Just a few months after embarking on its European journey, US online video aggregator Pluto TV has been swallowed by media giant Viacom for the tidy sum of $340 million. As Viacom’s traditional cable channels like MTV and Comedy Central verge on disappearing down the sink hole altogether, the company has been desperately trying to piece together an OTT video strategy, for which Pluto TV is an interesting choice – and a fitting one at that.
Yet the underlying motive here is again fundamentally one of the declining value of the mega production studio and transition of power to the online content providers. This was highlighted in November when Viacom inked another exclusive deal with Netflix, and this week the point was hit home beyond doubt as Netflix became the first internet company to join the Motion Pictures Association of America (MPAA).
Now then, we say Pluto TV is a fitting purchase for Viacom due to the ad-supported service’s unconventional approach to a modern problem, one which seems to be working wonders going by its user numbers. Founded in 2013, Pluto TV essentially turns streaming devices into traditional-looking pay TV services, but with a twist – by providing a choice of channels with programmed schedules. It eliminates the hassle of choosing a program, bringing thematic, curated, original channels which it says are adapted to meet the sensibilities and affinities of the local audience, as well as some branded content. Viewers can simply let the TV play whatever is scheduled to be on and not waste time browsing through shows or searching for a particular show, then a specific episode. Pluto TV offers 100 channels in the US.
Viacom’s experience in the linear space and its worldwide connections should prove invaluable in Pluto TV’s expansion, although Viacom is known for its aggressive cutbacks and only last August started dissecting teen media firm AwesomenessTV, to the tune of a 50% workforce reduction, after acquiring the company for an estimated $100 million.
Faultline Online Reporter said at the time of Pluto TV making its European debut in October, through a deployment deal on Sky’s new Roku devices dedicated for streaming Now TV, that it was Comcast’s way of bringing a little taste of US cable TV to the UK, and now Germany and Austria too, in what might be a sneak preview of what’s to come under US cable ownership. This is an idea which has clearly resonated with Viacom.
Pluto TV is now claiming some 12 million monthly active users, a figure we are skeptical of given the company’s track history of fudging its numbers, after back-tracking on its claim of 10 million MAUs last year which saw it eventually concede the real number was closer to 6 million MAUs.
The acquisition comes about four months after Viacom CEO and President Bob Bakish declared his company isn’t attempting to build a Netflix rival. “We see the SVoD space as becoming crowded and quite capital-intensive. At the same time, we see a great opportunity to grow through this ad D2C business and through the studio production business, where people all around the world are looking for content in the episodic space; in the film space; in the shorter space,” he said at the time.
Pluto TV raised $5 million in investment from Samsung Venture Investment, the VC arm of the Samsung Group, in October 2017. The total round was $8.3 million, after a $30 million Series B investment round. Sounds like a rescue round. A recent notable distribution deal for Viacom came at Baidu’s Chinese streaming service iQiyi a few months back, involving the production and distribution of the second season of iQiyi’s original 3D animated children’s TV show Deer Run.
“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,” said Bakish.