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What Does Disney See That You Don't?

By Mark Borum

in Industry News

Posted April 21, 2014
disney_maker-e1398171586796

Everyone has been talking about the recent acquisition of Maker Studios by Disney. The question is, why would Disney be willing to invest $500 million (with an additional $450 million to be paid based upon performance metrics) for thisthis, and this? Disney understands that YouTube is more than just cat videos and dogs on skateboards (not that there is anything wrong with that) and that by aligning themselves with one of the larger MCNs, they are aligning themselves with the millennial audience. Check out the 5 reasons Disney’s move makes perfect sense and why others should pay attention.

  1. The Future of Entertainment. Disney isn’t the first to studio to acquire an MCN, with Warner Brothers and Dreamworks experimenting here first (note: as of today Dreamworks also acquired BigFrame). However, their entrance into the space is the first to make the entire entertainment world sit-up and take notice. Disney is flying high right now. They just released their highest grossing animated film, Frozen. It’s stock was at it’s 5-yr. high prior to the acquisition. Why YouTube? This is where their audience is. Heck, this is where everyone’s audience is. Paid-TV saw a drop in subscriptions for the first time ever this past year, while YouTube has more than 1 billion unique visitors monthly and reaches more people between the ages of 18-34 than any cable network. This trend isn’t slowing. The content is getting better. And with Disney’s entrance into the landscape, you can bet this is just the beginning.
  2. If you can’t beat ‘em, join ‘em. With 100 hours of content being uploaded to YouTube every minute, everyone is vying for attention. Trying to break through the noise on a platform that doesn’t take brand equity into account is extremely difficult. Disney was smart to jockey for position by teaming up with one of the leaders in the space.
  3. Data. Disney just opened the floodgates to the amount of information they are going to have access to. Maker has over 55,000 channels generating more than 5.5 billion monthly views. Disney can now see each one of those channels’ audiences’ interactions and viewing habits. For a studio who has spent the past few decades relying on box office receipts and Nielsen ratings as guidance, this new information available is solid gold for Disney’s future.
  4. Talent Acquisition. What do Issa RaeBroad CityAnnoying Orange and countless others have in common? They were all YouTube talent plucked from their homes online and placed on television. YouTube is great to allow people to find their voice and develop their chops. For Disney, this is a ripe opportunity to have a farm league, of sorts, for their own development.
  5. Product Placement. 94% of pre-roll video is skipped after the first 5 seconds. If you are a major brand and have 55,000 channels at your fingertips, what better way to get your message in front of your audience then to authentically integrate it into the videos they are already creating. I’m curious to see how many YouTubers visit Disney World on their channel this year or how many discuss a Disney film as it opens.

Let me know what you think. Is Disney smart for jumping into YouTube or is this a potential flop? I’d love to hear your thoughts.

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