What are multichannel networks and why does everyone from Disney to AT&T want a piece of them?

Apr 23, 2014

UCLA/The Wrap Sundance 2013 Panel - Park City 2013

(L-R) Slated co-founder and CEO Duncan Cork, Maker Studios Chief Development Officer Chris M. Williams and director Rick Rosenthal speak during UCLA and The Wrap Sundance 2013 Panel at The Claim Jumper on January 21, 2013 in Park City, Utah. ; Credit: Jason Merritt/Getty Images

In March, the Walt Disney Co. Offered to buy the Culver City-based Maker Studios for $500 million in cash. Depending on the company’s performance, it could get an additional $450 million more from the Mouse House.

So what is Maker, you might ask? The 5-year-old company is a multichanncel network (MCN), meaning a producer and distributor of online video on YouTube. It’s responsible for 55,000 YouTube channels with more than 380 million subscribers and 5.5 billion monthly views–hands down the most popular MCN out there. One problem though: Maker’s not exactly profitable. With the acquisition, Disney is following in the footsteps of a couple big purchases by other companies. In 2013, DreamWorks,  threw down $33 million for AwesomenessTV, a competitor to Maker. Last month, Warner Bros. pumped $18 million into the Machinima network, despite the fact that the niche network has been losing viewers. Media conglomerates aren’t the only ones wanting a piece of the pie. AT&T has rolled out plans to create a new MCN.

Is the Maker Studios deal worth close to $1 billion, one of Disney’s biggest acquisitions in recent years? What does it give Disney over its competitors? Are we likely to see more of these blockbuster deals in the future?


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