Felix “PewDiePie” Kjellberg, YouTube's most popular star, works with Maker Studios.

Felix “PewDiePie” Kjellberg, YouTube’s most popular star, works with Maker Studios.

Media


Now it’s a done deal: As we first reported two weeks ago, Disney has indeed bought Maker Studios, the YouTube network that generates 5.5 billion views a month, for $500 million.

That number could swell up by another $450 million, depending on the way the property performs after the acquisition. So the total price could hit $950 million, but we won’t know for some time.

We also won’t know for a while how Disney really intends to use Maker: Will they get hands on and start directly managing a company that by all accounts could use some more management help? Or keep the property at arm’s length? Somewhere in between?

We can say what the deal has done for the YouTube ecosystem in the near term: It has investors interested, once again, in a sector that looked kind of iffy just a few weeks ago.

While lots of people — including several established media companies — have placed bets on YouTube networks, over the last few years a growing consensus has emerged: YouTube is the best place in the world to find video viewers, but it’s not a great place to build a business. Which is why nearly every company that has figured out how to get views on YouTube is trying to build businesses outside of YouTube as well.

Maker raised around $70 million prior to its sale, and my hunch is that investors who put money in its last round were hoping for a bigger payout than the one they got. But $500 million — or more — is still a big number, and it’s enough to change the conventional wisdom.

“It’s a ridiculous number, but I can’t say that out loud,” said the head of a large video network with a big YouTube presence. “And it’s good for me and everyone else who’s still in the sector.”

Another take: “Now people all love these things,” said an investor in multiple video networks. “It’s such herd mentality for people who never paid attention here.” Not that he’s complaining: “I’m a seller if prices are egregious.”

UPDATE: I had a quick chat with Disney EVP Kevin Mayer, who told me that his company has signed on most of Maker’s “core management” — including CEO Ynon Kreiz, COO Courtney Holt and chief content officer Erin McPherson — to multiyear employment deals.

Mayer also argued that Maker, which has been losing money, will be able to succeed even if YouTube doesn’t make significant changes in the way it sells ads, or shares revenues with its partners. “We  think there’s a good business there on a standalone basis, ” he said. “I think that Maker and YouTube are pretty complimentary. We’re happy to utilize that business as it’s currently structured.”

And what about the price? “We think we’re paying much less than it’s worth,” he says. And while lots of deals have earnout goals that no one ever thinks will materialize, Mayer insists that he’ll be happy to pay. “We are highly aligned on the earnout.  We hope they make it because it means it’s worth much more to us.”




1 comments
Si Gornick - Moovd
Si Gornick - Moovd

Maker's investors might be grumbling about their multiple, but Disney's going to be working overtime to turn this into a money-ahem-maker. The deal seems based on hope and hype rather than dollars and sense. 

Follow

Get every new post delivered to your Inbox.

Join 300,893 other followers