In an attempt to tap the enormous potential of online video
The Walt Disney Company
) will acquire Maker Studios for $500 million in cash. Further,
as per the deal, Disney will shell out an additional $450
million, if certain performance targets are achieved by Maker
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The deal, subject to regulatory approval, is expected to close in
the third quarter of fiscal 2014.
Disney's latest move is a strategic one as short-form online
video is fast becoming the next big thing in the media industry.
As YouTube and other newer forms of digital media become
increasingly popular, Disney is compelled to focus on online
video distribution to attract young viewers, who have less
fascination for television and other traditional media.
With Maker Studio, Disney will have access to superior technology
as well as programming expertise. These are expected to push it
to the forefront of this dynamic arena in the media industry.
Founded in 2009, Maker Studios is a major multi-channel network
) YouTube catering to nearly 380 million subscribers globally
with over 55,000 channels. It garners a whopping 5.5 billion
views per month.
These days big media houses are vying for a share of the
profitable online video distribution market. Earlier this month,
Warner Bros., a subsidiary of
Time Warner Inc.
) invested $18 million in a video game network, Machinima.
DreamWorks Animation SKG Inc
) acquired AwesomenessTV for $33 million, along with $117 million
worth of performance related compensation. AwesomenessTV is
primarily a teen-oriented channel on YouTube.
Currently, Disney has a Zacks Rank #2 (Buy).