Can spending almost $1 billion for a company many in Hollywood had never heard of a year ago actually be a genius move, and a bargain to boot? That’s the provocative question out of a conference panel today featuring leaders of some of the biggest multi-channel networks on YouTube. The consensus: a definite ‘Yes,’ from a group that included top execs at MiTu, Machinima, Dance On, All Def Digital, Nylon, Gracenote and Collective Digital Studio.
“It’s an interesting question whether (Maker’s) price was too low,” said Allen DeBevoise, Machinima’s CEO and an early investor in seemingly every notable MCN or analytics company out there. “It turns out that these things are incredibly valuable (because of) their ability to reach a giant audience around the globe that’s really important to Disney in an area where it previously could get no traction at all. Bob Iger really struck gold with that move.”
Disney bought Maker last spring for $500 million with the potential for investors to earn up to $480 million more depending on the company’s continued performance. Speaking yesterday at the same conference (Digital Entertainment World, in Los Angeles), Maker CEO Ynon Kreiz said the company represents between 55,000-60,000 YouTube creators, and views have doubled from 5.5 billion per month when the deal closed to 11 billion per month now.
Roy Burstin, the MiTu CEO, said given the growth happening across all the online video companies, Iger’s deal will look very good two years from now, but likened to another scoffed-at billion-dollar deal a few years back.
“When Google spent $1 billion on YouTube (in 2006), that really caused a lot of the same reaction. People couldn’t believe it,” Burstin said. “I agree that in two years Bob Iger will look like a genius” because of the Maker deal.
Part of what’s driving growth now is an explosion of new audiences on sites other than YouTube, though it remains important to all the MCNs as a baseline part of their evolving and expanding businesses. Facebook is the big opportunity with its new ability to play videos natively in posts, but Twitter is not far behind. And smart companies need to create other content customized for Vine and Snapchat as well, the panel members said.
Traditional media are buying either part or all of many of the biggest MCNs, to acquire a foothold in this new world, and also to get some expertise where they have had little. Of particularly note are European companies such as ProSeibenSat.1, which bought Collective Digital Studio, and RTL, which bought fashion MCN StyleHaul. For them, the MCNs provide a foothold with U.S. and global audiences that they couldn’t otherwise have because of foreign-ownership restrictions on broadcasters.
When moderator Peter Csathy of Manatt Digital Media asked the panel if they thought the Maker deal was indeed a genius move by Iger, all seven raised their hands. As he noted dryly, given all the companies’ own greater ambitions, no bias in those answers at all.