Disney to Buy YouTube Video Maker

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Emphasizing online video’s growing value to the media industry, The Walt Disney Company on Monday said it would acquire Maker Studios for an initial sum of $500 million

Maker Studios which is one of the leading producer and distributor of short, entertaining videos on YouTube, many of which are geared toward millennials. Its many channels receive a total 5.5 billion YouTube views per month, which makes it one of the most successful online video companies of its kind.

Essentially, Maker has helped create a whole new universe of shows, made for the Web rather than television, and now Disney will be able to learn from them. This is could be very important since one of Disney’s key demographics, teenagers, are flocking to online video services like YouTube.

“By acquiring Maker Studios, Disney will gain advanced technology and business intelligence capability regarding consumers’ discovery and interaction with short-form online videos, including Disney content,” the press release about the acquisition said.

Reportedly, Maker will not be folded into one of Disney’s television or film divisions.  Instead, Maker’s executives will report directly to Disney’s chief financial officer, with the presumption that this will ease collaboration with multiple divisions.

The acquisition to close sometime in the spring, according to Disney. In addition to the $500 million, Maker’s shareholders may receive up to $450 million more over time, depending on whether Maker achieves its performance targets.

Approximately $70 million had been invested into Maker, including $25 million from the investment arm of Time Warner, the parent company of Maker.

The $500 million, though it could up to possibly $950 million, will set a new bar for startup online video networks. Earlier this month when the Wall Street Journal broke the news that Disney and Maker were talking, it was said that it “would mark the biggest acquisition by a major media company in the fast-growing but challenging business of producing and promoting video programming on Google’s YouTube.”

“Maker’s YouTube-centric DNA would give Disney valuable insight into how to extend its star-making machine to the still quite opaque online realm,” industry analyst Will Richmond, the publisher of Videonuze, wrote at the time. “But star-making is just half of the equation. The other, equally important half is mastering (and quite possible shaping) how online video distribution works, and what role YouTube will play.”

Bob Iger, the chief executive of Disney, said in a statement on Monday that “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 with an unmatched combination of advanced technology and programming expertise and capabilities.”

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