Why Are Major Media Companies Snapping Up MCNs?

/ May 15, 2014


Why are major media companies racing to claim a piece of MCN-Land, an industry that by and large is still searching for profitability?

According to the Q1 2014 US Entertainment, Media, and Communications Insights report from PricewaterhouseCoopers, it’s because a bet on MCNs is a bet on younger audiences — or, in more poetic terms, the future.

You’ve heard this argument before. Younger viewers — a “highly desirable audience” for advertisers, as the report says — are watching less TV and more web-native content. In a lot of cases, it’s content made by non-traditional celebrities; “independent” creators on YouTube who have anywhere from thousands to tens of millions of fans.

MCNs, which have made a business of aggregating these creators into their network, “excel in this audience,” argues the report. “For instance ~80% of the Maker Studios audience is in the 13-34 age bracket.”

What’s more, by aggregating thousands and thousands of channels on the world’s biggest video platform, MCNs ostensibly have the data and tools to help creators experiment with content and develop and build audiences — insights that can also come in very handy for any major media company or brand looking to reach that age bracket.

Once you accept this value proposition, then buying an MCN makes a lot of sense for major media companies, which have the money to spend but not the insights to know what the kids want these days.

“Judging by the recent M&A volume,” — Disney’s acquisition of Maker Studios, DreamWorks’ acquisition of Big Frame via AwesomenessTV, and ProSieben’s investment in Collective Digital Studio — media companies may increasingly be choosing the inorganic option,” the report says.

PwC is very bullish about this type of “deal activity,” with one reason being that, frankly, it’s also easier for traditional media companies to buy something than building something similar from scratch.

There are two reasons why traditional media companies are generally terrible at building innovative digital businesses, according to the report: 1) The old media guys have a habit of treating digital media like traditional media, when in fact, they’re very different; and 2) New media is about being nimble and constantly iterating, while old media is about “planning, planning, and planning.”

“That being said, incumbent media and entertainment companies also bring capabilities to the table that are complementary to those of most MCNs,” the report notes. “Large media players often have strong agency and marketer relationships, cross-platform packaging and brand integration prowess, and leading entertainment brands that can accelerate the advertising monetization of MCNs.” (In short: Major media companies can help MCNs make money.)

Or, to put it another way, these acquisitions fill dual needs: Major media companies are investing in what could be the future of the video ecosystem, while MCNs find the money they’re looking for.

Tags: , , , , , , , , , , ,

  • I think in many cases legacy media companies are paying for access to audiences the MCN’s have cornered. It’s been difficult to make the MCN model profitable because it relies heavily on ad revenue and platforms like YouTube have been adamant about controlling a large chunk of that. Presumably traditional media has the scope and brand recognition necessary to make advertisers commit more aggressively to web content.

    • I agree that the best possible scenario is that the media companies help advertisers see the value in YouTube and how much that value is worth to them.

      • It’s pretty clear that the Disney deal is already giving Maker clout that they didn’t previously have.

  • Coxy

    When oh when is someone going to be a legit competitor to YouTube? Where are the other revenue share sites? I wish they’d get their act together already.

    • Jocelyn Johnson

      ShowYou has been trying, TouchCast is pretty sick and there’s Dailymotion too. Vimeo is nice depending on what you’re looking for! it’s just impossible to get the type of scale that YouTube has elsewhere.

    • Chazmanite1138

      You’d have to be able to compete with Google in order to set up a non-gatekeeper network that can compete with YT. Elsewise, its closest competition are companies like Amazon or Netflix.


MTV Labs Taps Rapper A$AP Rocky as Creative Director


FCC Cancels Vote on ‘Unlock the Box’ OTT Proposal


Collab Signs Horror Channel BlackBoxTV to Network, Partners on...

PewDiePie 3-2-15

PewDiePie Expands Revelmode Gaming Slate with DoubleMoose Deal

Industry Tickets Selling Fast!
Click above to lock in your registration for VidCon 2015!

Storyful Launches Viral Video Marketplace


Pioneering Hip Hop Exec Lyor Cohen Joins YouTube as Global Head...


Legendary Digital Reveals Alpha Subscription Service Launch...


Time Inc. Teams with Digital Comedy Producers Jash for Branded Content

Amazon Logo

Amazon Greenlights Three Comedy Pilots as Series


How the Cartoon Network Combined the Best of VOD and Linear TV...


Jukin Media Goes Viral for Brands with Ethos Division Launch

Streamy Awards

Streamy Awards Trade In VH1 for YouTube, Again


Matching Ads to Videos Not So Simple, According to Zefr’s...


Plug Pulled on Canadian SVOD Service Shomi


What’s Trending on the Twitter Sale

Machinima Logo

Machinima Teams with SiriusXM for Daily Esports Radio Show


AwesomenessTV, Vice, Complex to Power New HearstLive...


VIDEO: ‘Dirty 30’ Confessions with Stars Hart,...


Facebook Says It’s Sorry It Vastly Overestimated Video...


Pilgrim Media Group CEO Craig Piligian (‘The...


Heroes or Rats?: YouTube Unveils New Program for Creators Who...

Vessel says it's doing well in its first month

Why Verizon is Pursuing Vessel, the...


How Canvs Media is Harvesting Emotional Insights on YouTube,...


Marlon Wayans Getting ‘Naked’ for Netflix with Regina Hall


HuffPost RYOT Launching Virtual Reality Comedy Series and News...


YouTube Launches #voteIRL Campaign Targeting Digital-First Generation


How Top YouTubers (incl. Tyler Oakley & Meghan Rienks)...


Charlie Sheen to Star in Crackle Feature ‘Mad Families’


Gunpowder & Sky Buys Distributor FilmBuff As Vision for...


Toy Freaks Top Viewed YouTube Channel in August According to...


Emmy Wrap-Up 2016: Jeffrey Tambor (‘Transparent’)...


Twitter Scores 2.1 Million Viewers for Thursday Night Footall Kickoff


Vloggers Not Unique Snowflakes: 90 Million Flag YouTube Videos...

Mode Media

‘Billion Dollar Startup’ Mode Media Shuts Down


Who Is Winning The Marketing Revolution And Why?


Netflix Orders ‘She’s Gotta Have It’ Series...


What Is ‘Swedish Dicks’ and Who Is Selling It?


How GMC is Using the AOL Series ‘Seamlessly She’...


Liberty Global to Put Netflix on Set-Top Boxes in 30 Countries


Getting to the Spine of VR’s Monetization Challenges with...