offers an ad-supported streaming service with more than 100 channels and claims over 12 million monthly active users. That media content and viewership data could help Viacom as it pushes into streaming video in search of higher ad rates through granular audience targeting.
The $13bn media giant dipped into streaming video M&A with the $17m acquisition of AwesomenessTV in July. Today’s larger deal signals Viacom’s appetite for more digital-first and digital-native content. Price isn’t the only dramatic difference between today’s transaction and that earlier buy. With Pluto TV, Viacom gets a fully backed streaming service that hosts both scheduled content and on-demand videos on a variety of channels, rather than a single channel or studio. Reaching for Pluto also gives Viacom access to millions of users, many of them younger viewers who don’t consume much traditional television. That amount of proprietary audience and viewership data can be immensely valuable, as the company recently cited increased ad rates due to improved ad targeting.
Surveys show that more people are signing up for online video services, often at the expense of traditional TV. According to 451 Research’s Voice of the Connected User Landscape, roughly one-fifth of consumers have either dropped traditional cable and satellite TV providers or have never subscribed to them in the first place. The same survey found that 57% of consumers now pay for at least one online video service.
According to 451 Research’s M&A KnowledgeBase, media firms have infrequently acquired software and internet businesses, having only printed about 20 deals in each of the past two years. Still, we anticipate that more broadcasters and studios will expand their acquisitions of video services or underlying technology as they seek ways to generate a direct link to their audiences to offset declining TV viewership and massive investments in original, niche content from Amazon and Netflix.