Earlier this week, Viacom Inc. (NASDAQ: VIAB, VIA) announced that has agreed to buy the leading free streaming service, Pluto TV, for $340 million in an all-cash deal. With more than 12.5 million monthly active users, including 7.5 million watching Pluto TV on connected TVs, the ad-supported Pluto TV offers more than 100 live TV channels plus on-demand content, including sports, news, lifestyle, comedy, cartoons, gaming, TV shows and movies. This acquisition, which is expected to close in the first quarter, will allow Viacom to enter the streaming market for the first time.
With more than 130 partnerships with media networks and film and TV studios, Pluto TV offers unlimited entertainment options that Viacom can leverage. According to a January 22 news release, Pluto TV’s viewers stream billions of minutes of content each month on a wide range of devices including Roku, Sony PlayStation, Chromecast, Amazon Fire TV, Apple TV, Android TV, mobile apps on iOS and Android and on Samsung and Vizio smart TVs.
“Today marks an important step forward in Viacom’s evolution, as we work to move both our company and the industry forward. Pluto TV’s unique and market-leading product, combined with Viacom’s brands, content, advanced advertising capabilities and global scale, creates a great opportunity for consumers, partners and Viacom,” said Bob Bakish, Viacom president and CEO, in the announcement.
“As the video marketplace continues to segment, we see an opportunity to support the ecosystem in creating products at a broad range of price points, including free. To that end, we see significant white space in the ad-supported streaming market and are excited to work with the talented Pluto TV team, and a broad range of Viacom partners, to accelerate its growth in the U.S. and all over the world,” Bakish added.
In the announcement, Viacom outlined how the acquisition will further the company’s strategic plans, including growing its advanced advertising business. Key strategic advantages include the following:
- Pluto TV will be able to expand its reach and scale the company’s growth.
- Viacom will also expand its customer base, giving it access to millions of consumers.
- Pluto TV will help Viacom retain existing customers for its targeted subscription products including Noggin and Comedy Central Now.
- Pluto TV will serve as a distribution outlet for content produced by Viacom Digital Studios.
- Viacom will be able to reach a younger, gender-balanced audience which can be hard to reach.
- With the ability to immediately offer billions more ad impressions, Viacom as an advertising entity becomes much more attractive to potential and existing clients.
- The acquisition expands Viacom’s ability to attract new partnerships by serving up an entirely new audience.
- Viacom’s purchase of Pluto TV will also give the company additional monetization opportunities with the expansion of its content library.
Pluto TV CEO and co-founder Tom Ryan, who will remain CEO of Pluto TV, commented on the acquisition.
“Since our launch less than five years ago, and particularly over the past year, Pluto TV has enjoyed explosive growth and become the category leader in free streaming television,” said Ryan. “Viacom’s portfolio of global, iconic brands and IP, advanced advertising leadership and international reach will enable Pluto TV to grow even faster and become a major force in streaming TV worldwide. Viacom is the perfect partner to help us accomplish our mission of entertaining the planet.”
This acquisition is continuing the trend we are seeing with ad-supported, free streaming services. Companies like Pluto TV are successful because they have a strong advertising base, and their customers would rather watch a few commercials than pay a monthly subscription fee. This acquisition appears to be a win-win for all. Viacom gets in on the streaming game, expanding its reach and exposing it to new, potential subscribers of other products. Pluto TV gets a big paycheck while continuing to do what its good at. We are eager to see how this partnership grows and how they will fair against other ad-supported, free streaming services.