Biggest Digital Video Power Plays in 2015 + 2014 Follow Up

/ Jan 5, 2016

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2014 set off a trend of big M&A and marked the early formation of a financial tidal wave towards the video industry. Heading into 2015, we noted the Biggest Digital Video Power Plays in 2014. Much to our surprise, those power plays, though strong in 2014, fizzled in 2015.

Kernel, xbox and YouTube picking up the big screen comedy “The Interview” on the heels of the big Sony leak was a landmark deal for Sony, which nearly gave up on distribution the film altogether. It was a marquee moment of opportunity for the streaming business as well, as the film topped various charts, including YouTube and Google  Play. But after that streaming deal and the subsequent roll-out of the film, Kernel may as well have gone out of business. There was a lot of noise surrounding the company in December into January and then crickets for the rest of the year. We also didn’t see any major acquisitions by YouTube on the direct-to-fan front this year, although the company has rolled out YouTube Red, a subscription service that combines both music and video for a single monthly fee. There was also anecdotal evidence that more feature films were released day and date in theaters and on digital platforms.

Similarly, AT&T’s partnership with The Chernin Group to fund and incubate video-related startups under the Otter Media banner has also fallen flat. Five hundred million dollars  was supposedly allocated to the co-venture, but acquisitions Crunchyroll and Fullscreen seem to be the only Otter investments making headway.

MCN acquisitions slowed in 2015, as did any progress by GoPro to accelerate into the original video space, despite its massive IPO and a few strategic hires. Perhaps the only power play in 2014 to extend into 2015 was the move by HBO to break from cable with the release of HBO Now.

So what were the big power plays of 2015? And will those deals have reach into 2016?

6. YouTube Strongarming Creators into New Terms for YouTube Red

At the end of 2015, YouTube started renegotiating the terms of its Partner Program with its most prominent creators. Under the new deal terms, YouTubers had to opt into a new Partners Program that would grant YouTube rights to any content uploaded by said creator for distribution behind a subscription pay wall. This kicked up a stir among the agencies and MCNs. But by Fall of 2015 when the company rolled out subscription service YouTube Red, the company had successfully converted most of its creators over to the new terms. The consequence for those opting out – no revenue sharing. Hmm, if that’s not a power play, we don’t know what is!

5. Verizon Acquires AOL for $4.4 billion. This is undoubtedly a big play for Verizon as it looks to make video and entertainment a part of its media strategy. At the top of 2015, we noted that the telcos would be the companies to watch in 2015, and Verizon certainly lived up to that prediction. Combining Verizon’s FIOS route into the home and its strong position in the handheld market with AOL’s ad stack, programmatic business, global reach, online presence and legacy dial-up and mail clients, this deal is very important for the streaming industry from a distribution and marketing perspective. In the latter half of 2015, we started to see changes at AOL. But the $4.4 billion price tag and the early commitment to video made by Verizon with the launch of Go90 is just the beginning of spend for the telco giant.

4. Verizon Spends Close to $500 Million to Build, Launch and Populate Streaming Service Go90.

Any scenario where money is flowing into the business is good news for the industry. Verizon entered the market with a financial bang, reportedly spending upwards of $500 million to acquire domestic first window exclusivity to original content for a year. According to industry insiders, the company doled out $180 million to AwesomenessTV alone, while New Form Digital received nearly $12 million* across for its six series deal with Go90. Insiders also confirmed that Go90 allocated roughly $100 million in marketing budget to promote the product – a campaign which has rolled out over the last quarter of 2015 on social platforms such as Instagram, as well as on linear television. Verizon also included complimentary streaming data for early Go90 users. In 2016, VideoInk is hearing that the spending is still ramping up and that the company could spend close to a billion in content acquisitions and will start developing its own slate of programming. Refresh on all Go90 news from 2015 and stay up on 2016 news here.

3. Vessel Enters Market to Disrupt the Early Access Ecosystem.

For the better part of 2014, former Hulu execs Jason Kilar and Richard Tom were working on a secret stealth startup called “The Fremont Project,” and by early 2015 the video world welcomed Vessel. Well, at least they welcomed its early budgets for exclusive early access. Betting on the draw that YouTube creators have to migrate audiences to new platforms for early access to new content, Vessel offered lofty upfront guarantees in the hundreds of thousands and millions to some of YouTube’s most well-established creators  such as Bart Baker and Ingrid Nilsen and content producers and MCNs including Above Average and Machinima. Kilar and his team drummed up constant water cooler chatter and media hype, as rumors flew that they were going to take down YouTube. Kilar denied this rumor, strongly arguing in an interview with VideoInk that Vessel and YouTube should and would co-exist. This didn’t stop YouTube from counter-offering big dollars to creators to keep them focused on YouTube. By summer of 2015, Kilar and Vessel reported that the company was over delivering on its projections that it could commit a $50 average CPM for creators. However, the hype and the media storm around Vessel died out over the course of 2015. According to industry sources, gaming was a strong category for Vessel, but it wasn’t performing as well in other verticals.

Changing an industry mindset is tricky and windowing as a mode of creating waterfall revenue streams has been a backbone strategy in Hollywood. The video space will eventually follow, but Vessel may need to come up with another big move in 2016 to maintain its footing when the other shoe drops. Keep up with all of Vessel’s news from 2015 and into 2016 here.

2. Vice Sets Up To Launch Cable Networks Worldwide

Vice Media co-founder and CEO Shane Smith is the king of power plays and media hype. So far, that approach has worked quite well in positioning Vice as an industry leader in publishing, media and video. Vice, a punk magazine turned media titan, climbed the ladder from online platform to premium cable series. Now, Smith’s latest ploy to take over the world with a cable network launching first in the U.S. and, soon, around the globe. A co-venture with A+E, Vice’s cable network Viceland is scheduled for a February 2016 roll-out. The deal, while bold, was not necessarily surprising considering that A+E, a company owned by Hearst and Disney, invested nearly $250 million in Vice in late 2014. Given the big plays Hearst has been making in the video space (Awesomeness TV, Buzzfeed, Vice, Complex), there could be other synergies between the companies it owns digitally and its linear television properties similar to Viceland, perhaps in sports with Disney property ESPN.

1. Facebook Video – Just… Everything About Facebook Video

In 2014, VideoInk published an article positing that Facebook was quietly positioning itself to take on video in a big way. And we saw that play out in 2015 as video publishers scrambled to get their content natively uploaded to Facebook, where most creators were seeing staggering viewership (due Facebook’s algorithm favoring native video content vs. embedded or linked videos from YouTube, specifically). Facebook made significant strides in video in 2015, from identifying “freebooting” of video content to a partnership with Fullscreen and Jukin Media to solve the content ID problem. Facebook now has its hand in all areas of video – ads, short-form clips, series and live stream feeds. But if we had to pinpoint Facebook’s most significant power play of the year, it would be its big heist – getting content creators to upload their video content for free without revenue sharing, then changing the algorithm on them to make it harder to garner big view counts. Here’s a prediction for 2016: Facebook will mimic the moves made by Amazon with Prime and YouTube with Red and not only commission big tentpole projects, but erect a direct-to-viewer pay wall or subscription service. Can’t remember all of Facebook’s video news? No worries – refresh here. 

*Correction – a spokesperson for New Form Digital has confirmed the number was over double our original number of $6 million

Agree or disagree with the above? What do you think were the biggest power plays of 2015?

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