The Walt Disney Co is about to pay $500 million for one of YouTube’s largest networks- Maker Studios- and become a major online video distributor with expectations running high that the company will now be able to draw more teens into the Disney entertainment empire.
According to the article on Reuters, Disney is prepared to pay up to $950 million if Maker Studios hits certain performance milestones, with the deal expected to close in Disney’s third fiscal quarter.
Maker Studios was founded in 2009 and is now one of the largest video production networks on Google Inc’s YouTube that targets the younger millennial generation and helps produce and distribute videos to over 380 million subscribers worldwide across more than 55,000 channels. All of the Maker Studios videos reportedly reap around 5.5 billion views per month.
“This gives a presence online to reach the millennial group that is increasingly getting its video online,” said Kevin Mayer, Disney executive vice president for corporate strategy.
“And it gives us a lot of data to help promote our other businesses to them.”
According to Mayer, the deal will be “mildly dilutive” to earnings per share through fiscal 2017, with Disney’s fiscal year closing at the end of September.
The company has the support from Time Warner Investments, Upfront Ventures and Greycroft Partner and has partnered up with PewDiePie, the online persona of 24 year-old video gamer Felix Kjellberg that has over 25 million subscribers and is the single most-subscribed star on YouTube.
“Short-form online video is growing at an astonishing pace and with Maker Studios, Disney will now be at the center of this dynamic industry,” Disney CEO Bob Iger said in a statement.