Disney has acquired Maker Studios, the digital video network that distributes such strange hits as PewDiePie and Shay Carl (the work of co-founder Shay Carl Butler), as well as a series of fashion-related shows for women, and even syndicates old-school cartoons for kids under its Cartoonium imprint. Founded in 2009, the network boasts more than 380 million subscribers across all 55,000 of its channels and generates 5.5 billion views a month.
The leadership of Maker will report to Jay Rasulo, Disney CFO and one of the two men in contention for the Disney CEO and chairman job when Bob Iger steps down (the other is Thomas Staggs, who heads the parks division). “Short-form online video is growing at an astonishing pace and with Maker Studios, Disney will now be at the center of this dynamic industry with an unmatched combination of advanced technology and programming expertise and capabilities,” said Iger in a statement.
The acquisition costs Disney some $500 million immediately with a $450 million earn-out possible on top of that price if the unit meets performance goals. It's worth noting that the last time Disney made an acquisition like this, it didn't work out particularly well: Playdom, the digital game company Disney bought in 2010, was also offered a bonus of hundreds of millions if its success continued; it didn't.
Disney's evp of corporate strategy and business development, Kevin Mayer, spoke to Adweek about the acquisition by phone. "We've done earn-outs in the past," he said. "We're very careful about constructing them so that both parties want to achieve them. If they hit those goals, we'll be very pleased, they'll be better off and our shareholders will be better off because of the value created." Mayer wouldn't discuss the metrics for the earn-out except to say that "It's not just revenue [generation]"—presumably some of the terms used to quantify video use will be in effect, as well.
"It's a very exciting combination of a very strong combination of networks on YouTube," Mayer said of Maker. "The ecosystem is extremely large and growing and extremely relevant to the younger audiences, and those are very difficult to reach." Adweek asked Mayer about the cost of doing business with YouTube, which its channel operators have called high in the past. "Taking the economics as they are, that creates a huge business," Mayer said. "If we can change those favorably, that's an upside. They [already] coexist nicely and there's no need for contention."
Disney's rate of expansion is breathtaking, Playdom or no Playdom: the company has acquired LucasFilm ($4.06 billion), Marvel ($4.24 billion), Pixar ($7.4 billion) and the Muppets since 2004.