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Disney bets big on Maker Studios in $500M deal

In the latest and greatest statement of Hollywood's increasing faith in the potential of digital entertainment networks, Disney has scooped up one of the largest multichannel networks on YouTube.
March 24, 2014

In the latest and greatest statement of Hollywood’s increasing faith in the potential of digital entertainment networks, the Walt Disney Company announced today that it’s buying Maker Studios.

Shareholders of the multichannel network will receive $500 million from Disney, with an additional performance-based earn-out of up to $450 million, if targets are met, according to a statement. It’s one of the highest values placed yet on a company that was built on YouTube. Content creators within the Maker network can for the time being expect business as usual, with the studio supporting the talent in the same way it has before.

Two weeks ago, Warner Bros. Entertainment led an $18-million investment in gaming-centric MCN Machinima, with existing investors MK Capital, Redpoint Ventures and Google Capital also participating.

By acquiring Maker Studios, Disney is looking to gain insight on how to reach youth through short-form online video entertainment, and how to retain those consumers through ongoing interaction with them.

Maker has a proven track record in that arena, with more than 55,000 channels, 380 million subscribers and 5.5 billion views per month on YouTube, making it one of the top online video networks for millennials. It is home to online stars such as PewDiePieKassemG and series such as Epic Rap Battles of History. In recent months, Maker has inked deals with will.i.am, Steve-O of Jackass fame and the Just for Laughs Comedy Festival.

“Disney stepping up to buy Maker is a very positive step for the online video industry,” says Paul Kontonis, executive director of the Global Online Video Association (GOVA).

“It demonstrates that when you have a business model which goes beyond an ad network play, your long term value is clear and attractive. The MCNs are each evolving and like butterflies are breaking free into massive realms of opportunity,” he says.

It’s undeniable that kids and millennials are changing their viewing behaviors, and Disney is smart to keep well-plugged into this demo, says Will Richmond, a leading online video analyst and founder of VideoNuze.com.

“It certainly helps legitimize YouTube as a distribution platform and also the digital native talent that has flourished,” he tells StreamDaily.

Maker Studios will remain headquartered in Culver City, Calif., with additional offices in New York and London, and the team will report to Disney CFO Jay Rasulo.

 With files from Melita Kuburas

About The Author
Todd is StreamDaily's U.S. West Coast Correspondent. He has written for a wide range of publications, including The Hollywood Reporter, Variety, the Los Angeles Times, the New York Post, NylonGuys and, yes, even the Weekly World News. Earlier in his career, he served as senior editor for the pioneering alternative movie magazine Film Threat. You can reach him at toddrlongwell[at]gmail.com or on twitter @toddlongwell1
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