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Verizon buys stake in AwesomenessTV

Published:Friday | April 8, 2016 | 12:00 AM

Verizon buys stake in AwesomenessTV

Verizon has paid more than US$100 million for a piece of the online-video studio AwesomenessTV.

It's the latest attempt

by a maturing, mainstream corporation to find growth

in non-traditional video programming that can reach younger audiences on smartphones and tablets.

In 2014, for instance, Disney acquired online-video producer Maker Studios for a tab that eventually hit US$625 million. An AT&T joint venture bought Fullscreen, a similar production company, for an undisclosed sum the same year. Hollywood's DreamWorks Animation bought AwesomenessTV in 2013, paying a total of US$113 million after the studio hit promised deal targets.

The investment gives Verizon a 24.5 per cent stake in AwesomenessTV and more original video for its Go90 streaming service, which launched in September. It will also help it make use of its US$4.4-billion purchase of AOL last year, which gave Verizon a new capability to deliver ads on top of video.

"Verizon has concluded that trying to extract more and more money out of data-usage charges is a dead-end street," said analyst Craig Moffett of research firm MoffettNathanson. Instead, it's been focused on selling ads targeted to where its users happen to be, which is "why they bought AOL and why they launched Go90," he said. Now, the company is focused on building up its library of stuff to watch - and, of course, to sell ads against.

More for moviemaking

AwesomenessTV CEO and founder Brian Robbins said the money will allow it to spend more to make short-form shows with top-level talent. That, in turn, will help it build an audience older than the teen 'Generation Z' crowd it now attracts with shows like Cheerleaders and Guidance.

The idea, Robbins said, is to make shows on par with the "high end of premium subscription services - HBO, Netflix or Showtime." Verizon would reserve some of that programming for a new paid Go90 tier it plans to launch later this year or early next.

The investment - valued at roughly US$159 million - is tiny relative to Verizon Communications Inc's US$217-billion market value, and at best represents a baby step by the mobile carrier.

"Even if these things double in two years, which is a high growth rate, so what?" said Hal Vogel, an analyst with Vogel Capital Management. "My feeling is that if they're going to make a statement in media and entertainment, they should make one giant statement instead of picking off these odds and ends."

- AP