Viacom Inc. has entered into a definitive agreement to acquire Pluto TV, the free, ad-supported streaming television service in the U.S. that features over 100 linear channels plus on-demand content and 12 million active monthly users. Viacom wants to expand its direct-to-consumer activities and its presence on next-generation distribution platforms like connected TV, and views the proposed acquisition as a way to grow its advanced advertising business, as well. Viacom believes it can help accelerate Pluto TV’s growth, including globally, and sees a near-term opportunity to create a Spanish language version.
According to Bob Bakish, President and CEO at Viacom, “This marks an important step forward in our evolution. As the video marketplace continues to segment, we see an opportunity to support the ecosystem in creating products at a broad range of price points, including free. To that end, we see significant white space in the ad-supported streaming market.”
Viacom believes its existing brands, global reach and what it calls a vast and “unencumbered library” will ensure Pluto TV is a leader in the free streaming market. The company says Pluto TV will now benefit from Viacom’s strategic decision to curtail the licensing of large library packages to SVOD providers over the last two years. In other words, Viacom has the digital rights to fill out the Pluto TV offer.
The deal is worth $340 million, to be paid in cash by Viacom. The transaction is expected to close in Q1 (2019). Pluto TV will operate as an independent subsidiary of Viacom and its CEO and Co-Founder Tom Ryan will stay in post.
Pluto TV is a multi-genre service that includes news, movies, lifestyle, cartoons, comedy, sports and gaming. It is available via a long list of popular connected TV devices, as well as mobile Android and iOS. Over 60% of the active user base is watching on a connected TV device or Smart TV – something that may have impressed Viacom when it was assessing the advertising potential for the platform. Pluto TV has around 130 partners providing programming today.
Viacom has provided a comprehensive list of reasons why the proposed acquisition makes sense. In their words:
It creates a scaled DTC/D2C (direct-to-consumer) offering
- It provides Viacom with direct access to millions of consumers
- It serves as a very important marketing engine to acquire and retain consumers for Viacom’s targeted subscription products, including Noggin and Comedy Central Now
- It provides a new distribution outlet for Viacom Digital Studios’ content, beyond the existing AwesomenessTV channel on Pluto TV
- It promotes Viacom brands and content that live on other platforms, such as Pay TV, theatres and beyond.
It meaningfully enhances the advanced marketing solutions business
- It immediately adds billions of high-quality addressable advertising impressions, which will further strengthen Viacom’s ability to serve advertisers and their agencies
- It brings an additional audience that is young, gender-balanced and hard to reach.
It adds an important offering for distribution partners
- It further expands Viacom’s ability to partner with distributors by adding a premium, free service for broadband-only and other subscribers
- It serves as a customer acquisition and retention tool for certain tiers of Pay TV packages
- It represents a significant opportunity for all types of distributors, including mobile operators.
It unlocks Viacom library value
- It creates an incremental opportunity to monetise Viacom library product. Importantly, Viacom’s current-window programming will remain in the Pay TV ecosystem on its branded networks
- It benefits from Viacom’s strategic decision to curtail the licensing of large library packages to SVOD over the last two years.
It creates a global opportunity
- It leverages Viacom’s international reach, infrastructure and capabilities. In particular, Viacom sees a very compelling near-term opportunity to create a Spanish language offering, capitalising on Viacom International Media Networks’ library, in both the U.S. and Latin America.
It accelerates Pluto TV’s leadership in free streaming TV
- It strengthens key areas of Pluto TV’s offering for consumers by including Viacom’s content across kids, African-American, reality and comedy
- It gives Pluto TV access to Viacom’s brands and marketing capabilities to grow audience and usage
- It delivers incremental value to Pluto TV’s existing content and distribution partners.
“Since our launch less than five years ago, and particularly over the past year, Pluto TV has enjoyed explosive growth and has become the category leader in free streaming television,” says Tom Ryan at Pluto TV. “Viacom’s portfolio of global, iconic brands and IP, advanced advertising leadership and international reach will enable Pluto TV to grow even faster and become a major force in streaming TV worldwide. Viacom is the perfect partner to help us accomplish our mission of entertaining the planet.”