Viacom Acquiring AVOD Pluto TV in $340M All-Cash Transaction
Viacom surprised the industry last night by announcing it will acquire ad-supported video-on-demand (AVOD) service Pluto TV for $340 million in an all-cash transaction. The deal is expected to close in the first quarter of 2019. Pluto TV CEO Tom Ryan will continue in that role following the acquisition, and Pluto TV will function as an independent subsidiary of Viacom.
Pluto TV is available on Roku, Amazon Fire TV, Android TV, Apple TV, Chromecast, and Sony PlayStation consoles. It also offers iOS and Android apps, and is included in Samsung and Vizio's connected TV platforms.
While Pluto TV now claims 12 million active monthly viewers, 7.5 million of whom watch on connected TVs, it's a lesser-known player in the streaming space. In its press statement, Viacom offered several reasons why the deal is a good match, including that it provides a marketing engine for attracting customers to Viacom's subscription services (including Noggin and Comedy Central Now), it gives the company a vast inventory of addressable ad impressions to sell, and it provides a way to monetize Viacom's video library (which it hasn't licensed to SVODs in the past two years). As for Pluto TV, Viacom says it will be enhanced with the addition of Viacom programming.
The deal looks to be a smart move for Viacom, which has been slow to enter the streaming space, and is a sign of the bright future many envision for AVOD offerings.
"The future of AVOD services is definitely on the rise at the moment. There are limits to consumers’ ‘streaming wallets,’ and this dynamic is a counterbalance to the multitude of SVOD services that have launched in the past few years," says Virginia Juliano, CEO of online entertainment recommendation service CobbleCord. "Pluto TV’s aggressive international expansion is a good ‘get’ for Viacom, where they have lagged, and this acquisition is a clear signal from Viacom that they are still in the game. Although it may be a case of too little too late—there are years of atrophy within the organization that will be difficult to undo."
In other words, while Pluto TV looks to be a smart for Viacom, there's a chance Viacom could get in the young company's way.
"Pluto TV’s growth has been impressive in large part because they have been completely unencumbered from the conflicted purposes and internal hand-wringing of legacy media. Although Pluto TV will be kept a separate entity, Viacom ownership could compromise its high-growth, startup culture and slow its progress. Particularly if/when the CBS/Viacom re-merger happens," Juliano says.
"The streaming wars haven't even started!" With ViacomCBS now accelerating its online video strategy, viewers are going to see even more competition for their attention.
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