Insight Bite

Increasingly, popular video channels on mainstream digital media providers, such as YouTube and Dailymotion, among others, are becoming much sought after as they offer a readymade audience, large ad revenues and a brand that speaks to million. Major digital firms, especially those involved in media and entertainment, are certainly showing interest in the acquisition of these online programmes. And now could be a good time for an exit strategy for these brands, as the acquisition climate piques. We at Acuity believe that international buyers want to gain access to new markets and customers, scarce expertise and leading technology, and this premise is certainly a major driver in the growing demand for multi-million-subscriber online channels.

1.       Maker Studios courted by Disney

Maker Studios is one of YouTube’s prime multi-channel networks, recording 5.5 billion video views a month across its many channels. The network’s strategy compiles a number of its own produced channels in conjunction with self-made big hitters that attract millions of viewers based on personality alone. One of its stars is PewDiePie, whose estimated monthly revenue from YouTube ads is between $140,000 and $1.4 million depending on viewership, counts around 25 million subscribers, more than double that of pop sensation Justin Beiber, for example. Maker Studios is reportedly attracting the interest of multinational Disney, which is apparently prepared to spend around $500 million on in what would be its largest-ever acquisition. The Californian firm has already attracted investment of $40 million from Time Warner. The network has 260 million subscribers across 60,000 channels and is diversifying its product, inking a deal with Pepsi to produce branded content and routing its content to other outlets like Microsoft’s Xbox.

2.       Warner Bros signals interest in Machinima

Machinima is probably the most well-known gaming channel in the world, attracting 170 million unique users every month and generating 2 billion views on YouTube. However, unlike other channels that serve a wide variety of audiences, Machinima knows its market and is not ashamed to stick to it. The company serves the gaming 18 to 24 year old demographic, of which three-quarters are male. Indeed, this strategy is part of its success, as this niche is increasingly appealing to major media firms. Warner Bros has already invested $18 million in the company earlier this month and could purchase the enterprise at a valuation of $600 million in the future, as its large audience is attractive for driving ad-based revenues.

3.       StyleHaul bets on fashion

Another niche programmer is StyleHaul, focusing entirely on fashion content and appealing to a growing e-commerce-focused audience online. The channel counts 76 million subscribers and has a total of 8 billion video views on YouTube. Unlike our top two choices, this channel has not attracted the huge sums or the interest of major digital giants, but it has already taken several millions in investments from German firm Bertelsmann. The company is also looking to move away from YouTube, whose business model of sharing almost half of total ad revenues of channels is certainly not loved by the StyleHaul heads. The development of a standalone site is likely on the cards.